The Hidden Toll of Health Trauma: How Australians Are Paying the Price

Since her breast cancer diagnosis in 2019, Sydney-sider Eliza*, a 50-year-old accounting professional, has spent more than $50,000 in out-of-pocket costs in just 4 years.

These include more than $30,000 for multiple surgeries, with the cost of anaesthetists and assistant surgeons catching her by surprise. Reconstructive surgery left her out-of-pocket another $14,000, and ongoing oncologist appointments for biopsies and scans often exceeded $500 each time. Chemotherapy and other medication treatments have caused dental complications, meaning Eliza will also need expensive implants in the coming year.

Eliza’s story is unfortunately indicative of the major health challenges faced each day by many Australians.

According to AIHW data , the largest contributors to the total burden of disease in Australia beyond cancers (17%) are musculoskeletal conditions (13%), and cardiovascular disease (12%), which each also incur significant financial strain.

Yet, in spite of Australians benefitting from one of the world’s leading public health systems, the financial burden of critical healthcare is increasing as costs rise. This burden is increasingly borne by individuals, and includes direct financial out-of-pocket costs paid for the diagnosis, treatment, and management of their conditions. Indirect costs, in the form of potential lost wages and other employment earnings, are also borne by the patient.

Rising Healthcare Costs and Underinsurance in Australia

Over the 10 years to March 2023, health inflation was 57.5% higher than headline inflation as measured by the consumer price index .

In real terms, the average cost of out-of-hospital services and medications have increased 50% in the last 10 years . For those who choose to pursue treatment as a private patient, these out-of-pocket costs can often be much higher. Out-of-pocket costs for professionally employed private patients can be anything from two to ten times higher than those having the same condition being treated publicly.

In 2020-21, an estimated 400,000 Australians missed or delayed seeing a GP at least once during the year because of cost, and about 500,000 missed or delayed essential specialist care because of cost . Over the same period, an estimated half a million Australians missed or delayed prescribed medication due to financial constraints.

Cancer, which tops the list of common health traumas in Australia, is estimated to have a total average lifetime cost of $1.3 million , including $644,599 ‘burden of disease costs’, $418,000 in lost productivity, and $134,000 healthcare costs including medication.

Despite all this, many Australians remain underinsured – the Financial Services Council Australia’s Life Underinsurance Gap: Research Report estimates there are 1 million underinsured for death/Total & Permanent Disability (TPD) and about 3.4 million underinsured for income protection insurance.

It’s clear that more can be done to close the gap between the incidence of health traumas and our preparedness levels in Australia.

Costs are even higher for professionals

As physicians, the health of patients is always our top priority. But what about our own wellbeing, both physical and financial?

No medico or healthcare professional should ever overlook his or her health, nor underestimate the financial challenge presented in the event of an unforeseen critical health event. Understanding the financial implications of major health traumas is key not just for our patients but also our own financial security.

High-earning professionals will generally suffer a greater financial impact for any given health trauma, relative to the overall population.

There are three drivers of this, which I have termed here the ‘triple bottom line’ impact:

1) High-earning professionals will almost always be treated as private patients. The out-of-pocket costs for private patients can be anything from two-to-ten times higher than those having the same condition treated publicly .

2) High-earning professionals will generally suffer a ‘postcode multiplier’, paying more for procedures performed in more affluent areas. A double hip replacement in Sydney’s East costs 14% more in out-of-pocket costs than the same operation performed in Sydney’s North, and a staggering 280% more than in other parts of NSW a report by PPS Mutual found.

3) The income lost through time off work is substantially higher for professionals, meaning some absences can leave the patient foregoing tens or even hundreds of thousands of dollars.

Many professionals also assume that their private health insurance covers payments for professional services including radiology and pathology that occur out of hospital. Unfortunately, the reality is that private health insurance only covers treatment undergone within a hospital setting. What this means is that every PET scan, CT scan, MRI, or expensive pathology test comes with out-of-pocket expenses. Another consideration is that investigations and treatment over time are now increasingly performed out of hospital, as our healthcare system becomes more technologically advanced.

As professionals, it’s important we acknowledge this disproportionate ‘triple bottom line’ impact and take steps to ensure we have sound financial planning and risk protection in place.

Just as we advocate for our patients’ health, it’s also important to safeguard our own health and financial security. Recognising the potential financial implications of unforeseen health challenges allows us to take proactive steps, such as seeking appropriate financial planning, risk insurance, and income protection, to set ourselves and our loved ones up for success.

*Name changed to protect privacy.