2GB Wake Up Australia program interview with Dr Rachel David on public hospitals gouging health fund members of more than $1.6 billion a year

Station: 2GB
Program: Wake Up Australia
Date: 12/08/2019
Time: 5:10 AM
Compere: Luke Grant
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


LUKE GRANT: Now you might have seen this story the other day: public hospitals gouging health fund members of more than $1.6 billion a year – a lot of money – by bullying them into using their private cover to pay for what should be free treatment. This was a report from Sue Dunlevy. I said at the time we’d try and chase down the CEO Private Healthcare Australia and she’s available for us this morning. Dr Rachel David, nice to talk to you, Rachel. Hope you’re well.
LUKE GRANT: So I had a chat to the listeners about this and what we determined was that we pay Medicare levy and then of course, we pay, many of us, private health insurance premiums and we expected that by paying for Medicare, we’d get Medicare or public services for free. Well, we pay a levy so there’s some payment there and should we go to a private hospital, then our private health insurance kicks in. And where it becomes a bit muddy is, as the story suggests, if you’re a privately insured person in the public system – and I can’t tell you how many people indicated to me that that’s right. You know, you go into the public hospital and once they know you’re in a private fund, they hit you up. Is that kosher, un-kosher? It’s not what it’s meant to do, I assume.
RACHEL DAVID: No. Look, I think the lines have really been blurred and in fact crossed here, Luke. There’s always been a small number of private patients treated for elective or planned procedures in public hospitals because that’s where their particular specialist works. And that’s not what we’re worried about, that number of people and that number of claims has not changed, as long as we’ve had private health insurance.

But what we are more concerned about is people turning up to public emergency departments with medical problems, so they don’t require surgery, but they’re turning up with shortness of breath, chest pain, weakness and other problems and while they’re actually distressed and unwell, being approached and harassed to give over their private health insurance details. The next thing you know, if they’ve been in hospital for longer than six hours, their health fund is billed for an admission. Now these are people who’ve paid their Medicare, they’ve paid their taxes, they are entitled to treatment free of charge. And what happens when most people’s health fund is billed, is that premiums go up for everyone, when in fact the Government should have covered that admission without billing the health fund. And that is what is causing the upward pressure on premiums to some extent.

LUKE GRANT: Rachel, have we worked out what the expense is? How much of your private health insurance premium covers the use of it, let’s say the inappropriate use of it, in the public system. How much is it?
RACHEL DAVID: Well it’s about a billion dollars of our members’ money a year and that works out to about a 2 per cent upward impact on premiums. So it’s about a hundred- so people would expect, like if this was stopped, people could expect to get some relief from their premium to the tune of about a hundred dollars.
LUKE GRANT: Okay. And in the scheme of things, that’s probably, given where premiums are now, not a whole lot but it’s something when they seemingly go up each year. It’s something back in the consumer’s favour. Who can fix this? Can’t the fund itself write into its policy somehow that the explicit use of the policy for a public health insure- or public hospital admission? Can’t they fix that? Or do we need Government to say to the state health systems, oi, pull your heads in?
RACHEL DAVID: Well look, it’s actually regulated that we need to pay these claims and it’s a combination of Federal Government regulation but also the arrangements that they have with state governments to fund hospitals. Now hospitals are funded to treat an increasing number of patients. Their funding is going up by 6.5 per cent per year from the Commonwealth. Our premium increase, we’re trying to keep premiums as low as possible, but our premium increase is only just over 3 per cent. So in fact, they are being funded for an increase in patients and we think that it’s actually unfair to be raising revenue from the health funds at the same time.
LUKE GRANT: Yeah. Look, there’s another thing here that comes from I think Medibank, who are quoted in the story, who have warned members they could face out of pocket charges from public hospitals if they use their cover for a private room in a public hospital. Now, again, if you’ve got the appropriate level of private health insurance, you’d anticipate that your private room would be covered. Do public hospitals gouge?
RACHEL DAVID: Now this has been a particular problem in New South Wales and for health funds that cover large numbers of people in New South Wales. For reasons that have never been explained, New South Wales bills health funds for $300 extra for any private patient that’s admitted to a public hospital and gets a private room. Now they don’t get any extra services for that $300 more, but a number of funds have just said look, enough is enough. We cannot put premiums up by another dollar for no reason. People are really struggling out there and so they’ve said they’re not going to pay. Patients will still be able to get a private room in a public hospital if they absolutely need one, but they can also go to a private hospital as well and there’ll be no risk of any co-payments. So I think that option needs to be explained to patients if is that they are being urged to use their private health insurance.
LUKE GRANT: Yeah. By the way, I’m speaking to Dr Rachel David, the CEO of Private Healthcare Australia. Well what do you say to those people, and as I said at the start, I’ve had listeners tell me this goes on, who feel to some extent bullied to use their private cover in the public system?
RACHEL DAVID: Well the first thing is that if you’re sick or a family member is sick there is absolutely no reason. You are entitled to be treated free of charge in a public hospital and you don’t need to hand over your details. And particularly if you’re unwell, you just say I’m too sick and you don’t need to handover your details. If you want to make an explicit choice to see your own specialist in that hospital, then the hospital needs to give you full informed consent about any out-of-pocket charges that you might face. The other thing that I’ll say is that some of the public hospitals have been telling people that it’s helping the hospital as a kind of donation to the public system by using your private health insurance. And one thing I’d say to that is well no, it’s not. The hospitals are adequately funded for the activity that they undertake. And that actually what that person is doing if they’re admitted is taking a bed away from someone who might not have any money and not have the option. So that is actually something that we need to consider as well.
LUKE GRANT: You’re right, they do. It’s like a goodwill payment. If we use our private health insurance, you know, you’re really helping the system here. That’s one of the lines they take, isn’t it?
RACHEL DAVID: Well that’s right, and in fact what the AIHW, which is the national statistician for health care, has found is that private patients in public hospitals are getting treated and seen quicker and they’re taking beds away from people that might not have any money and also be in need. So when that revenue raising tactic is used, it’s actually disadvantaging the public system, it’s not helping.
LUKE GRANT: Right. So if I can just get back to the main point here quickly. Is this a problem that needs the Federal Government to fix it? Can it be fixed by consumers? How do we stop it? How do we get that premium reduction, I guess I’m asking you?
RACHEL DAVID: Look, there are just too many cooks in this system. I mean we have a great health system but it is complex and what this needs is for the federal and state ministers to actually sit down with us and work out a way that this can be managed properly, rather than just from the bottom up. And I think that needs the attention of the Federal Minister to show some leadership to make this happen.
LUKE GRANT: Yeah. Great. Appreciate your time Rachel. Thank you so much.
RACHEL DAVID: Thanks Luke.
LUKE GRANT: Dr Rachel David, the CEO of Private Healthcare Australia.
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