Morgan Stanley investment bank analysts recently released a 63-page report which effectively states that the public hospital system in Australia is so good Australians don’t need to join a health fund for private health cover. It further states that the government should disallow any premium increases for three years while the industry undergoes a reform.
The number of Australians with private health insurance was 47.4 percent in 2015 – its highest peak – and had reduced to 45.8 percent in September 2017. This is thought to be due in part to more services being excluded and gap payments increasing. The percentage of Australian with private health insurance is expected to continue to drop as private health costs rise further and confidence in the public health system grows despite increasing waiting times for non-urgent surgery like sporting injuries rehabilitation. In the past decade, confidence in the public health system has risen to more than 80 percent.
Although a decrease in those with private health insurance would result in increased demand on the public health system, the Morgan Stanley report claims that public hospitals will be able to cope with the demand. It has been suggested that the government divert some of the $6.4 billion it currently spends each year subsidising private health insurers to instead fund public hospitals to meet the increased demand.
The private side view
While they agree that Australia has a world-class public health system for health emergencies, those representing private health services highlight lengthy waiting lists for elective surgery and also limitations around treating mental illness as a reason for people to take up or continue with private health cover. They further state that the private care healthcare system offers choice of doctor and hospital which is not available in the public system.
Representatives of private healthcare and private hospitals refer to research which shows that 80 percent of people with private insurance believe they do get value for money. An informal poll of 412 people found that 50 percent had private health insurance and that only 15 of them intended to ditch their health fund next year.
Morgan Stanley investment bank undertook the research in order to provide advice to clients around investing in health funds and public hospitals.
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