Is private health insurance worth it? Picture: iStock

Who wants to spend Saturday — even a cold Saturday — making a spreadsheet of costs and benefits?

There’s always Medicare, which you’re already paying for anyway. Why the heck would you fuss with the administration of buying insurance? Not to mention it can cost over $60 a week for a single.

You probably wouldn’t get it … except the government knows that and has set up all manner of snakes and ladders which take you to the square that says: Go On, Buy Health Insurance.

HAPPY 31ST, SUCKERS

For starters, there’s the Lifetime Health Cover surcharge. This sneaky thing raises the cost of private health cover if you’re over 31. If you get in the system straight after you turn 31, you pay no surcharge. Every year you delay, the surcharge goes up 2 per cent. If you wait till you turn 40, your premiums are 20 per cent higher. Ow.

This tax (it is a tax — the extra 2 per cent goes to the government) is to make people join private health cover early and stick to it.

Is it enough to twist your arm? Let’s do some maths. If you wait til you are 35, you’ve saved four years of insurance, (400% of the policy premium). Then you pay 8% extra for another 10 years (the loading only lasts 10 years). That works out at 80% of a year’s premium! By itself, it’s not enough.

But as every investor knows, future costs are worth less than current savings. Not to mention this is a government policy that could change — the 2 per cent surcharge may not remain for ever. By itself, it’s not enough.

MOAR TAX INCENTIVE!

The government is not finished trying to push you around. There’s another incentive. A real kicker.

Government has set up all manner of snakes and ladders.Source:Supplied

Scott Morrison will take between $1 and $1.50 of every hundred you earn — if you make more than $90,000 a year and don’t have private health insurance. This is the Medicare Levy Surcharge.

A realistic scenario is someone who made $95,000 paying an extra $950 in tax. That alone would fund a health insurance policy of $18 a week, just to get the tax savings. (Of course an $18 a week health insurance policy is not much of a policy.)

A family making $300,000 a year would pay an extra $4500 in tax if they don’t have private health. The richer you are the bigger the incentive.

BUT WAIT

There’s more.

The government will also pay a private health insurance rebate. If your family makes less than $180,000 a year you’ll get 27 per cent of your insurance premium back. Cha-ching-a-palooza.

ARE THERE, LIKE, ACTUAL HEALTH REASONS TO BUY HEALTH INSURANCE?

Maybe. If you search carefully. You could get lucky and find a policy that is useful when you’re sick, instead of just at tax time.

It turns out when everyone is buying health insurance for tax reasons, bad things happen. CHOICE has identified heaps of what it calls Junk Policies.

“It’s ludicrous that consumers pay thousands to insurers for these poor-value policies to avoid government surcharges but have to turn to the public system when they get sick as their insurance is effectively useless,” says CHOICE head of media Tom Godfrey.

Just this week, Medibank Private got dragged through the mud. It has been taken to court by the ACCC for misleading and unconscionable conduct. So choose your policy carefully.

WHERE DID WE END UP?

Right. If you make over $90,000, it probably makes sense to buy a cheap policy at least. More so if you just turned 31. Even more so if you make CEO money.

For the rest of us, ask if you feel comfortable relying on the public system, which is famously pretty good for emergencies but a bit less hot for elective surgery. If you expect to be healthy, maybe you don’t buy. If you expect the government to rip a whole lot funding out of public health, maybe you do buy.

Ultimately your comfort level is about you. Some people can’t sleep at night if they’re not insured to the eyeballs. Other people float along with a que sera attitude.

So: the summary. Rich, paranoid and sick: Get it. Poor, chilled out and healthy: Don’t.

Jason Murphy is an economist. He publishes the blog Thomas The Thinkengine. Follow Jason on Twitter @Jasemurphy