4BC Breakfast program interview with Dr Rachel David on private health insurance premium increases in 2021

Station: 4BC
Program: Breakfast
Date: 22/12/2020
Time: 8:20 AM
Compere: Scott Emerson
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


SCOTT EMERSON: Now, Health Minister Greg Hunt yesterday approved an average 2.274 per cent health fund premium rise, which means health fund members will be slugged with a second premium rise in six months, paying an extra $174 per year to stay covered from April 2021. Now, Private Health Australia Chief Executive, Dr Rachel David, is on the line. Dr David, thank you for being on Summer Breakfast.
RACHEL DAVID: Morning, Scott.
SCOTT EMERSON: Look, no one likes to see a price rise in their premiums for private health funds, this has gone up. It has to be approved by the Federal Government. Why was it appropriate for Greg Hunt to approve this rise?
RACHEL DAVID: Well, look, the only reason that premiums go up at all is because health funds are paying for more health care. We’ve seen an explosion in the need for surgery for- particularly for people aged 65 and over, and also for the need for inpatient or in hospital mental health care around Australia, which is why, unfortunately, premiums are going up.

We have worked very hard with the Federal Government that needs to approve all the claims and the premiums that we make, to keep some of those costs down. But unfortunately, even though we don’t want to put premiums up by a dollar, we need to make sure that we have enough to be able to pay our members claims.

SCOTT EMERSON: Now, this is a second price rise in just six months. So, has it increased that dramatically in such a short period of time?
RACHEL DAVID: Look, the first one was actually approved back in 2019, but it was delayed because of the COVID-19 pandemic, and not wanting to put additional pressure on members. This one won’t kick in until April of next year, as you mentioned before, so it gives people that are concerned about the price of their premiums to actually look around for an alternative. And if you go to the website privatehealth.gov.au that lists all the policies and their costs, so people can have a look and see if there’s something more suitable for them at a lower price.
SCOTT EMERSON: Now, we’re- when during COVID and the lockdown’s particularly, people weren’t getting as much surgery, they weren’t going to the dentist as much, they weren’t going to the physiotherapist as much, and a whole other range of services there. That would have saved most of the private health operators a lot of money. Where’s the payoff for prem- those who are members, for the fact that they weren’t using as much services?
RACHEL DAVID: Well, look, most of that money’s already been paid back to members, either in terms of hardship provisions; the fact that we delayed that premium increase last year; or, in payments for additional mental health and Telehealth services that took place during the pandemic. On the private side, because people don’t have any wait time, it actually caught up very quickly. So, literally on day one after the lockdown, we have, you know, 130 per cent of the number of people booked in for what we would normally expect. So in fact, health funds have actually paid out more benefits than ever before this year.
SCOTT EMERSON: In terms of going forward, we’ve heard for many, many years that the numbers of people with private health insurance had been falling. Has that been continuing during COVID? Or have people made a decision that are concerned so much about their health because of COVID they’re keeping on with their private health insurance?
RACHEL DAVID: Well, look, we have seen membership stabilise, as you suggested. So, people are hanging onto their private health insurance, really because the wait time in hospitals all around Australia in the public side have blown out by an astonishing amount as a result of the pandemic and public hospitals not being able to be used for surgery. So, people are now, instead of having to wait a few months in the public sector, it’s now blown out to years [indistinct] common procedures.
SCOTT EMERSON: Well, with the cluster we’ve seen in the Northern Beaches there’s still concerns about COVID moving forward. But going through, when we get vaccines next year, hopefully it is resolved to some extent. Do you think that you’ll still start seeing that trend pulling away? Or do you think people have decided they, they see value in private health insurance and will remain with the funds?
RACHEL DAVID: Look, we’re continuing to work with the Federal Government to improve the system. With any luck, some changes to the exorbitant amount that we pay for medical equipment and devices in Australia, the Government’s changing that next year – so we hope to deliver an even lower premium increase, if any, next year. And we’re also expanding and increasing the number of services that the funds provide, including services in patient’s homes, Telehealth and out of hospital.

So, we think those things will improve the value as we move forward, but it’s a continuous process. And again, it involves some pretty detailed negotiation with the Federal Government regulators.

SCOTT EMERSON: Alright. Rachel David, thank you for joining us on Summer Breakfast.
RACHEL DAVID: Thanks Scott.
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