There is a common misconception in Australia that all major medical expenses will be fully covered by Medicare and private health insurance. The fact is that Australians spent an astonishing $29.5 billion on health-related expenses in 2015-16.* This represents over 17% of that year’s total health expenditure – resulting in individuals being the third largest contributors to health spending, after federal and state governments, spending nearly double that of private health insurance funds. This amount relates to direct expenditure only, and doesn’t include any indirect costs, such as income loss or the cost of caregivers.

The out-of-pocket burden

There is often a ‘gap’ between the amount covered and the total cost of medical services. This translates to an out-of-pocket cost, which can create a barrier for people seeking suitable treatment.

An Australian study found that 14% of adults didn’t receive the recommended care due to cost, and for those living with chronic health conditions, the proportion was even higher at 24%.* Further research suggests that over 40% of people with depression and other mental health conditions skip treatment and other care needs, due to cost. ^

Cancer by the numbers

Cancer is the most common serious illness in Australia, accounting for 19% of the total disease burden. Over 130,000 new diagnoses are expected this year, and the average lifetime out-of-pocket cost for individuals aged 15-64 is currently $126,280. Cancer patients using drugs not supported by the PBS face monthly bills of up to $5,000 or more, as private health insurance and Medicare don’t cover these drugs. This means that innovative treatment options are often out of reach for most.

The financial burden of cancer extends beyond the patient though, with the average overall cost to the household estimated at $48,000. Around 72% of carers report a negative financial impact of caring, and more than half of carers working full-time need to take leave or reduce their working hours.

How can you protect yourself?

There a few options you can use to fund these costs:

  1. Selling down investment assets
  2. Taking on more debt
  3. Purchasing a critical illness insurance policy 

A critical illness insurance policy is generally the most cost-effective solution, as selling down assets or taking on more debt may have significant longer-term implications. Payment of benefits is based on the diagnosis of around 50 listed illnesses. This makes it perfectly suited to protecting against out-of-pocket medical costs associated with major illnesses, as there’s no need to prove you can’t work or provide medical bills. 

Please talk to your Elston adviser about how best to protect you and your family.

* Essue R et al. Out-of-pocket costs of healthcare in Australia. Submission to the senate standing committee on community affairs. Submission 28.
^ 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
# Paul CL, et al. The impact of loss of income and medicine costs on the financial burden for cancer patients in Australia. The journal of community and supportive oncology. 2016;14(7):p.307-313.

If you would like more information please call 1300 ELSTON or email info@elston.com.au and an adviser will be in touch.