“I’m sorry but your private insurance won’t cover your rehabilitation.”

He is 85, obese and diabetic. He doesn’t talk as much as wheeze and it takes two doctors to prop him up and listen to his lungs. He has spent the past few days mostly lying in bed because there simply isn’t the dedicated staff on an acute ward to get him up and moving. His wife is as old as he is and half his size. It’s a miracle that the three recent falls that she valiantly tried to prevent at home didn’t crush her.

And it is inconceivable that the private hospital that admitted him just days ago for “optimisation of heart failure” failed to appreciate that no matter how clear his chest x-ray, he was simply not ready for home. His wife protested at his premature discharge but took him home. And at the first sign of trouble brought him to the public hospital.

It’s clear on first glance that he needs “complex discharge planning”: a thorough assessment of his strength, mobility, cognition, social circumstances, home setup and his wife’s fitness as a caregiver. This kind of planning requires curiosity, multidisciplinary input and time. It is not a skill unique to the public hospital system, but time equals money and as every experienced clinician knows, private hospitals avoid such patients for the load they represent.

We request the private hospital to accept the recently discharged patient back into the care of those who know him. We explain that such continuity helps the patient and suits his wife. Having already paid the annual excess on their top cover, they won’t incur a financial penalty for the readmission. But the mere mention of “two assist” (needing assistance from two staff) is sufficient for the private hospital to say no thanks. The intern is puzzled: “I thought that’s why people bought insurance, for their time of need.”

I feel resigned but secretly hope that the patient will mount a fuss when I tell him he will have to stay in the public hospital and share a room with a delirious man, a psychotic woman and an asthmatic girl. The wait for rehab is long and each day in bed is a day to decondition. For 50 years he has paid for a luxury product that has now failed to deliver – surely this is a cause for dissatisfaction, even a full-throated complaint.

But here is what happens when I explain to my 85-year-old patient that the private hospital won’t have him back.

“I think you lot are the best,” he beams between wheezes. “I am not going anywhere.”

“But you have full private insurance,” my mildly horrified resident murmurs and I know what he is thinking because I was once the same.

The young doctor doubts how any patient could be truly happy with the patchy care that overstretched public hospital doctors chastise themselves for administering, but patients know what they value. Increasingly, frail and elderly patients with multiple chronic illnesses are realising that in times of need the public hospital is their sanctuary. It is the only place where someone will reliably put their best interests before the dollar. And while I readily concede that this can lead to inefficiency and waste, the solution is not abolishing Medicare.

The for-profit private hospital system rewards throughput. It needs most of its customers to be uncomplicated, short-stay ones to make up for those who end up staying longer than expected or desired. It isn’t that the complex patients don’t receive good care from good doctors; rather, the goal is to discourage their admission in the first place. Much has been made of the news that young people are disavowing private health insurance but older insured Australians are hardly reaping all the supposed benefits.

An experienced rehab physician who works across the public and private healthcare systems confirms as much when I ask her to help me understand why my neediest patients with the highest levels of insurance are denied rehabilitation that is essential to keeping them safe at home.

“It’s simple. Those complex patients are loss-making so it’s best for them to stay in the public system. The best patients for private rehab get in and get out. They are relatively young, fit and agile.”

I have to laugh. Those three words hardly describe the Australian population as a whole and exclude almost everyone admitted to a public hospital ward. I tell her the accounts of those who struggle to meet their rising insurance payments and are refused care at critical junctures. Patients satisfied with the public hospital don’t think to question the premise of their private health insurance, and others are often too ill or too disempowered to ask questions. Importantly, they know that they can always fall back on the public system, even if their rehabilitation goals could potentially be met earlier with more intensive intervention in a private facility.

I raise the troubling ethics of it all and she sighs it’s the system. But I can’t help thinking that she and I, another 70,000 Australian doctors and the patients we serve are the system. We are the system that Australians cherish, and the world envies, and we are the system that will fall apart if we don’t hold the private health system to account.

There must be a middle ground between abolishing all private health insurance which will place unbearable pressure on the public health system and ditching Medicare which goes against the grain of what a decent society should provide all its citizens. Australians subsidise the private health industry to the tune of $11bn while missing out on necessities including mental and oral health. We are entitled to ask if this money is well spent.

In response to the Grattan Institute’s new report of healthcare policy being “a muddle”, the health minister claimed significant private healthcare reforms that have not reduced premiums, rather their rate of rise. But ask any hapless patient. It’s not just about the premium they pay, it’s about the care they receive.

Reasoned debate means especially listening to those patients who are being short-changed by a private insurance system that is presently designed to fail them because they are old, frail and impaired.

To be fair, when it comes to listening to our oldest patients, no one emerges with a shine. But an industry which charges patients increasingly large sums of money in exchange for the promise of care at the most vulnerable time of life, namely old age, has a special need to explain itself. For the sake of our elderly, and one day, ourselves, we must not stop demanding answers.

• Ranjana Srivastava is an Australian oncologist, award-winning author and Fulbright scholar. Her latest book is called A Better Death