A ‘not-for-profit’ health fund is one where the premiums paid into the fund are used only to pay out benefits benefits for members and to operate the business. In contrast, ‘for-profit’ funds aim to return a profit to their owners. The owners may be shareholders – for example Medibank Private, which is listed on the Australian Stock Exchange, or a corporation – for example Bupa, which is owned by (and sends profits to) its UK-based parent company.

Recent figures show that members of not-for-profit-funds are better off than those in profit-generating funds – enjoying either lower premiums or higher benefits, or a combination at the two. Members of not-for-profit funds received on average 88.9 cents back in benefits for every premium dollar paid, compared to 84.8 cents for members of Australia’s top three for-profit funds – Medibank, Bupa and NIB – which have two-thirds of the market.

For-profit health funds are generating huge profits (Medibank Private’s 2018 profit was $445 million), while consumers are coping with premium rises that are typically well above the rate of inflation, as well as a declining percentage of government premium rebate.

Not-for-profit health funds include Defence Health, HBF, HCF, and Mildura Health. A full list of not-for-profit funds is available online.

Note that some not-for-profits impose membership restrictions, however many do not. Not-for-profit health funds also tend to have a lower incidence of preferred provider agreements and differential rebate schemes, which can also benefit the consumer.

In any discussion around private health insurance, distinction needs to be made between Hospital cover and Extras cover. Dental benefits fall exclusively under Extras cover. Unlike Hospital cover, Extras cover is not required to avoid the additional medicare levy, so there is no financial penalty from the government if Extras cover is not purchased.

Extras cover is also the area where Private Health Insurance companies make the majority of their profit, with margins as high as 22 cents in the dollar. To make this high margin on Extras cover, insurance companies heavily promote it in advertising material whilst simultaneously limiting the benefits which are paid out to customers. With profit margins so high for the insurance companies, it means that the the large majority of people would be better off dropping their extras cover and paying the full cost of dental, physio and optical treatments out of pocket.

Some large health funds also promise their clients that they will get a bigger rebate if they leave their dentist of personal choice and go to one nominated by their fund as a preferred provider. This promotion is made with no regard to the relative experience or quality of the dentists and dental practices involved. Patients are also not made aware of the details of the preferred provider agreements and what impact these agreements may have on the quality of treatment that they are provided.

Most Private Health Insurance companies are big businesses generating big profits, at the expense of their customers. For example, in the 2015 financial year alone, Bupa generated $328.7 million in profit in Australia for its UK parent company. In the 2016 financial year, Medibank Private generated a profit of $417.6 million.

With health insurance premiums typically rising at well above the rate of inflation each year, we would encourage everyone to ensure they feel they are getting full value from the premiums that they are paying out for Extras cover. If Extras cover is considered a necessity, another option is to consider buying it from one of the smaller not-for-profit mutual providers (e.g. Defence Health, HPL). These providers typically pay out more of the premiums received, and do not practice discriminatory differential rebates.

[Source: ‘Dental patients exploited by large health insurance funds’ By Graham Middleton, BA, MBA – Australasian Dental Practice – September/October 2016]

We accept rebates from all major private health insurance companies. These rebates must be processed on the day of your treatment.

In recent years, some health funds have introduced ‘preferred provider’ schemes which claim to decrease your out-of-pocket costs, at the expense of your health fund dictating to you which dentist you can see. These schemes do not take into account the experience or quality of the dentist and dental practice. Preferred provider schemes also impose restrictions on dental practices which could result in compromises in the delivery of patient care. The Australian Dental Association states that ‘preferred provider’ arrangements are more about the bottom line for Private Health Insurers than health outcomes for patients.

At Goodwood Dental, we do not believe that preferred provider schemes are in the best interest of patients and consequently we are not a member of any preferred provider schemes. We commit instead to providing our patients with:

• experienced, dedicated dentists and staff with high order clinical, administrative and interpersonal skills,
• honest, accurate and reliable advice, information, treatment and care to patients at reasonable prices,
• safety and care at all times through best practice sterilisation procedures and modern, state-of the-art equipment, and,
• a welcoming, clean and comfortable patient environment.