3AW Interview with Rachel David on 1 October premium increase

Station: 3AW
Program: Mornings
Date: 21/09/2020
Time: 9:40 AM
Compere: Neil Mitchell
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


NEIL MITCHELL: Hey, I want to have a look at this too, because I’ve been getting a constant stream of emails the past few weeks about increases in private health premiums form the 1st October. Most insurers did delay the increases for six months, but the freeze is coming to an end. On the line, the Chief Executive of Private Healthcare Australia Dr Rachel David. Good morning.
RACHEL DAVID: Morning Neil.
NEIL MITCHELL: Thanks for your time. What is the biggest increase?
RACHEL DAVID: Look, it does vary between funds, but overall it is the lowest increase in 19 years, so it will be fairly small compared to what people have seen in the past.
NEIL MITCHELL: I understand it varies – what’s the biggest increase?
RACHEL DAVID: Look, I can’t tell you that just off the top of my head, but it will vary between zero and, you know, possibly five to six per cent.
NEIL MITCHELL: Oh, you reckon it’ll be nothing higher than six? Okay. I thought- well, I mean, looking at an average of five, it must be higher, there must be people going up higher than five.
RACHEL DAVID: Look, it will go up by an average of 2.9 per cent overall, that’s the industry net average, which is actually under the inflation in health cost, but we’ve worked very hard with the Federal Government that controls our claims expenditure to be able to bring those costs down.
NEIL MITCHELL: But why do you need it, when surely, the amount of expenditure in the past six months has been reduced because of the cuts to elective surgery?
RACHEL DAVID: Well, actually, surprisingly that hasn’t been the case. So, during the period of lockdown, firstly, health funds did pay out claims for a number of urgent procedures. But the moment the lockdown finished in states outside Victoria, those cases that had been scheduled but that were postponed immediately came back. Surgeons drive that, they need the income. So, we’re seeing joint replacement surgeries like for your hips and knees go back to 124 per cent of normal in June. So, we had to make provisions for those claims …
NEIL MITCHELL: [Talks over] Well, how-
RACHEL DAVID: … and we’ll see the same in Victoria, we’re already seeing those, now that there’s been some loosening up of the elective surgery restrictions, we’re already seeing those procedures be rebooked.
NEIL MITCHELL: But how much of the health insurance business is out of Victoria? What per cent?
RACHEL DAVID: Roughly- yeah. Well, look, it’s roughly about 25 per cent.
NEIL MITCHELL: The second most populous state and we’ve only got 25 per cent of the national. That’s amazing.
RACHEL DAVID: Yeah. But look, the point is that those cases will come back, because they’ve only been postponed.
NEIL MITCHELL: [Talks over] No, but-
RACHEL DAVID: If you’ve got a serious condition, it will-
NEIL MITCHELL: Surely the point is that, for six weeks or so, health insurers have had a pretty good holiday, at least in Victoria. They haven’t had to pay out anywhere near as much as they normally would?
RACHEL DAVID: Yep, so we’re going to-
NEIL MITCHELL: [Interrupts] And yet, when the fees go up, Victoria goes up as well.
RACHEL DAVID: So, look, what I can do is just walk you through what’s happened to that money. There has been some money saved, and already $500 million of that has been paid back to members who are in genuine hardship as a result of their income dropping as a result of the pandemic. Some of it is being paid out to Telehealth to give access to people with mental health conditions and who can’t leave the home to need healthcare, and some of it has been put aside for those procedures that we know have just been postponed, but that have already been rebooked when the restrictions ease. So, that’s what’s happened, it’s very tightly regulated. Health funds and our regulator has agreed that there’ll be no profiteering as a result of the pandemic. So, you’ll see that every dollar that may have been saved has been accounted for in this process.
NEIL MITCHELL: Okay. And there’s no chance of a bit of an exemption, a bit of a lull for Victoria, given that we’re still in the middle of this crisis?
RACHEL DAVID: Look, in health insurance, the premiums are calculated on a national basis. However, if it looks as though, as a result of the situation in Victoria, there’s any cash that’s been accumulated by the health funds, it will be paid back. But I would caution people, you know, the underlying rate of health inflation has remained unchanged as a result of COVID-19, and our revenue needs to keep up with claims to help funds to remain viable. We’re very concerned about anybody who’s under financial distress as a result of the pandemic, and anyone in that situation needs to contact their health fund about an exemption from their premium [indistinct].
NEIL MITCHELL: [Talks over] How many exemptions have been granted?
RACHEL DAVID: Look, I can’t tell you on an industry wide basis, but it’s roughly, about 1.5 per cent of members have accessed a full, some kind of complete waiver of their premiums, and some – we don’t have the statistics in yet for how many have actually received the discount – but we should know that in the next few weeks. But the point is that anybody who is in a financial distress as a result of their situation should contact their health fund before they consider dropping out, whether it’s as a result of this premium increase or something else, because all health funds have some kind of assistance in place.
NEIL MITCHELL: Thank you very much for your time.
RACHEL DAVID: Thanks Neil.
NEIL MITCHELL: Dr Rachel David, Chief Executive Private Healthcare Australia.
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