The Economics Of Oral Care & Private Health Insurance

“Australia ranks well when it comes to total dental care expenditure. But a closer look at the numbers reveals that trips to the dentist are a luxury many people can’t afford. Australia spent $11.1bn on dental care in 2021–2022, ranking it sixth out of 31 OECD countries for per capita expenditure. At first glance, that statistic seems pretty good. Dig deeper? Not so much. That’s because Australia performs very poorly on public funding of dental care, sliding to 23rd in the OECD, according to the Australian Dental Journal.”
– The Guardian

The brutal truth of the current situation is that ageing Australians need to have private health insurance to cope with the steep costs of oral care for failing teeth. A healthcare service which costs over $11 billion per annum means big bucks being charged for necessary procedures and treatments. The standards of dental care in Australia are high but we pay for them.

Dentistry In Australia & Private Health Insurance

“Private health insurance plays a key role in financing dental care in Australia. Having private dental insurance has been associated with higher levels of access to dental care, visiting for a check-up and receiving a favourable pattern of services. Associations with better oral health have also been reported. “

Private health insurance (PHI) plays a key role in the financing of dental care in the Australian health system.1 In 2012–2013, 12% of all spending on dental services was funded indirectly by individuals via PHI.2 The Australian PHI industry is highly regulated and is directly subsidised by the government via a means-tested 30% insurance premium tax rebate. “
– Gnanamanickam ES, Teusner DN, Arrow PG, Brennan DS. Dental insurance, service use and health outcomes in Australia: a systematic review. Aust Dent J. 2018 Mar;63(1):4-13. doi: 10.1111/adj.12534. Epub 2017 Sep 11. PMID: 28543627.

The above academic review clearly suggests that those with generous private health insurance plans, especially when it comes to dental, end up with better teeth. The private health scheme invariably involves them in their oral care on a more day to day or consistent level. The customer’s monthly payments to the insurer engages them with the ongoing care of their teeth and gums. The fact that they benefit from discounted rates on their dental care every time they go to the dentist encourages more regular visits.

Conversely, those Australians without this cover are far more likely to avoid going to the dentist because of the cost. This means fewer checkups and more emergency dental incidents, which are more expensive and painful. Thus, the messaging of the dental clinic about regular checkups falls on deaf ears for many of those Aussies without private dental cover. This situation is exacerbated by the fact of Medicare, where all other parts of the body are covered by a universal health insurance scheme.

Is Private Health Insurance’s Dependence Upon Dental A Barrier To More Universal Oral Care Cover?

To understand this dependence imagine if oral healthcare was suddenly covered by Medicare. What would the private health insurance sector do if this essential healthcare disappeared from their exclusive remit? The value of plans would plummet and the industry would be in real trouble.

Private health insurance cover for dental care appears to function well for those who can afford the monthly premium payments and are committed to the scheme. Indeed, it is something, particularly for dental care, which should be in place for all adult Australians. Perhaps, a more tightly focused scheme entirely for dental cover would be a better and more attractive product for more Australians not currently covered?

“A total of 14.7 million Australians hold private health insurance cover and accessed more than $23.5 billion in health and medical benefits paid by insurers in 2023.”
– Health.gov.au

The adult population is probably around 21 million over 18 years old. Thus we are left with some 6 or 7 million folk uninsured for dental care.

“Australian Government expenditure on dental services fluctuated over the decade to 2021-22, from a high of $1.9 billion in 2011–12 to a low of $1.2 billion in 2013-2014 with expenditure remaining relatively stable between 2014-15 and 2021-22 at around $1.3 billion. Across the period, expenditure declined at an average annual rate of 3.6%. Overall, state and territory government expenditure on dental services grew at an average annual rate of 0.6%. Expenditure fluctuated over the decade; ranging from lowest expenses of $725 million in 2012–13 to highest expenses of $963 million in 2021–22.

Between 2011–12 and 2021–22, Australian Government per capita expenditure on dental services fluctuated between $50 in 2019-2020 and $83 in 2011-2012, declining overall at an average annual rate of 4.9%. State/territory and local government per capita expenditure fluctuated during the period 2011–12 to 2021–22, ranging from $32 in 2012–13 to $40 in 2011–12. Across the period, expenditure declined at an average annual rate of 0.8%.”
– AIHW.gov.au

The state governments run limited dental services for those in poverty and provide free or part-free dental care for children under the age 17 in most states in Australia. The Australian Dental Association (ADA) has been pushing to expand government funding for elderly Australians in need of dental care. Australia has a poverty issue afflicting its older population demographic and this continues to go largely unassisted by federal governments of both political persuasions.

“The Australian Dental Association (ADA) doesn’t think any government will swallow the price tag of universal dental care, calling instead on the federal government to expand the Dental Benefits Act to provide more public oral health care for vulnerable groups, such as people with disabilities.

“By targeting those socio-economic demographics that need it the most, like those in aged care, Aboriginal and Torres Strait Islanders and those with low incomes, we could assist in turning around the burden of Australia’s oral disease,” says Melbourne-based ADA federal president Stephen Liew. “
– ADA.org.au

I suggest that clearer messaging to the public re-dental care costs and the need for private health insurance from the federal government, industry and related bodies is called for. A stand alone dental care cover plan from private health insurers would better serve the nation’s population. Reports that around 50% of those surveyed avoid going to the dentist because of fears that they cannot afford it are alarming for public health and should, also, be worrying for dentists.

“Dentists worry skipping out on essential oral care could mean a trip to the emergency room. Research from the Australian Dental Association (ADA) found two-thirds of Australians don’t visit the dentist yearly, due to affordability concerns. Up to 63 per cent cited high cost as the reason for delays. The ADA’s 2024 annual oral health survey of 25,000 people also found that only one-third of Australians went to the dentist for a regular check-up.”
– ABC.net.au

To Have Teeth, Or Not To Have Teeth

The economics of oral care and private health insurance are inextricably linked in Australia. The exclusion of dental care from Medicare has forged this strong relationship. Facts revealed from academic reviews show that those with private health insurance covering dental go to the dentist more often and consequently end up with better oral care. The consumer’s financial investment in their own healthcare engenders a more responsible behaviour, which is encouraged by the economics of discounted treatments.

The drawback to this is for those lacking the income to commit to private health insurance premiums either through unemployment or lack of employment. The high standards of dental care in Australia are, unfortunately, excluded from those that cannot afford its big ticket prices. The ADA want to see greater federal government investment in funding dental care for those elderly Australians currently unable to afford it. Poverty in old age is a real problem for Australia, with the housing crisis exacerbating this further. A two-speed economy has emerged via the ‘haves’ who own property and the ‘have nots’ who don’t. Dental care is fast becoming a demarcation point between these groups. Natural teeth fail in old age and if these folk lack private health insurance the remedial expenses can be in the many thousands of dollars. It becomes a black hole in which limited funds and wellbeing quickly disappear.

A life of eating mush and inhabiting the tinned soup aisle in the supermarket presents a grim reality for too many older Australians. Surely, a supposedly wealthy nation like Australia can do better for its aged citizens?

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