When the figures don’t add up

In a country with state-funded care, health insurance may be an expensive luxury.

The day he hit 60, Auckland man Jasper Reeves* became very expensive to insure. His Southern Cross health insurance cover virtually doubled in price overnight. “It had been creeping up each year for a while,” he says, “though some years the jump was smaller than others, if I hadn’t made a claim in the previous 12 months.

“But this was almost double and I started to think it was not a very good investment.”

Reeves recognised that the passage of the years was making him a higher risk, but the abrupt massive rise in his monthly premium just because 60 years had elapsed since his birth came as a bit of a shock.

His cover was for private hospital and specialist care only – he had been wearing the cost of an occasional GP visit and prescription charges himself – and it didn’t take long with a calculator to work out that he would have to be extraordinarily unlucky to get anything like value for money from his premiums.

“The thing about health insurance,” he says, “is that it can result in your having treatment, or levels of treatment, that you don’t need just because you can. There have been occasions when I’ve gone to see a specialist who confirmed – for $900 that Southern Cross paid – what my GP had already told me for $40. And I was paying $2000 a year for the privilege of having that cover.”

Reeves reckons that health insurance plays to a fear of ending up on a waiting list for elective surgery, such as hip replacement or a cataract operation. But it is far from a certainty that he would need such treatment and if he does, and doesn’t want to wait for it, he can pay to go private with the $12,000 he’s saved in premiums so far.

“The news is full of stories about the failings of the public health system, but most people get excellent treatment and don’t even wait an unreasonably long time for it. In cases of accident and trauma, there’s probably nowhere better to be than here. As for the rest, I’m insured against it; I’ve insured myself.”