Does private health insurance help or hinder New Zealand’s health system?

Recently I was asked whether private health insurance helps or hinders the public health system and my immediate reaction was “of course it helps the public system by….!”

But putting that initial gut reaction aside, I put myself into the shoes of those working in the public sector and started to question whether we do in fact encourage top surgeons to move out of the public sector. Does the presence of the private sector contribute to further inequities in health outcomes?

It is generally accepted that surgeons are paid more in the private sector than in public, and it could be argued this disparity could be discouraging surgeons from working in the public sector. However, what we are really seeing is that most surgeons working in a private setting also continue to work in the public sector. Arguably the higher pay rates they can command in the private sector subsidises their public earnings, thereby keeping world class surgeons here in this country.

Retaining quality surgeons in both the private and public sectors should be a key priority for maintaining the high standards of healthcare in this country and is a way that private health insurance can support the public health system.

Private health insurance contributes more than a billion dollars to the health sector annually and this money is often used by private sector providers to partially fund the introduction of emerging technologies such as PET scanning, robotically assisted surgeries, and development of facilities to manufacture radioactive isotopes used in diagnostic imaging across both the private and public health sectors.

New Zealand’s two tiered health system does introduce overall inequities where some people are able to afford a wider range of health services than others. However, health insurance can also help to reduce inequitable outcomes by encouraging those who can afford it, to take greater responsibility for their own health needs. By paying for around half of all elective surgical procedures in New Zealand, the private sector frees up public funding to deliver greater benefits to those who cannot afford private health insurance premiums.

Overall the public health system in New Zealand does a fantastic job but does have its limitations, particularly with regards to elective procedures. Private health insurance has a place in complementing public health services by picking up some of the slack in this elective surgery area, helping to fund innovation that benefits all New Zealanders and encourages those who can afford to look after more of their own health needs to do so.

Why transparency is a good thing

In recent years we’ve seen a spate of high-profile privacy incidents hit the media. Notorious examples abound: organisations passing on personal information to police and government agencies without reasonable grounds for doing so, huge data breaches (think Ashley Madison or Yahoo!), and instances of employees inappropriately accessing customer records. Intuitively we recognise that if an organisation is unable to assure its customers that their information is safe, people’s trust in it will be eroded.

But where does transparency fit in and what does it mean? If you ever hear a person described as being “transparent”, chances are it isn’t a compliment. When it comes to privacy however, being transparent is definitely a good thing. It’s about being upfront, open and honest regarding what you’re doing with personal information, and being accountable for keeping it secure. For Sovereign, it means ensuring we are responsible custodians of customer data for the duration of the time we hold it.

When I began working here, I quickly came to understand just how sensitive some of the information we hold is – medical records being just one example. Thankfully, I’m happy to report that Sovereign takes its’ obligations to protect your privacy seriously. We know that the relationship we have with you is built on a foundation of trust, so let’s put our cards on the table and be transparent about a few things:

  • Our Privacy Policy outlines how we collect, use, disclose and protect your information;
  • You have the right to request access to a copy of all the information we hold about you;
  • Sovereign has a team which specialises in responding to Privacy Act requests made by individuals, as well as requests for personal information made by the police and other government agencies;
  • We won’t release your personal information to the police or a government agency without your consent unless required by court order or legislation, or we believe there are reasonable grounds for doing so (such as where there is a serious threat to your safety or the safety of others); and
  • If we consider a government agency is asking for more information than necessary, we’ll push back and ask them to explain why before making a decision on the request.

So next time you wonder what we’re doing with the information we hold about you – just ask. We’ll be happy to tell you.

Let us know if there are more privacy and data issues you would like our Privacy Specialist Tony Collins to cover in future blogs.

Making your claims experience easier

The claims process for life and health insurance is quite different to general insurance and it’s important to have realistic expectations about how long things will take.

Our claims team is set up to ensure that customers are supported and fully informed throughout the process with clear case management and accountability. We understand that our customers are contacting us at a difficult time in their lives and we want to do everything we can to make things easier for them.

We also want to pay claims as quickly as possible, in fact it’s easier for us to pay a claim than decline it. But the process can be complicated and there is essential documentation that we need to gather, which can take time.

Where we are most likely to experience delays is in getting medical information from third parties. You can help to speed up the process by keeping detailed medical and specialist notes, including referrals, together so you have access to them when you need them.

Early notification is key to helping the process along. The earlier you make contact with your insurer, the quicker things can get started. Disability Income claims are a good example. We can start providing proactive rehabilitation that allows clients to return to work sooner than expected. This can occur before a benefit payment is made.

If you have an adviser they can make the process much easier for you at claim time. If you give full consent when you lodge your claim, your adviser can manage the process on your behalf. Their understanding of the process can make a huge difference during a difficult time. They can also regularly review your insurance with you and help you understand exactly what you are covered for.

Here are my top tips to improve your claims process:

  • Notify us as quickly as possible so we can get started.
  • Talk to your adviser about the benefits of joint ownership on your life policy.
  • Keep copies of your medical notes and referrals.
  • Regularly review your policies and understand what you are covered for.
  • Build a relationship with an adviser to set up and manage your policies.
  • Understand that information gathering at time of claim can take time and we’re working as hard as we can to pay your claim.

Are you making good financial choices?

In 2015, US insurer Prudential ran a series of ad campaigns highlighting the biases that lead people to make poor financial decisions. These biases, known as “heuristics”, are mental shortcuts that enable us to make quick decisions that are practical but not necessarily optimal.

Heuristics served our Neanderthal ancestors well back when decision making was simple. For example, if Ancestor Joe wrongly assumed that a strange red fruit was poisonous, he would have missed the opportunity to enjoy a delicious snack. In modern times, decision making is far more complex and the stakes are higher, particularly in financial matters.

I was recently reflecting on decision making in the context of insurance. Consider these facts: about 90% of Kiwi motorists have car insurance, whilst just 25% of income earners hold income protection cover. Why the gap? The Financial Services Council offers some possible explanations:

  • Kiwis are more familiar with car insurance than income protection insurance;
  • Reliance on ACC for income support; and
  • Perception that income protection cover is too expensive.

Another possible explanation is the concept of “loss aversion”. Studies have shown that the pain of a loss is twice as great as the pleasure of a gain. In other words, people are more worried about paying for damage to their car after an accident than the risk of losing income if they are unable to work due to injury or illness.

Don’t believe me? Imagine how much more likely you would be to purchase income protection cover if you received your annual salary at the start of each year and you were required to pay it back if you were unable to work.

Another heuristic that leads us to make poor insurance choices is “availability bias”. We tend to worry about things right in front of us. A famous study by the founders of Behavioural Economics, Daniel Kahneman and Amos Tversky, showed that people assessed the risk of an earthquake in California to be greater than the risk of an earthquake in the United States. The study exploited the fact that earthquakes commonly occur in California and are often reported on by the media. Therefore, it’s not surprising that we tend to be more concerned about car accidents, which most of us are regularly exposed to, than disablement.

You can check out the Prudential ads here. And to avoid potentially costly financial mistakes, it pays to get some good advice.