Health insurance and psychiatry – covered or not?

In these increasingly difficult financial times, more Australians with private health insurance are questioning whether to stay or leave as the premiums increase annually with questions such as ‘is it worth the cost?’, ‘would I be better off in the public health system?’ or ‘am I getting the benefits?’.

My organisation, the Private Mental Health Consumer Carer Network (Australia) (hereafter Network) represents Australians who have private health insurance and who receive their treatment and care from private hospital settings for their mental illnesses so we believe we are in a good position to speak about health insurance and psychiatry.

In order to understand the extent of the private psychiatric hospital sector to which this article relates, it is important to provide some basic statistics. There are:

  • 68 private hospitals providing specialist psychiatric care
  • 3,200 beds
  • 36,000 people accessing these services every year

Private hospitals treat patients with the full range of psychiatric conditions: depression and affective disorders, psychotic disorders, PTSD, anxiety disorders, alcohol and substance abuse, eating disorders and personality disorders.

The Network is very concerned as to what we understand are the increasingly discriminatory practices by health funds to psychiatry cover which affects people now and in the longer term. In our opinion, it would seem that the larger companies are intent on removing psychiatry cover from their products. This is an appalling position given that the statistics above show that this affects 36,000 Australians. We know this would not happen in illnesses such as cancer, cardiology, orthopaedics etc.

We are also concerned about the possible categorisation of health fund policies into Gold, Silver or Bronze with psychiatric cover being flagged for inclusion in only the Gold or highest level of cover. If this becomes the adopted Government policy, it will remove the mandatory cover as currently exists under legislation and dramatically reduce patient access to vital psychiatric services.

Current regulations ensure that health funds are obliged to pay at least a minimum level of benefits for mental health services. Even though restricted cover for psychiatry can leave consumers with an out-of-pocket cost, the assurance that some level of cover will be provided and that consumers can switch cover with a waiting period of only 2 months means that consumers with private health insurance are able to access timely care.

Many people with mental illness have limited funds, for example those on Disability Support Pensions. They go without in order to pay their health fund premiums to ensure timely access to private psychiatric hospitals. For some people it comes as a surprise to learn that their fund does not fully cover psychiatric admission. This then necessitates referral to the public system or face a large gap payment. So any alternative funding model to cover private patients in public hospitals as might be the case with other specialities, could be very problematic for people with mental illness given the already overstretched public mental health system.

Health funds limit the level of benefits provided in numerous ways, some of which are of serious concern.

Some health funds are declining to recognise and fund evidence-based programs such as day programs and hospital outreach programs that provide the interventions necessary to avoid more expensive overnight care.

Current re-insurance arrangements for private health insurance mean that there is a disincentive for health funds to fund innovative community care modalities. This gap in current government policy translates into services not being available for the privately insured patient. Innovative programs could ensure continuity of care and provide an essential adjunct to reliance on inpatient and psychiatrist led services particularly for those patients already in therapeutic relationships.

When consumers are referred for admission to a private psychiatric hospital it is not uncommon for them to find that they are not fully covered because their fund does not contract with the hospital in question or because the insurer has declined to recognise a particular program. Health funds often restrict the amount of cover provided in some policies by:

  • Limiting the number of days a person can access day programs in a year
  • Only covering a limited number of ECT treatments per year, usually 10 treatments.
  • Imposing a benefit limitation period so that a consumer is forced to wait longer than the statutory two month waiting period.

Other issues for health fund members requiring access to private psychiatric hospital services include:

  • Many consumers have difficulty in accessing accurate and complete information about their policies.
  • For some people who have private health insurance it comes as a surprise to learn that their insurance does not cover psychiatric admission. This then necessitates referral to the public system (if available), or acceptance of a large gap payment.
  • Health funds cover day admission programs however there is confusion by consumers as to what kind of day programs and the number of sessions covered under their policies.
  • Consumers have limited ability to compare policies particularly as they pertain to psychiatric care.

There is a clear need for better information and communication by health funds to consumers about whether they are covered for psychiatric care and the extent of inclusions and exclusions on their policies. It would seem that there is insufficient transparency and consistency regarding the features of health fund policies for psychiatric care to enable consumer to make informed decisions.

We are also aware that the Private Health Insurance Ombudsman pays particular regard to correct and prudent information. We regularly refer our members to the Government’s website of: which provides good, independent information about health insurer policies.

So in terms of health insurance cover for psychiatry, there are lots of things to be wary of. Make sure you know what your policy covers, the extent of your cover, what are your exclusions, excesses and any other issues which might affect you if you need private psychiatric hospital services for your mental illness or disorder.

Private Mental Health Consumer Carer Network (Australia) Ltd is at