Why didn’t my private health insurer cover the full cost of my surgery?
Q: Why didn’t my private health insurer cover the full cost of my surgery? I was $5,000 out of pocket - and I’ve been paying premiums for years! I feel totally ripped off.
A: You’re right to feel frustrated. But the reason you’re out of pocket isn’t because your insurer refused to pay – it’s because of how the system is set up. And Australia’s Constitution is right at the heart of the problem.
Doctors can charge whatever they like. There’s no limit. That’s thanks to 11 frustrating words in our Constitution that prevent the government from capping doctors’ fees. So, if your surgeon charges $20,000 and the insurer pays it, there’s nothing stopping them from charging $25,000 for the next patient. It’s a cycle that’s been going on for decades, and it’s part of why fees keep rising.
Insurers, on the other hand, are tightly regulated. They’re only allowed to pay in accordance with their approved schemes and are not allowed to cause inflation. That means they can’t just keep increasing payouts – because every time they do, prices go up again. That’s not theory – it’s been happening for the last 40 years.
What makes it worse is that many of the fees you’re charged aren’t even visible to insurers. They’re often hidden as admin fees, booking fees, or facility charges – usually of questionable legality. These extra costs are often off the books and disguised as something separate to the surgery fee, so insurers literally can’t see them. And if they can’t see them, they can’t cover them. In fact, the official national data says there is no-gap for nearly 90% of private hospital treatments, meaning your doctors and anaesthetists are not charging you anything at all. It’s completely free!
You might see lots of debate online blaming insurers for this mess. But it’s not that simple. The real issue is a lack of transparent and honest billing. That’s where the fix has to start. And yes, those 11 constitutional words are a thorn in our side – but not insurmountable. I explain the workaround in detail in my book, Medical Bills Made Easy.