As the cost of living rises, Aussies are spending less on health. In one survey of 600 women by the Heat Group, 41.7 per cent said they'd cut back on health-related activities because of interest rates, while 66 per cent pared back pampering. Cancelling pedicures we get, but yoga and the odd massage? Not fair. Then there's private health insurance, which sucks upwards of $500 a year from your bank account. And since the Federal Government proposed increasing the Medicare Surcharge Levy cut-off point, there's less incentive for young, healthy people to dish out dollars on health care.

The insurance deal today: pretty much everyone who earns a wage pays a 1.5 per cent Medicare levy, but taxpayers on higher incomes need to pay an additional one per cent, unless they have private hospital cover. This was introduced by the Howard government in 1997 to encourage "wealthier" folk (singles earning more than $50,000; couples, $100,000) to take out insurance. See, it costs less to have private health than to pay the surcharge. In May, the Rudd government proposed raising the threshold for the surcharge to $100,00 for singles ($150,000 for couples). At the time of writing, the Opposition plans to block the legislation in the Senate.

It's estimated that between 400,000 and one million Aussies will ditch their private health insurance because they no longer face the surcharge. "Less money will be coming through the Medicare levy and we'll have longer waiting lists and even poorer conditions in public hospitals," says Dr Michael Armitage, chief executive of the Australian Health Insurance Association. Case in point: in September 2007 a 14-weeks' pregnant woman miscarried in a Sydney public hospital waiting room toilet, after complaining of acute pain for two hours. And health fund premiums will increase to cover the drop-outs, adds Dr Armitage. This means that if you do go private, it could cost you more than it used to. With petrol and food prices spiralling out of control and those friggin' interest rate rises, it's enough to give you a meltdown.

OK... breathe, relax. Calm blue ocean. Now use the info below to help you decide - is health insurance worth it?

Cover your privates?
We consulted PrivateHealth.gov.au on the ups and downs of insurance

Pros

• You can choose your hospital and doctor when you need surgery. (Why go Best Western when you can stay at the Hilton?)
• Typically, private patients have shorter waiting periods for elective surgery (for nonlife- threatening, but possibly painful conditions. Think kidney stones).
• You can get insurance to cover ambulance trips, which, unless you live in Queensland or Tassie, aren't paid for by the government. An emergency trip in metro areas could set you back up to $870. Ouch.
• Medicare will still cover 75 per cent of medical fees that fall under the Medicare Benefits Schedule (MBS); your insurance only needs to pick up the rest. (What's MBS? Check out health.gov.au/mbsonline.)

Cons

• There may be waiting periods before you can claim some extras like optical, physio, acupuncture or the fun trip to the dentist. Check before you sign up.
• When you stay in hospital, you may have to pay an excess for each day you're there. If your stay exceeds 35 days, you'll need to pay the whole cost of "accommodation". Health insurers are banned from covering this.
• Private hospital cover doesn't completely cover reconstructive or cosmetic surgery.
• If you get private health after your 31st birthday, you pay a two per cent surcharge per year up to a maximum surcharge of 70 per cent. So, a 36-year-old joining would pay 10 per cent more on their insurance premium.