With the constant badgering of big private health care companies convincing you to sign up with them, it’s difficult to look past what they have to offer. You can’t escape them, whether it’s TV commercials, pop-ups on your laptop, the radio, among other ways of getting into your home, they’re just…there.
However, if you can push this constant colossal marketing to one side, you will discover that underneath these health insurance giants holding the industry to ransom, there are other health care companies who put all their money back into their members. These companies potentially offer you more affordable health insurance and potentially bigger benefits. These companies are called not for profit.
A big part of your search for the perfect health insurance provider may be your desire to be with a not for profit health insurance company. Different health funds have different business structures, and, in that sense, not for profit health funds are no different, but it’s the principles behind the structures which split the two.
How are they different?
It should be mentioned that 30+ years ago, all health care providers were structured as not-for-profit/mutual organisations. But, when you see today that Australia’s largest private health insurer is Medibank, which represents 3.8 million people, commanding a 29% market share in the industry pie, it seems the culture has shifted. Bupa closely follows with 27%, and NIB and the ahm brand (a Medibank brand) are increasingly growing their market share. Medibank/ahm, Bupa and NIB are all for-profit businesses – a telling tale regarding their dominance in recent times.
The key difference between the two is that if a health fund is listed as 'not-for-profit', this means it is a mutual organisation, with the premiums paid into the fund used to operate the business and cover benefits for members. 'For-profit' funds aim to return a profit to their owners (which may be another health fund or corporation) or shareholders. Therefore, if it is a not for profit company you are looking for, then your options are slightly more niche, but nevertheless, you do still have choices to make.
If you are looking for not for profit health care providers, you need to be able to spot the key differences between those and for profit providers when conducting your search online. Let’s break that down here in short definitions:
Essentially, a 'for-profit' health fund (such as Bupa, NIB and Medibank) aims to return a profit to their shareholders and/or owners, which may be another health fund or corporation. They are still required to maintain sufficient funds to operate the company and pay benefits to their members, but are not obliged to put in more than is needed back into the service.
In comparison, a 'not-for-profit' health fund (like HIF) is a mutual organisation, with all premiums paid into the fund being used to operate the business and cover benefits for its members.
This hopefully makes the differences clearer. The most important factor you would probably care for most is that the not for profit health funds Australia has to offer make it all about the members. Conversely, for profit organisations have to answer to their investors who are always looking for a return on investment, regardless of the need for improvement of service. This means that any profits made are, more often than not, returned to the investors’ pockets. The patient is punished as a result as the services are not improved with a long-term model in mind.
But what extra benefits do these not for profit members get when comparing those signed up with for profit providers? Let’s take a look:
If the insurance fund has returned a higher percentage of premiums to their members than the for profit organisations, they can enjoy added benefits in the service.
This means that the end of year surplus is put back into processes, in the form of reduced premiums and additional benefits. This could range from more doctors being hired, and a new facility being built, or a more available call out service and faster access to scans and x-rays – the potential for expansion is endless.
Now you know the difference, you need to have a plan of action when finding the best not for profit health insurance for either yourself, you and your spouse, or even your family, if applicable.
When searching for a health fund, the standard Google search would be the best way to start, which will give you an endless list of search results, but this can be confusing. It would be wise to use a comparison website so you can generate a list of health care providers on one page to easily navigate between deals and decide on which one best suits you.
But it’s during this stage that most people miss a vital part of the research process. These comparison sites will give you a list of not for profit health funds with only the top-level information on show. It is common for people to look at the policy first, and then the policy benefits. This is all well and good, but if you are looking at a list of non profit health insurance companies, be sure to check the business structure of each organisation, which will give you a true indicator of their intentions with company profits. You may not be able to find this on comparison websites, so may need to dig a bit deeper on each company’s website, or even give them a call and speak to a consultant about their business model.
There is no reason for not for profit companies to have a vested interest in offshore activities. Not for profit organisations should give you peace of mind about who owns the insurer. Bupa is owned by an overseas corporation, so profits end up offshore. Medibank and NIB are based in Australia, but are effectively owned by their investors, not their members. If this is an important deal breaker in your search, then do take the time to do a bit more digging around this, as this information will unlikely be on the surface of basic search results and comparison websites.
Another benefit you will receive by deciding to go with a health fund not for profit, is that many of the companies are part of the collective Australian Health Service Alliance which means that if you become a member, your health fund will actually have more doctors and hospitals on contract than many of the larger for profit funds.
If you are already with a health insurance company and want to change, but feel it will be too difficult, or too much hassle, you may be surprised. Switching providers is a more common occurrence than you think. In most cases you can simply join your new fund online or contact the fund directly and your new health insurance provider will contact your previous provider on your behalf to arrange the transition. And if you are still unsure, just give your provider a call and get them to give you a side-by-side comparison with the provider you are considering moving to, irrelevant of whether one is a for profit and the other a not for profit health insurance company.
Hopefully this article has helped give more clarity on the differences between for profit and not for profit providers and even gives you some direction for which type of provider you want to belong to. But, in all cases, taking the route that is best for you and your family is surely the right path to take.