Just when it feels like every item on the family budget is going up, health insurance providers are making a plea to the government to hike their premiums.
In December, their bid to add up to 6 per cent to the cost of their policies was knocked back, but they are expected to have another go at getting the health minister's approval for a smaller increase.
So are you better off having private health insurance or relying entirely on the public system?
Hannah Israel, 27, from Tasmania is not so sure.
Two years ago, she took out full hospital and extras cover because she wanted the freedom to access care without going on a waitlist in the public system.
Then she bought a house and decided to ditch her extras cover.
Instead of paying $40 each month for services she felt she didn't need, she put that money into her home loan.
"It's a nice little chunk off my mortgage," she said.
Now she's considering whether to drop her hospital cover as well.
That decision is a bit trickier because she knows she will get stung with additional tax if she doesn't have it.
But if premiums go up, will she be better off paying the tax?
Working that out is complicated so we've asked a few experts for their advice on what to consider.
Why do we need to buy private health insurance?
Hang on. Don't we get free healthcare in Australia?
Yes, Australia boasts universal healthcare so citizens and permanent residents get free or low-cost health and hospital services.
Our public health system is generally good, but if you can afford it you may want to use private clinics and hospitals so you can choose which doctor treats you, get your own room and have procedures without going on a lengthy waiting list.
Private health insurance helps pay some of those costs and extras cover helps with services not covered in the public system like optical, dental and physiotherapy.
Health economist Professor Yuting Zhang at Melbourne University says the government encourages people to get private health insurance to take pressure off the public system.
The view is this will drive equity by improving access to the public system for people who can't afford private healthcare, but she questions whether this is truly the case.
Professor Zhang's research at Melbourne University has found that more people buying private health insurance makes little difference to the length of time patients spend on public health waiting lists.
"We have to figure out why do we have private health insurance sitting alongside Medicare," she says.
That's a much larger issue, so for now let's focus on how current government policy affects you.
Incentives for getting covered
Are you saying the government will help me pay for health insurance?
Well, yes and no.
If you have private health cover, you may be eligible to get a discount on your insurance premium paid for by the government.
The amount depends on your age and income.
If you're single and earn $144,000 or less, you can get anywhere between an 8.2 and 32.8 per cent discount.
For couples and families, it's $288,000 or less.
But if you haven't been insured before, the government can sting you with a Lifetime Health Cover loading.
If you decide to get hospital cover later in life, you'll be slugged with a 2 per cent penalty on your basic premium for every year over the age of 30.
The maximum loading is 70 per cent and it's removed only after ten continuous years of holding private health insurance.
But that's not all.
Because the government really, really wants you to have private health insurance, it charges higher-income earners a Medicare levy surcharge for not having cover.
This applies to singles earning more than $93,000 and families earning over $186,000.
Those without private hospital cover — with an excess of $750 or less for singles and $1,500 or less for families — will pay an extra tax on their income of between 1 and 1.5 per cent, depending on how much they earn.
It sounds like getting cover makes sense but is it right for me?
If you're going to have to pay the Medicare levy surcharge, it could be worth getting private health insurance instead.
Professor Yuting Zhang says that people with higher earnings might save money by avoiding the extra tax.
"They're probably better off in terms of buying the cheapest plan, even though [they] don't use it," she said.
Ms Israel is not convinced her health insurance offers value for money but says it could be a different story if she needed hospital treatment.
"And certainly that'll change when I look at having kids and as I get older," she said.
Financial adviser Adele Martin says everyone's situation is different so it's important to consider personal circumstances when weighing up the value of having cover.
"You don't want to send yourself broke and get yourself into credit card debt [just] to keep the private health," she says.
She recommends factoring into your decision your medical history, healthcare needs and future events like having a baby.
Once I'm covered it's all free, right?
Not exactly.
Once you get private health insurance, you still need to fork out cash on top of your premium for treatment, medication and other associated costs.
That's because your health insurance may only cover part of the cost of the medical service or product you need.
And you may have to pay an excess – an amount your health insurance provider charges when you are admitted to hospital.
You can change the excess amount to adjust how much your premium is.
According to data from the Australian Institute of Health and Welfare, individuals paid 15 per cent of the country's total healthcare expenditure in 2019-2020, almost twice what health insurers chipped in.
Health economist Professor Brenda Gannon says people may take out health insurance as a way to save money, but then face large expenses when they need to use it.
"People may still be even more out-of-pocket," she says.
The government's new medical costs finder lets you see what people with private health insurance pay out-of-pocket for different procedures.
The Department of Health also encourages people to get an estimate of out-of-pocket costs from their insurer and healthcare provider prior to starting treatment.
If you need a particular procedure, you should also check the waiting periods for claiming benefits when you first get insurance.
Are people dropping cover as the cost of living goes up?
Jeni Hall, a single mother with a two-year-old and a mortgage, says she's feeling the pinch right now but doesn't know if ditching her health insurance is the right thing to do.
Some large medical costs a few years ago prompted her to take out a high level of cover.
Now she says her policy costs so much each month she can't afford to see a GP for anything but urgent issues.
"Behind the mortgage and daycare, it's the single most expensive bill of the month," she said.
She works full-time and considers herself to be on a good salary but says she sometimes can't pay all her bills.
"My mum and dad have stepped in quite a bit. Just to help get me over the line until payday," she said.
More than one in two Australians have some form of private health insurance.
Professor Gannon says people tend to think in the moment and might be less inclined to buy health insurance as the cost of living goes up.
"They might think in the next year, I don't need this, I can't afford it," she says.
She warns that the lifetime penalty and the Medicare levy surcharge can make health insurance more costly over the long term.
Ms Martin says it's important to budget wisely.
She recommends reviewing your policy regularly and comparing providers to ensure you're getting the best value.
"If this is going to save you a 1,000 bucks or 500 bucks a year and take you 30 minutes, maybe it's worth it," she says.
How to reduce the cost of private healthcare
ASIC's MoneySmart website offers tools, tips and calculators to help manage money and make more informed financial decisions.
On private health insurance, MoneySmart's Andrew Dadswell suggests paying attention to the fine print.
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To choose the right policy for you, find out how basic ambulance cover, hospital cover or extras cover differ
Compare policy product disclosure statements to understand what is included and what is not
Before signing up, think about who the cover is for and how much you can afford
Work out what medical products or services you use to decide which extras you need and remember to check if there is a waiting period before you can claim any services
If you are unhappy with your health insurance discuss with your provider how you would like the problem fixed and if the problem isn’t resolved write them a formal complaint
Disclaimer: This is general advice only. Please see a professional for advice on your individual financial circumstances. As a financial adviser, Adele Martin does not receive payment from health insurance providers. If she recommends other insurance like income protection she may receive a commission.