3AW Drive interview with Dr Rachel David on Federal Government’s private healthcare reforms from 1 April 2019

Station: 3AW
Program: Drive
Date: 28/3/2019
Time: 4:10 PM
Compere: Tom Elliott
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


TOM ELLIOTT: Now, federal government healthcare reforms come into place on Monday, so a) health insurance will get more expensive; b) it’ll probably cover fewer things; c) they’re now giving all the health insurance contracts or policies a sort of a simple rating: Gold, Silver, Bronze, and Basic, which I assume means fourth place. And The Australian newspaper is suggesting that 1 million people aren’t going to renew their health insurance.

Okay, for a crash course in private healthcare for dummies, the CEO of Private Healthcare Australia Dr Rachel David. Good afternoon.

TOM ELLIOTT: Firstly, this claim in The Australian newspaper that 1 million people are going to ditch their private health cover between now and Monday – do you think that it’s true?
RACHEL DAVID: No, it’s absolutely not true. As part of the reform process and part of the normal activities of health funds, we stay in touch through market research with consumers and people purchasing health insurance all the time. And while there will be some changes and a small- and a modest price rise on 1 April, there is no likelihood whatsoever that 1 million people are intending to give it up.
TOM ELLIOTT: [Interrupts] Because that would be- how many policies are there out there? Like, I don’t know, 15 million or something like that?
RACHEL DAVID: There are about 13.5 million people covered by some level of health insurance at the moment, with a slightly lower number of policies that cover them. And so, you know, for a number of that magnitude, there’d really have to be a catastrophic event in the sector, and the reforms that are being introduced on Monday are designed actually to help people better understand the product that they’ve got and make better choices in terms of their private health.
TOM ELLIOTT: Okay, alright. Well, it is interesting, because The Australian is saying that a YouGov Galaxy Research study suggests that almost one in 10 policy holders – or 1 million out of 13 million – will axe their insurance between now and Monday. Alright, well, let’s say that’s rubbish.

What about the cost of it, though? I mean, I got pretty angry at my provider, which happens to be Bupa, because the cost kept going up and up and up and then when I looked at what was covered, every year they were taking things out of the coverage. Now, what I ended up doing was upgrading to a higher level of cover, which is costing me even more per month. But, you know, I could understand why a lot of people would ditch it, because it is getting expensive.

RACHEL DAVID: Yeah look, and we certainly understand that no one likes to see price rises in any sense, particularly as, you know, people’s wages and incomes haven’t been increasing at the same rate. But the reason why health fund premiums go up is really very simple: it’s because we’re paying for more healthcare. And what’s happened is over the last 100 years as a society we’ve gained an extra 30 years of life, and people are spending- more and more is being spent on them keeping those 30 years good quality of life. And that’s impacted a number of areas, be it aged care, healthcare, superannuation, the Medicare system. And it’s one of those things where we can’t stop it, but what we can do is make absolutely sure that every dollar that we spend of members’ funds is spent wisely.
TOM ELLIOTT: You don’t think it’s because just about every specialist I see has a big house in Toorak and a garage full of expensive cars, though, do you?
RACHEL DAVID: Well look, we’ve done a lot of work on the charges that medical specialists have in the private system, and only- there are a small percentage of medical specialists that are probably over-charging, even by AMA standards, but that’s small and it’s not growing. The biggest cost probably that’s driving up healthcare is the fact people are having more treatments to stay healthy longer – like, they’re not just having one joint replacement and sitting on the couch and dying of a heart attack. They’re having a joint replacement, like a knee replacement, then they’re going skiing and probably still working, playing tennis, and 10 years later they’re having another one. They’re having more treatments and the nature of those treatments is becoming more sophisticated – technology is improving and they’re becoming more expensive.
TOM ELLIOTT: Okay, now what about this new grading or ranking system for health funds?
TOM ELLIOTT: So, I know in the supermarket they’ve tried to have sort of a health rating – you can have, you know, red which is not good for you, orange which is not too bad, and green which is good. So, the broccoli gets green and the chocolate frogs get red. But it seems to me that health insurance is going the same way, so you’ll have a gold star for top cover, a silver one for mid-level colour, bronze for even lower level cover, and then a thing called basic. How does all that work?
RACHEL DAVID: Well, the tiering system is basically designed to make it clear to people what level of cover they have or how much value is in their policy. So, a Gold policy is equivalent to what’s been called Top Hospital Cover, and that basically covers pretty much everything. The Basic level at the other end is more an entry level product which is suitable for younger people just starting out. It covers things like mental health. But it means that in the unlikely event that they do get sick, they get their specialist- they get a fully trained medical specialist, but, you know, if they go to a private hospital, they’ll get an extra charge. In the middle you’ve got, you know, products- you’ve got the Silver and Bronze, which have exclusions – Bronze covering the things that are less likely to happen like your cancer, abdominal pain, and Silver covering heart disease.
TOM ELLIOTT: Okay. Thank you for joining us. Well, I guess we’ll find out on Monday whether or not one in roughly 11 or 12- one in 13 Australians according to The Australian, according to a poll published in The Australian, is going to ditch private health cover. I doubt it. Dr Rachel David there, CEO of Private Healthcare Australia.
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