Insurance

Covid-19 makes medical insurance essential

Steve Wright discusses why private health insurance is even more important in a Covid World.

With qualifications in law, economics, tax and financial planning, Steve Wright is General Manager Product at Partners Life.

While it’s unlikely private medical insurance will pay for treatments associated with acute or life- threatening Covid-19 infections – that’s a function for the public health system - it may fund private treatments for non-acute complications caused or exacerbated by the disease.

Private medical insurance will also fund most non-Covid-19-related, elective and non-acute treatments provided by the private health system. These treatments would ordinarily be reasonably available through the public health system, but may become unavailable due to capacity constraints.

Capacity constraints in the public health system are of concern around the world. Caused by a combination of factors - the numbers of Covid-19 patients, restrictive hospital protocols required during a pandemic, and staff shortages when isolation is required - these added burdens increase the time taken by the public health system to perform non-Covid-19-related treatments.

Covid-19 has forced its way to the front of the public health medical queue, pushing other important treatments aside

‘In a pandemic, we are less likely to be able to get the treatment we need from the public health system within an acceptable timeframe’

Of course, one solution is private medical treatment, but you have to pay for it. Private medical insurance provides the money for approved private treatments, allowing quicker access, often with a greater choice of treatment, than might be offered through the public system.

Private medical treatment also relieves the public health system from having to provide a great deal of medical treatment - in particular, diagnostic tests and elective surgery - for the insured public. This takes pressure off the public system and allows it to perform its part pretty well for the uninsured.

What would happen if significant numbers of people gave up on medical insurance and relied solely on the public health system? Wouldn’t it be completely overwhelmed, even without Covid-19, at least for many years? What kind of access to public medical treatment would be available if this happened? Giving up medical insurance might simply mean we can’t get treatment in the public health system and still need to access private medical treatment, but now would have to pay for it ourselves – somehow!

As I mentioned above, treatment of Covid-19 will add significant stress on the public health system. Media reports already tell of the public system falling behind in performing elective procedures, many of which will probably not happen at all, since “catching-up” is nigh on impossible due to limited resources

which were already close to capacity before Covid-19. If you need a hip or knee replacement or, indeed, cancer surgery or any other non-emergency treatment, how long will you now have to wait for it in the public health system? Covid-19 has forced its way to the front of the public health medical queue, pushing other important treatments aside.

In a pandemic, we are less likely to be able to get the treatment we need from the public health system within an acceptable timeframe. Having medical insurance will provide the funds to get covered treatments done in the private system. In short, private medical insurance was important before Covid-19, but is even more so in a Covid World.

An adviser I spoke with recently asked me what would happen if Covid-19 completely overwhelmed our public health system? Would Covid-19 then be treated in the private system?

I don’t know the answer, and I hope this does not happen, but let me speculate. I suspect the Government may have emergency powers to requisition private health resources, to relieve extreme pressure on the public system. What happens if we can’t get our knees, hips or cancer surgery done in an acceptable time in either the public or the private health systems? Here is the next reason why medical insurance remains especially relevant in a Covid World: good medical insurance will pay for covered treatments overseas if the required treatment can’t be accessed in New Zealand within the medically recommended time periods.

I’m confident we will conquer Covid-19 in time, and I really hope the public health system can continue to cope with the added pressure of Covid-19. In New Zealand’s two-tier health system - public and private - we need both health sectors to be strong. They rely on each other to provide us with the best medical treatment.

Right now, even though my medical insurance won’t pay for acute Covid-19 treatment, I am aware of all the other health problems which may arise unexpectedly, as they have always done. It is of great comfort to know that if I need surgery in the private health system, or even overseas, my medical insurance will make the funding of it possible.

Every adviser should ensure that every client, or potential client, understands the value – indeed, the increased value - of having private medical insurance in place during a pandemic. ✚

This article is for information purposes only, its content is intended to be of a general nature, does not take into account your circumstances, situation or goals, and is not a personalised financial adviser service or legal advice. It is recommended you seek advice from a suitably qualified professional before you take any action or rely on anything stated herein.