The out of pocket burden

Whilst Medicare is universal, and can cover hospital, medical and pharmaceutical benefits, more than 11 million Australians choose to ‘supplement’ their healthcare funding with private hospital cover and around 13 million had private ancillary cover2

Notwithstanding the interaction between Medicare and private cover, the individual is often left with a ‘gap’ between the amount covered and the total cost of the medical services

This gap can arise for several reasons, including where service providers choose to charge more than the ‘notional fee’ for a service, as calculated by health authorities (the free market in operation)

This gap translates to an ‘out of pocket’ cost, borne by the individual

The quantum of these out of pocket costs can create a barrier to individuals seeking suitable treatment for their conditions

An Australian study investigating the effects of healthcare costs on individuals found that 14% of adults didn’t receive the recommended care due to costs; for those living with chronic health conditions, the proportion was higher, at 24%3

Further research suggests that over 40% of individuals with depression, anxiety and other mental health conditions skip treatment and other care needs because of the cost4.

Indirect costs

Indirect costs to the individual, such as time spent off work and time spent travelling to and from medical appointments, as well as indirect costs to families and carers also pose a significant burden

As an example, average people with back pain or problems are absent from work almost 21 days per year as a result of their illness6

A report investigating the impact on carers of people who have experienced stroke found that:

58% of primary carers of people with stroke and disability spend 40 hours or more per week in their caring role5

21% report a decrease in income due to their caring role

24% incur extra expenses due to their caring role

31% have difficulty meeting everyday living costs

•  14% of adults didn’t receive recommended care due to costs for those living with chronic health conditions, the proportion was higher, at 24%3

1. Australian Institute of Health and Welfare 2013. Health expenditure Australia 2011–12. Health and welfare expenditure series no. 50. Cat. no. HWE 59. Canberra: AIHW, p. 117.
2. Australian Institute of Health and Welfare 2017. Health expenditure Australia 2015–16. Available from:
health-welfare-expenditure/ health-expenditureaustralia-2015-16/ contents/ data-visualisations [Accessed June 2018].
3. Essue B et al. Out-of-pocket costs of health care in Australia. Submission to the Senate Standing Committee on Community Affairs.
Submission 28.
4. Callander EJ, et al. Out-of-pocket healthcare expenditure and chronic disease — do Australians forgo care because of the cost? Aust J Prim Health. 2016;23(1):p.15–22.
5. 15. Australian Institute of Health and Welfare (2013). Stroke and its management in Australia: an update. Cardiovascular disease series no. 37. Cat. no. CVD 61. Canberra: AIHW.
6. 6. Australian Institute of Health and Welfare (2017). Back problems. Available from: reports/ arthritis-othermusculoskeletal-conditions/ back-problems/ what-are-backproblems [Accessed May 2018].

From Zurich Whitepaper – The Cost of Care