Zip up your pockets: Australian specialists can charge whatever they want

Whilst private health insurance often cops the blame for ludicrous out-of-pocket-costs, there is another factor at play – doctors' fees.

Millions of Australians fork out big money for private health insurance believing it will give them their choice of specialist, but even with insurance the out of pocket costs are sometimes out of their price range.

Many are quick to blame their health insurance fund but there could also be another issue you need to consider. Your specialist could be charging overly high fees.

Specialists in Australia are free to charge whatever fee they like. There is no restriction on their pricing.

Australia is an outlier when it comes to specialists' freedom to charge. Other countries with comparable health systems, including France and Canada, don't allow doctors to charge whatever they like. Australia is the only country in the OECD that allows doctors complete price freedom.

Some may argue that it's a free market and that you should shop around for cheaper specialists.

Unfortunately, the free market doesn't necessarily work that well in the health sector.

People are often making decisions in times of stress and under time pressure. We are also inclined to go with the specialist we were referred to and trust the doctors will charge a fair price. There's also the issue of the mounting cost of multiple initial consultations that makes it difficult, if not impossible, to shop around.

A recent ABC Four Corners investigation revealed that while many think a higher fee equals better service, this isn't the case. In fact, in rare circumstances, doctors may charge a higher fee than a competitor to give the impression that they are better surgeons just because they are more expensive.

It might seem that the obvious solution is just to increase Medicare or private health fund rebates to match the doctor's price. But in turn, doctors might increase out-of-pocket costs in a classic case of testing 'what the market will bear'.

The Australian Government's out-of-pocket committee was formed at the end of 2017 to address the large and sometimes unanticipated out-of-pocket medical fees some patients face. They have proposed that patients should have access to the fees and charges of doctors before their first appointment – before it gets harder to back out.

Most doctors are unlikely to be ripping off their patients, but it's worth being aware that doctors can set their own fees and that you have the right to find another doctor is you are not happy with the price.