Private Health Insurance information in Australia

The importance of insurance is mostly felt during times of crisis especially when it comes to dealing with natural calamities. The floods that ravaged Queensland, New South Wales and Victoria resulted in massive losses of property and income especially for those business owners that have been totally wiped out by the rising waters. Other than the material things that were lost and destroyed, health is greatly affected as more people get into contact with possible sources of disease and infection. Clearly, the role of health insurance providers also takes center stage in the drama created by the floods.

There was so much destruction that can only be rehabilitated in equal proportions, pressuring the Federal Government to provide monetary assistance that may be partly taken from the Future Fund. An estimated $20 billion is said to be needed to help the affected areas fully recover from the aftermath of the floods. The government hopes to work together with the private sector in order to come up with a budget without the need to dig into the nation’s coffers or accessing the Future Fund. Doing so may set a precedent that will push the government to always use the Future Fund as a back-up plan for any crisis, burdening the taxpayers who will assist in building the fund.

In truth, the Future Fund was created to respond to the issue of unfunded liabilities by the many and differing indexed pension superannuation programs. Sadly, the members of these pension funds will now face fast increasing unfunded superannuation liabilities due to an increase in long term and insufficient investment returns in the past couple of years. The liabilities have clearly outrun the Future Fund assets. In addition, the fund at present will be able to cover on;y about 50% of the liabilities. This would simply mean that using the future Fund, which may offer the quickest solution, will most likely create more problems by contributing to future liabilities.

The government is clearly facing a financial dilemma mainly because of ill-suited policy making decisions in the past that have contributed significantly to the pressing problem of unfunded super schemes. The burden is placed on future citizens and taxpayers for the Commonwealth along with the state governments have clearly been unable to get insurance like property insurance or health insurance as well as failed to create a reserve in times of calamities. The long standing decision is towards self insurance, which is best explained as choosing not to purchase insurance plans and taking the risk to pay for the cost of accidents or destruction brought by calamities.

Clearly, our governments have utterly neglected to create reserves and build assets to cover any expense that may arise one way or another like say after a 50 or even 100 year flood. What happened is that the states have relied on a false feeling of assurance provided by the sharing arrangements of the Commonwealth with its long existing emergency relief burden fund. Unfortunately, such unforeseen events like the flooding have resulted in such huge expenses that may be too immense for the Federal Government given its financial situation. Now it is clear that the government needs to beef up its financing in more sustainable levels in order to cover for vital insurance products like health insurance as opposed to the far riskier self insurance.