5AA Interview with Rachel David

Station: 5AA
Program: Mornings
Date: 01/09/2020
Time: 10:08 AM
Compere: Leon Byner
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


LEON BYNER: Last year health funds – these are the private health funds – paid $21.7 billion in benefits to members, and that’s a recent figure, up to June this year, 2020, And of course you’ve got to remember that COVID-19 was happening at its worst during that time. So where do we go with private health? Because I know there are a lot of people who say it is getting too expensive, the things I can claim are not as much as they were. I do note that the health funds in general will contact you with all sorts of interesting offers, with frequent flyer points and all sorts of stuff, but it just occurred to me that of all the reasons to which you would join a fund, or you are a member, it is that when you need the service it’s as seamless as possible and the out of pockets are as minimal as possible, and the services for which you are covered are as broad as can reasonably can be. So really, a lot of these other things are a bit of a sideshow. But I guess a lot of companies do it. Let’s talk with the CEO of Private Healthcare Australia, Dr Rachel David.

Rachel, thanks for coming on today.

RACHEL DAVID: Good morning, Leon.
LEON BYNER: Do you agree that that’s what consumers expect from the health fund?
RACHEL DAVID: Look, we know a lot about the members of health funds from the research that we do, and the main reason that people choose private health insurance is overwhelmingly so they don’t have to wait for surgery or essential services which are provided – like mental health services provided as an inpatient in hospital. So the wait times that people have traditionally tried to avoid in the public sector at the moment, given how many services has been mothballed as a result of COVID-19, we are expecting that they will blow out considerably to over a year and a half for many common procedures. And so that’s really meant that recently people have to hang on to their health insurance because they felt that it’s probably worth the money, given that for many procedures it’s not going to be that easy to get treatment in a public hospital at the moment.
LEON BYNER: You recently – and we talked about this – you recently had an issue where a lot of prosthetic parts – it’s almost like the Six Million Dollar Man now where you can get so many things – some of these parts that were being charged out were rates that were ridiculously high. Has the funds in general been able to reconcile this to a much better deal?
RACHEL DAVID: Well look, just to take a step back, one of the big issues that health funds have is that the claims that they pay out are, for the most part, regulated by the Federal Government. Unlike other forms of insurance, health funds can’t choose what they pay claims for, including in some areas where the claims can be pretty wasteful. One area that we’ve seen huge growth there, way out of proportion to any of the other things we pay for is the cost of medical implants and devices. And so it’s entirely regulated by the Federal Government.

There is a lot of waste there, both in terms of the volume of the bits and pieces that are claims which often have, I think, that are supplied to hospitals and surgeons for the case, and are claims that aren’t actually that useful or used. And the other area is just simply the price of these things which is way higher than is paid in the public hospital sector, and in fact in most countries- similar countries overseas. So because it’s regulated by the Federal Government it is probably the only thing at the moment that’s disproportionately putting upward pressure on premiums. So to get premium increases as close to zero as possible, we need the prices and wasteful claims for these devices to come down.

The government has agreed to review this again, this review has been stalled by them as a result of the COVID-19 pandemic. But you know, we’re seeing surgery come back now after the lockdown to over 100 per cent of what it normally would have been because surgeons, quite rightly, are trying to catch up on cases that have been postponed. So, we’re seeing joint replacements back to 124 per cent of normal. So, we need this addressed pretty quickly to avoid future premium increases.

LEON BYNER: What’s Greg Hunt said to you about this? The Federal Minister?
RACHEL DAVID: Well, at the moment we are meeting with Minister Hunt’s Department to try and resolve this, and we have sent a communication today asking for a meeting at the senior level to figure out how we get this sorted out.
LEON BYNER: Because I know, basically people want peace of mind. And when they go into hospital for example, they want to be able to go in and not have to worry about the bill because they’ve got the stress of their medical procedure which is a real worry. So my question is this, should consumers, in your opinion, check every now and again with their health fund just to see what they’re covered for or what they’re not?
RACHEL DAVID: Yeah. Look, I think that’s a pretty good idea. We’ve done a lot of work to make it easier for people to understand what they’re covered for, and to choose a new product if they actually need it, including the categorising of health fund products into gold, silver, and bronze according to what level of cover you have. But it really makes sense to check in with your fund once in a while to make sure- firstly, to make sure that the cover that you’ve got is appropriate for your stage in life – you know, as people get older, they might need things that they haven’t in the past. And for younger people, coverage for mental health admissions is pretty important; it’s the biggest risk in that age group.

So, your needs do change as your life stage changes. And also health funds are offering new things as technology changes – including, as a result of COVID-19 a lot of telehealth options now are covered for things like counselling, and home exercise with a physio, and so forth. So, it is worth having a chat with them about that. In addition, anyone in financial hardship as a result of job losses or income losses as a result of the pandemic should talk to their health fund, because almost all of them have introduced measures to help reduce or eliminate the cost of health insurance until you get back on your feet.

LEON BYNER: Okay. Since we’ve had this new gold, silver, bronze system, would you now, as the peak body, say that there’s no such thing as a junk policy?
RACHEL DAVID: Look, we have never believed in the rhetoric of junk policies. That was something that, you know, terminology- it’s not terminology we use. Because, simply, lower cost policies are there for a reason, they’re there so a younger person who doesn’t have a lot of medical conditions or pre-existing conditions can get a foot in the door, and not need to wait until later in life when the cost of actually joining a health fund will be a lot greater; it does increase with age. But if you have- but if you take it out when you’re younger and you get a lower cost policy, then your premium won’t have that age-related loading. So, it is an important entry level product for younger people. It’s not suitable for older people, but that’s why we encourage people to talk to their health fund, and also to jump online – go to privatehealth.gov.au and check out what products are appropriate for you, given your own health status and your life stage.
LEON BYNER: Rachel David, thank you for coming on this morning. That’s the CEO of Private Healthcare. I thought it was worthwhile checking in with Rachel because sometimes we spend a lot of time talking about COVID for reasons you understand, because people want information. But there have been a couple of issues where people have, let slide some of their general health matters – which is not the smart thing to do – or they might have thought they were insured or covered for something which they weren’t, or vice versa.
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