Pauline Davies has never skimped on healthcare. She's also never had private health insurance.
"Not having health insurance has never caused me to question the value of paying for health services," she says.
"I've had some small procedures and I value paying for services directly to the provider rather than to a health insurance company.
"When it's not been Medicare funded, I've been happy to just pay the full amount."
Ms Davies is one of, what's believed to be, a small number of people who make the conscious decision to self-fund their healthcare.
They will then opt to either wait and have their care delivered through the public system or, if they don't want to wait, elect to pay up-front and be seen as a private patient.
It's a strategy that won't suit everyone because it involves taking a risk that you'll stay healthy and won't end up chronically ill. It also requires a stable income and being a good long-term saver.
Typically, people who self-fund set aside money at regular intervals. That money is then used to pay for medical care, including doctors, specialists, procedures, hospital stays, therapies and medical devices.
Ms Davies' children are now adults but for much of her life, she was a single mum. She also estimates she earned an average or slightly above average income for most of her working life, but she's always lived frugally and been good at saving money.
"It's a gamble I decided to take," she said.
"I've been able to retire early at the age of just 59. I put that down to hard work and living carefully, but also 40 years of not paying health insurance, I think, has contributed to my solid financial position."
It's a decision she said she had never regretted, especially as she has seen the cost of living and health insurance premiums rise.
The next premium rise is expected in April.
Switching from insured to uninsured
It's a similar situation for David who also self-funds his healthcare.
For decades, he and his wife have made regular payments into a high-interest savings account which they only dip into when they, or their children, need to pay for medical expenses.
The family did start out with insurance but decided to scrap it following the birth of their second child in the late 1990s when they were aged in their 30s.
"My wife went in as a private patient in a public hospital here in Canberra, and the obstetrician that we expected to be there for the birth was not available," he said.
They'd already paid for that obstetrician's services, so having him unavailable and then also being left with further out-of-pocket medical expenses left them questioning if private health cover was for them.
"We ended up with, yes — a wonderful healthy baby, but there was a bit of a sour taste in our mouths about that particular episode."
David is now retired but previously worked in health policy. He believes that background provided him with a good understanding of the health system, which was helpful when he and his wife were weighing up their options.
They also discussed the fact they should only self-fund if they had a safety net, to cover a worst-case scenario if a major health event emerged. In that situation, they agreed they would use their mortgage offset account to cover unforeseen big medical costs.
Becoming a more active partner in your healthcare
David believes his decision to self-fund made him more proactive about his health and more likely to seek out second opinions to ensure he was getting the best advice and value.
"If you're paying for something, generally you take a more interested view in what you're getting for your money," he said.
"There was one instance where I went to a specialist, and I wasn't very happy with the advice that I got.
"So, I actually paid to go and see another specialist. I don't think I would have done that had I not [saved for my own] health fund, because I wanted to get value for money."
The idea of self-funding healthcare isn't new. But it's a concept not regularly canvassed.
The most recent data from the Australian Institute of Health and Welfare shows the number of public patients using public hospitals – that is, whose costs are entirely funded by the government — has held steady between 2017 and 2022.
In the financial year to 2022 there were 6.8 million admissions to public hospitals and 4.7 million to private hospitals.
Of those, 37,921 were self-funded through the public system where, like a private hospital patient, you can pay to ensure you are seen by a specialist or doctor of your choice and to have your own room. A further 376,481 self-funded in private hospitals.
Beware of the fine print
Self-funding healthcare is not a strategy health economist Stephen Duckett endorses.
He thinks the potential risks far outweigh the benefits.
"It's very hard to predict what your health needs might be in a year or two years or five years' time," Dr Duckett cautioned.
"Everybody, if things go wrong, can go to a public hospital.
"But if you're a bit older and you have a chronic disease and you might have hip pain or knee pain and you need a hip replacement, you might have to wait quite some time in pain to get access to your surgery — if you're simply relying on the public sector."
In his view, self-funding healthcare is something only people with a certain earning capacity, temperament, and strong organisational skills should attempt.
"Not everybody has got that personality," he said.
The other consideration is around tax and various levies.
The first is the Medicare Levy. It's charged at a rate of 2 per cent of a person's income and helps the public healthcare system.
Then there's the additional Medicare Levy Surcharge, charged to some people who earn over a certain amount each year and who don't have private health insurance. That levy is typically between 1 per cent and 1.5 per cent of a person's income.
"Because of the way the Australian tax system works, for many people, it is cheaper to take out health insurance than to pay a tax penalty — the so-called Medicare levy surcharge," he said.
There's also a Lifetime Health Cover; a loading charged to your hospital premium if you don't have private hospital cover from the year you turn 31 but decide to get it later in life.
Ms Davies said when the levy was first introduced, in 1984, she did weigh up her options, concluding it did not make economic sense for her to get health insurance.
She also decided if she did ever have to pay the levy (surcharge) – she would prefer her money go to public health than an insurer.
"I did my maths and chose to gamble on my good health, knowing that I work hard, and I've always lived very carefully and had a surplus," Ms Davies said.
Both her children are now adults. Her son is in the defence force so automatically receives private health insurance.
However, her daughter, a registered nurse, has decided against taking out private health insurance.
At the end of the day, Ms Davies said it really came down to one thing; "I understand that we're taking a gamble by not having health insurance, but this is a personal decision that everybody makes for themselves."
Editor’s note: Due to a production error, the figures initially listed in the table for treatment funding of public patients in public hospitals were inaccurate and have been corrected. Based on this table, the story incorrectly stated that the number of public patients using public hospitals steadily increased between 2017 and 2022. This has been changed to reflect that the numbers have held steady.
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