2GB Afternoons program interview with Dr Rachel David regarding PHI numbers and APRA PHI statistics

Station: 2GB
Program: Afternoons
Date: 19/02/2020
Time: 12:24 PM
Compere: Deborah Knight
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


DEBORAH KNIGHT: Now, private health insurance, it has long been considered a crucial part of our lives helping to keep the entire health system running. But more and more people, they’re dropping it in droves. The latest figures from the Australian Prudential Regulation Authority, APRA, shows just 44 per cent of Australians have basic hospital cover after nearly 10,000 people decided to axe their private health at the end of last year. They’re big numbers, the largest decline – young people aged between 25 and 29. They reckon it costs too much. They’re paying more out of pocket anyway. And they just don’t see the benefit from it.

And look, I get it. The sentiment here- the system as it stands, the costs keep going up and it can be really confusing to compare different private health cover. It’s not comparing apples with apples. You’ve got to really be across it. It’s very difficult to try to ensure that you get a good deal, even though the Government has tried to simplify the system. And I know a lot of people who are either thinking of dropping private health or have already dropped it. You might be one of them. 131-873 is my number. What were your reasons for doing it?

Private Healthcare Australia is the peak body representing insurers and CEO, Dr Rachel David, joins us now on the line. Rachel, hello to you.

RACHEL DAVID: Hi, Deborah.
DEBORAH KNIGHT: Is private health insurance really worth it anymore? Because for that amount of people to be dropping it, 10,000 axing their private health at the end of last year, I guess many people are saying it’s not.
RACHEL DAVID: Well look, it is worth it and we’ve shown that through the data that was released recently that shows that health funds were paying out claims at record levels. For every dollar that people pay in premiums, the health funds pay out 87 cents in benefits, which is far higher than any other form of insurance be it travel insurance or car insurance.
DEBORAH KNIGHT: [Talks over] So why are people leaving then? Why are they axing it?
RACHEL DAVID: Well, it is a big cost, and I think that one of the problems that we have with the community is that health costs are rising at far higher a rate than inflation. And particularly, as people are living longer we’re spending a lot on non-emergency but essential surgery in people aged 55 to 75, basically, on wear and tear issues, on replacing hip, knees, the lenses in your eye and implants into the heart, to keep people going and productive. Now-
DEBORAH KNIGHT: [Interrupts] We are seeing though- sorry to interrupt, but we are seeing, as you say, in that age group – that’s one thing. But the biggest decline in private health cover is in young people aged between 25 and 29. They’re sort of looking, thinking: I’m fit and healthy, why do I need to fork out the money for this?
RACHEL DAVID: Well look, that can be a bit of an issue particularly as younger people do feel invincible. And yeah, there is a perception that they’re paying more and getting less because there is this big bubble of an older population going through the system. However, it is a myth that younger people don’t suffer from unexpected health issues that take them to hospital.

We know that 280 people per 1000 aged 25 to 34 will present to our hospital with some kind of condition needing urgent assessment. And so of those- if those people were all to drop out we’d be looking at 5000 extra people joining public hospital waiting lists. And they’re blowing out already. Already, we’ve got wait times for pretty essential procedures over two years in many parts of New South Wales and certainly in Queensland. So we do need to address this.

Health funds have worked with the government to keep premiums down. We’ve had the lowest rise in premiums in 19 years. We have simplified the system. If people go onto the government website, privatehealth.gov.au, there is a useful tool to navigate the most suitable health fund products-

DEBORAH KNIGHT: [Interrupts] You say it’s a useful tool, Rachel, but it is very confusing. If I wanted to go about changing my health cover, you go on and you try to compare it one cover with one company to another, and it isn’t simple though. I mean, you say you’re trying to simplify it, but it’s quite confusing for the average consumer.
RACHEL DAVID: Look, the reason it can be confusing is that the health …
DEBORAH KNIGHT: [Interrupts] Well, it is. It’s not that it can be, it is.
RACHEL DAVID: Well, the health system itself is complex. There’s more technology than ever before, more conditions are being diagnosed than ever before, and there are more different kinds of practitioners than there have been in the past. But what the Government has done is actually made it a lot easier. You’ve got the four tiers: gold, silver, bronze, and basic and most people are one or other at the end of the spectrum. So there are a large chunk of people, about 41 per cent, that have your top cost hospital cover, which is in the gold tier, and a lot of people that are younger and healthier and they just want an entry-level product, and that’s the basic and bronze tiers.

Where it gets a bit more complicated is people that want as much as they can afford, and they want to know that the particular condition that they’ve got are covered and then there’s a decision to be made about whether that’s silver or gold. And in that situation, it’s often you sort of talk to a couple of funds as well as looking on the comparative site to get a sense of what’s covered.

DEBORAH KNIGHT: You say that it is essential; that it does put an extra burden on the public hospital system, which we know that it does. But what are you going to do about it though? Because simply, consumers are not convinced, they are leaving, the numbers say it all. What would you, as a private health insurance industry, be doing to try to get people back?
RACHEL DAVID: We’re doing a lot already. And one of those things is that we have cut management expenses and consolidated behind the scenes to deliver the lowest premium increase in 19 years to 2.92 per cent. But there is more that needs to be done, and there is strong awareness, both within the funds and in the sector and with the federal government, that the main concern that consumers have is premium affordability and rising health costs.

So we have put quite a detailed submission before the Government about things we can do together, both to take wasteful costs out of the system and to restore the subsidy that they’ve been cutting over a period of years that was going to low income earners to improve participation. Now, we know the Government is- has strongly considering some of the measures in our submission, particularly around some of the savings from inflated medical device prices that we’ve been paying for years, and some of the cost shifting that’s gone on by state governments that have shifted patients that have presented to public hospitals as public patients into the private sector.

So, we know these are things that can be addressed and that will bring premiums down, but we need the Government and the regulators to help us with that. We don’t have the power to do it on our own.

DEBORAH KNIGHT: Alright. Well, we’ll see how that goes and we thank you for your time today.
RACHEL DAVID: Thanks, Deborah.
DEBORAH KNIGHT: Dr Rachel David there, CEO of Private Healthcare Australia. But I’d love to hear from you on this. 131-873 is my number, 2gb.com, 4bc.com.au on the e-mail. Have you already axed your private health cover, or are you considering it? Why? We know many people are. I’d love to hear from you.
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