3AW Drive Interview with Rachel David on 1 October premium increase

Station: 3AW
Program: Drive
Date: 30/09/2020
Time: 4:09 PM
Compere: Tom Elliott
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


TOM ELLIOTT: Now, health insurance premiums. We’ve had a six month stay of execution. As I mentioned, normally they go up the start of April each year. This year it’s the start of October. Tomorrow is 1 October. To find out what we can expect, our next guest is the Chief Executive of Private Healthcare Australia, Dr Rachel David. Good afternoon.
TOM ELLIOTT: Now, has the Government said that on average premiums can only rise by 2.9 per cent? Is that correct?
RACHEL DAVID: Yeah. It is an average. So, there are some funds that won’t be putting their premiums up at all tomorrow, and for some people it will go up by a bit more. But overall, that is the lowest premium increase that we’ve had in 19 years. Pretty much because it’s the work that we’ve done with the Federal Government to help reduce the cost of claims, because premiums really only go up because the number of claims have increased.
TOM ELLIOTT: But- okay. But in Victoria, I’m told that we’ve had virtually no elective surgery for the past six months. Surely that means that health funds haven’t had to fork out nearly as much money as what they’re used to.
RACHEL DAVID: Well, there’s been some urgent cases have still gone ahead, as had some other urgent treatments and payments for medical conditions, like severe pneumonia and heart conditions and so forth. But what we’ve found in every other state, as soon as lockdown had finished, those cases get rebooked and, for example, everywhere else in Australia, the number of joint replacements that we had done in June – that’s your hip and knee replacements – were 124 per cent of normal, because in fact effectively in private health, you don’t have waiting lists and people could just rebook, and the private sector was able to work through late at night and on weekend to get those cases done, those cases had just been postponed.
TOM ELLIOTT: Sure, but- I mean, still, six months of postponement is six months of not paying out the money.

Why do medical costs seem to rise so much more than the general rate of inflation? I mean, inflation’s actually been negative recently, and yet every year we’re told the medical costs go up four, five, six, ten per cent per annum. Why is that?

RACHEL DAVID: Well, look, there are a lot of reasons but probably the main one is because we have this large baby boom population that’s reached a particular age which is the peak of needing surgery, so I call it peak surgery. And- so they’re having more procedures than ever before to stay on their feet, keep active and in many cases to keep working, as many people are working into their 70s and 80s these days. All of those- a lot of those cases that are done in private need very expensive medical implants like pacemakers, hips, and knees, and we pay more for those technologies in Australia than virtually anywhere else in the world.
TOM ELLIOTT: But- sorry, why is that? Why does it cost- why does a hip replacement in Australia cost more than anywhere else in the world?
RACHEL DAVID: Well, it’s because of transfer pricing. The multinationals that sell these things in Australia can virtually set the price. And because the Commonwealth Government many years ago regulated the price and set that level as being too high, it means we’ve really struggled to change it since that time.

Now, Greg Hunt to his credit has tried to do something about this, but it’s still been slow, and it’s early days yet, but over time we’re expecting to work with the Federal Government to bring some of those claims down so that we can start to bring those prices down and get this under control.

TOM ELLIOTT: Sure. Now, obviously a lot of Victorian households will be feeling the pinch. People have lost their jobs, they’ve lost work, businesses aren’t making money. Wherever you look, there’s economic problems associated with the lockdown. Now, health insurance is getting more and more expensive. Did you anticipate a lot of Victorians might say enough’s enough, and just stop paying their health insurance or give it up this year?
RACHEL DAVID: Yeah, look, you know everyone I speak to is doing it tough in some respects. And I can only imagine. My colleagues down in Melbourne have just had such a tough time. I think the first thing that anyone in that situation needs to do is to ring their health fund, because every health fund has hardship provisions in place, and so you can get a reprieve for a while. If you’re looking at shopping around, there’s a great government website called privatehealth.gov.au, which is completely independent, and gives you the ability to compare policies so that you can get one that’s right for you that saves you money.
TOM ELLIOTT: Thank you Dr David. Rachel David there, Chief Executive of Private Healthcare Australia.
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