Private health insurance: For the rich, paranoid and sick?

JUNE is here and with it another fun period of deliberately procrastinating finding out if you should buy health insurance.

Who wants to spend Saturday — even a cold Saturday — making a spreadsheet of costs and benefits?

There’s always Medicare, which you’re already paying for anyway. Why the heck would you fuss with the administration of buying insurance? Not to mention it can cost over $60 a week for a single.

You probably wouldn’t get it … except the government knows that and has set up all manner of snakes and ladders which take you to the square that says: Go On, Buy Health Insurance.

HAPPY 31ST, SUCKERS

For starters, there’s the Lifetime Health Cover surcharge. This sneaky thing raises the cost of private health cover if you’re over 31. If you get in the system straight after you turn 31, you pay no surcharge. Every year you delay, the surcharge goes up 2 per cent. If you wait till you turn 40, your premiums are 20 per cent higher. Ow.

This tax (it is a tax — the extra 2 per cent goes to the government) is to make people join private health cover early and stick to it.

Is it enough to twist your arm? Let’s do some maths. If you wait til you are 35, you’ve saved four years of insurance, (400% of the policy premium). Then you pay 8% extra for another 10 years (the loading only lasts 10 years). That works out at 80% of a year’s premium! By itself, it’s not enough.

But as every investor knows, future costs are worth less than current savings. Not to mention this is a government policy that could change — the 2 per cent surcharge may not remain for ever. By itself, it’s not enough.

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