In the past 12 months, half a million Australians have ditched or downgraded their top-cover health insurance policies – and that’s got the government worried.

“Many consumers are unhappy with their private health insurance and if people needed proof it was a barbeque stopper, here it is,” Health Minister Sussan Ley said earlier this month.

In response to increasing dissatisfaction with the price of health insurance, the government launched an online consumer survey on November 8. Ms Ley said that in the first five days of the survey, which runs until December 4, 20,000 people had shared their views on how to make health insurance better value.

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So as it stands, is private health insurance actually worth the ever-rising costs?

Tom Godfrey, spokesperson for consumer watchdog CHOICE, says since 2009, there’s been cumulative price rises of about 35 per cent.

“It’s getting very expensive to have private health insurance,” he says.

Mr Godfrey says it’s a good time to ask yourself: “Why do I have it, and how’s it covering me if something goes wrong?”

He says taking out extras cover in particular can be poor value if you’re not using it.

“People often end up paying more in premiums than they get back in claims throughout the course of the year,” he says.

If you choose not to take out private health insurance, Mr Godfrey says you’ll be covered by the public health system in an emergency – and in many cases would end up there anyway even if you do have private health insurance.

Of course, there are some risks to not having private health insurance, says Mark Metherell, communications director at the Consumers Health Forum of Australia.

“The risks of not taking it out apply particularly for elective surgery,” he says.

“Many people as they get older need a hip replacement or have cardiac problems. They would wait longer on hospital waiting lists unless it’s acute.”

Mr Metherell says the average family may be facing premiums of $4000 a year or more, which is a lot of money in anyone’s language.

“If they need care, quite often they’ll end up finding their policy doesn’t cover the particular element of private hospital care,” he says.

Many people are choosing to squeeze down their cover, rather than dropping it altogether to save costs, he says.

Financial planner Michael Miller, of MLC Advice Canberra, says if you choose not to take out private health insurance, you will need to factor in the tax implications.

“Private health insurance isn’t compulsory, but the Medicare levy surcharge might mean you pay more if you don’t have the cover,” says Mr Miller.

If you’re single and earn more than $90,000, or if you’re a family earning more than $180,000 – and neither you nor your dependents have cover – you’ll face a Medical levy surcharge of between 1 and 1.5 per cent of your income.

“For example, a single 25-year-old male earning $95,000 per annum can obtain basic cover for around $840 a year after applying all the rebates,” says Mr Miller. “It will be very basic cover, but without the cover the extra Medicare levy surcharge he’d pay is $950 a year.”

There’s also the private health insurance rebate to consider. If you’re under 65 and earning less than $90,000, for example, you’ll get a 27.82 per cent rebate for having private health insurance.

Mr Miller says if you’re considering ditching the cover, and instead saving or investing the money to cover potential future health expenses, you should consider whether that money would be sufficient to not only cover medical expenses down the track, but also in the first few years.

“If you do have cover,” he says, “it will usually cover expenses very soon after taking out the policy – be sure to ask about waiting periods – whereas you may not have built up much of a fund in a short period of time if you have an early claim.”