2GB Breakfast interview with Dr Rachel David on the introduction of a new tiered system of private health insurance cover: basic, bronze, silver and gold

Station: 2GB
Program: Breakfast
Date: 4/4/2019
Time: 7:49 AM
Compere: Alan Jones
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


ALAN JONES: Well, private health insurance premiums rose this week by an average of 3.25 per cent. It is actually the lowest increase since 2001. Premiums in recent years have risen on average by between 4 and 6 per cent. When you consider, though, the cost of living is one increase by 1.8 per cent, wage inflation is 2.3 it is a big slug. The average single will pay around $62 a year more, the average family about $135 but the proportion of Australians with private health cover is less than 45 per cent, which means that raises the premiums by itself. So given that what you pay in premiums and what you get back there is a problem here.

This week has also seen the introduction of a new tiered system of private health insurance cover: basic, bronze, silver and gold. Each tier, as I’ve been explaining to you, has a minimum set of treatments that insurers must cover. But when Peter rang me on the open line on Tuesday, he wasn’t impressed. He said the health funds are being lazy with the new tiered system because it makes it easier for them to administer. Peter said his policy should be competitive in terms of the items or cover he wants and he told me he doesn’t want to be an administrative donkey that carries the health funds’ load and he made the point he’s paying for things like wanting to have the baby-pregnancy, he doesn’t need it. They’re all lumped together. It’s a fair point.

I thought to try and sort out this out as best we could with Dr Rachel David. She’s the CEO of Private Health Care Australia. They are the peak representative body for the private health insurance industry. More than 20 funds as members, so we’re talking the likes of Bupa, HCF, Medibank Private and so on. Dr David, good morning and thank you for your time.

RACHEL DAVID: Good morning, Alan.
ALAN JONES: This is a difficult area, isn’t it? I mean how did this new tiered system come about?
RACHEL DAVID: Well look, over the last two years we’ve been developing this system with the federal government, doctors, hospitals and consumers based on a survey that was done by the Health Minister a couple of years ago, Susan Lee, which found that consumers and patients were finding the system very confusing. So it’s a way of helping consumers understand what they’re covered for and also to select the right cover for them.
ALAN JONES: Well, what about Peter, who says: I can’t- I don’t want to be covered in pregnancy, I’m 60 something years of age? Do people have bundled in to their cover insurance for procedures that they don’t want?
RACHEL DAVID: Well look, this isn’t a new thing. This is because of our community rating system, which means that health funds can’t discriminate against anyone based on their health status. It means that an 80-year-old pays the same premium as an 18-year-old for the same policy and we can’t discriminate against people because they’re sick or they’ve had a bad genetic test.
ALAN JONES: This is government again telling us what should happen as opposed to a private health fund being able to decide for itself how it properly represents the concerns of its members. It’s the same problem, isn’t it?
RACHEL DAVID: Well look, that’s definitely true. But this system is actually fairer for older and sicker people because if everyone was able to cover only for the areas they wanted, that would actually put premiums up massively for older people because young people would just get the minimum, whatever happens, and people that were in good health would get the minimum whatever happens. So people like Peter, even if he could choose, it could mean that his premiums went up massively. So actually, although it’s frustrating for consumers to understand, the system now is probably protecting him from massive premium increases in future.
ALAN JONES: But are we going to face- are people going to face a circumstance now, when they move into one of these categories – that’s basics, gold, silver and bronze – that cover that they previously had won’t be available to them now?
RACHEL DAVID: That is possible, so …
ALAN JONES: So how do you sort that out?
RACHEL DAVID: For a small number of people, because of the changes that we’ve made to some of the clinical treatment areas to make them more inclusive, it’s possible that some people’s existing products might not actually be compliant with the new system. Now, that’s a small number of people and all of those people…
ALAN JONES: [Interrupts] I read somewhere where there are several thousand people covered likely to be in that circumstance. I mean is this that mean that the consumer has got to have the health fund, or will the health fund come to the consumer to say that under these categorisations you’re not covered for these things which you have previously covered for? Who’s telling whom?
RACHEL DAVID: The ideal is that in the next couple of months, if people haven’t received a tailored letter already, they should be getting a tailored letter or other communication from their health fund and the government. So if people haven’t got that letter already, it will be coming.

In the meantime, if anyone is concerned and they haven’t received that communication, there are a couple of things they should do. One is to call the health fund and ask to firstly to check that their current cover is what they think it is and whether they should- whether there’s a requirement or there’s a need for them to change. And secondly, there’s a site the government has invested quite a bit in called privatehealth.gov.au, which will help people check their cover and compare with other policies.

ALAN JONES: Privatehealth.gov.au. You see, the trouble here is the fewer people who take out private health insurance, the greater the cost. I mean the private health insurance outfits sort of go broke. There’s a major problem here, isn’t it? Because people say we pay four times: we pay tax that goes into consolidated revenue, we pay the Medicare levy, we then pay the private health insurance premium and then we pay this massive gap. Now, it’s okay – I’m a bit of an expert on this, Rachel because as you know, I’ve been in and out of the hospital so many times, and the hospital cover, that’s fantastic. The hospital is covered but the gap when it comes to the medical is often massive. Now, this is a disincentive to people who say: well, I paid four times and I still haven’t got the cover that I thought I had. I mean I’m not suggesting you’ve got an answer to this but this is the imponderable, isn’t it?
RACHEL DAVID: Look, I totally agree with this and we’ve done a lot of research into this area about how folks feel about it. There are some people that choose to have a high gap because they want to see a particular doctor and they’ve got a huge amount of trust in that person and they’re actually quite happy about it. The problem is when people don’t know and they’re slugged with it and it’s completely unexpected.
ALAN JONES: [Interrupts] And people- sorry to interrupt you, Rachel, but people think: I’m okay, my wife’s having a baby. And I spoke to some of the young people here and I said: have you checked your private health insurer? Yeah, I’ve got private. I’ve got top cover. Well, hang on, you might be significantly out of pocket by the time you pay the anaesthetist and the gynecologist and so on. They don’t really know that there may be a bill coming their way even though they’ve got private health cover.
RACHEL DAVID: Yeah look, I totally agree, that’s the problem. And what we’ve discovered is that about a third of people that have a procedure in hospital probably aren’t properly informed about what the gap could be. The government has made a tentative step to producing a website that will give some comparative information about specialist costs and it will be focusing on obstetrics to start with. Well, I think there’s probably a lot more we can all do there, including the funds, but the government I think does need to make that first step.
ALAN JONES: Yeah, so privatehealth.gov.au. Look, good to talk to you. This is imponderable. I have a fundamental problem about the government being involved in this anyway. I think this ought to be a matter between the patient and the private health fund. Everywhere government puts its finger, there’s normally a mess but that’s not something you can address, Rachel. Thank you so much for your time.
RACHEL DAVID: It’s my pleasure.
ALAN JONES: There she is. That’s Dr Rachel David, the CEO of Private Health Care Australia. Now, there’s four categories now, it’s brand new since April 1; it’s basic, it’s bronze, silver and gold and you can check that at privatehealth.gov.au to find out what you actually are covered for, privatehealth.gov.au
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