3YB Great South Coast Today program interview with Dr Rachel David regarding private health insurance premium increases

Station: 3YB
Program: Great South Coast Today
Date: 6/4/2018
Time: 12:29 PM
Compere: Denis Napthine
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


DENIS NAPTHINE: … CEO of Private Healthcare Australia. But before I talk to Rachel David, I must declare that I am a director of GMHBA, which is a members-owned, not-for-profit private health insurer.

Dr David, welcome to 3YB and the Great South Coast Today.

RACHEL DAVID: G’day, Denis.
DENIS NAPTHINE: On Sunday, the cost of private health insurance increased by an average of 3.9 per cent, which is almost twice the inflation rate. Why is this increase well above the level of inflation?
RACHEL DAVID: Well, Denis, this occurs for one reason and one reason only and that’s because health funds are paying for more healthcare. As our population has got older and people are wanting to retain their jobs, and retain activity and participation in society, they do need health services for things like hip and knee replacements, lens replacements for cataract, and cardiac services, and that does push the prices up, along with the cost of new and innovative technologies that tend to be used in the private sector patient. From about 2014- the Federal Government has released some figures today about how much they’re paying public hospitals, and their funding has gone up by 12.5 per cent per year over the last couple of years to meet demand. And even at that level, with $60 billion now being put in, there’s still waitlists of three to four years in some regional and outer suburban areas for basic things like hip replacements and lens replacements for people who’re struggling with their vision.

Now, if you’re working, you’ve got kids and you’re trying to support your family, and you have an accident that means you can’t drive your car, or you have some other trouble that means that you would need to take some time off work to have surgery, how would you feel if you were told: well, you know, it might be three years and we don’t know when we’re going to be able to get you to come in, and you don’t know when you’re going to have this pain or this disability fixed. People can’t afford to wait.

DENIS NAPTHINE: They’re paying good money for private health insurance, they go in for a procedure, and they get hit with a bill as well. How does this out-of-pocket expenses work?
RACHEL DAVID: Well look, health funds, for the most part, cover your treatment in hospital and that has two components to it: the hospital accommodation and then what the doctors charge. Health funds by law aren’t allowed to influence what the doctors charge, but for most doctors working in hospitals, they have a contract so that the doctor either does not charge the gap, or charges a known gap to the customer. Now, in some particular treatment areas in some locations, doctors will charge above the- a large amount above the scheduled fee, which means the health funds can’t cover it without putting premiums up. So, it’s important that people at the time of referral ask their GP, if they have concerns about what the gap might be to people working on this issue right as we speak, to look at ways in which we can help give consumers and GPs, family doctors, information about where the higher gaps are being charged so that people have a choice.

I should mention something else at this point, Denis, and that is that for services provided out of hospital, if you see a specialist in their room or in outpatient as a private patient, health funds are not able to cover that gap. That’s also something that a legal issue under the Medicare legislation, and it’s something that given some of the concerns that have been raised, we’re trying to change. But at the moment that’s not possible.

DENIS NAPTHINE: And in recent times, we’ve seen private health insurance become a pretty popular political football with a proposed 2 per cent cap on increases by the Labor Party, now suggested for review. What’s your advice about what our federal political parties should do with respect to private health insurance and our general health system?
RACHEL DAVID: We care about one thing, and that is that Australia’s combined public and private health system is offering some of the best outcomes, in terms of patient outcomes from surgery, in the world, and a lot of those outcomes are being delivered in the private sector. The private sector does two-thirds of the planned surgery that occurs in Australia and we can honestly say that we get what we pay for in terms of outcomes. And we really risk- if we risk that system and the balance in that system, in terms of the quality of outcomes, it can only go backwards. But you’re talking about a 2 per cent cap. What we need to understand is that healthcare costs are rising because more people are using the system. The public system had a 12.5 per cent rise in terms of what they’ve been given over the last two years. If the private sector is capped at 2 per cent, what that will mean is that funds will fall back on patients that are trying to access the system. If they leave the system they would simply join a public hospital waiting list. So, it really solves absolutely nothing.
DENIS NAPTHINE: It seems to me, Dr David, what we need is for the private sector, the government, and the public hospital system to all work together to try and keep costs at a minimum, but to make sure we can guarantee good health service into the future.
RACHEL DAVID: Yes, and I think that’s what people want. We’ve got a lot of folks out there who tell us: look, I’ve paid my taxes all my life and I’ve paid into my health fund all my life, and with all of this talk in the media, I’m worried that the system I’ve invested in won’t be around when I need to use it. And I think we need to give these people reassurance. We need to give them reassurance that they will be able to access a high-quality surgeon when they need treatment and not in three years’ time. So, by focusing on the system and the quality, the high quality that we’re providing in the system, rather than just simply how much it costs, I think [indistinct].
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