5AA Mornings interview with Dr Rachel David about private health insurance reforms

Station: 5AA
Program: Mornings
Date: 30/01/2019
Time: 10:07 AM
Compere: Leon Byner
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


LEON BYNER: And this is a chestnut that we really need to explore and that is the business of private health. Private Healthcare Australia has proposed a number of key reforms to address the rising cost of health care and stem the movement of members to an already overburdened public health system. Our health care costs, of course, are rising much faster than the CPI. And we know there are all sorts of likely justifications for this.

But do you know the one thing that keeps coming up when people talk to us on this program, and that’s why we love interacting with you because you tell us stuff like it is, you tell us the reality and what is happening right at your doorstep. We don’t engage the theory we engage the practice. The one thing you keep telling us is, well, the advertising I’d say you may not need pregnancy support or insurance. So why don’t you atrophy that from your policy? Sounds good doesn’t it? Because you’re well past the age of having kids, maybe. So then you talk to your fund. And you find out that – and this has been the case until very recently – well, you can’t actually do that because if you want something else that might cover you for a contingent the business of being covered for pregnancy is bundled in to what you want. So you’ve got no choice.

So let’s talk to CEO of Private Healthcare Australia, Dr Rachel David. Rachel, thanks for joining us today.

RACHEL DAVID: Morning Leon.
LEON BYNER: Is that going to be fixed?
RACHEL DAVID: Yes. Look the government has worked with us, doctors and hospitals over the last two years to implement some pretty important reforms for private health insurance. And one of them is to actually better classify the treatments that are covered into four very distinct tiers so that people will have a very clear idea of what they’re covered for and what treatments are under each tier. So some of the issues that you were talking about will be fixed because people will better be able to understand what they’re covered for at their life stage. But one thing we can’t do is make private health insurance particular- completely bespoke to the individual for what they need, because of the community rating system. And that is because we can’t deny cover to someone who might be sick or have, you know, a particular risk for illness. We had to make sure that a sufficient number of things are covered for a sufficient number of people to be able to manage that risk. So we can’t make it completely bespoke to the individual, but we can make it easier and we will make it easier for individuals to- and families to better assess what cover is available that suits them.
RACHEL DAVID: Well this will be implemented from the first of April this year, but a lot of people will start receiving communication from their funds from about now and from the government in mid-February about what the changes mean. And certainly by the first of April we’ll start seeing some communication from the Private Health Insurance Ombudsman about what the changes are and how people can access the information.
LEON BYNER: Can you walk us through the various tiers of cover?
LEON BYNER: And give us some typical examples of the lowest cover and the premium gold cover?
RACHEL DAVID: Okay, well there are four tiers to start with. There is the gold, the silver, the bronze and the basic tier. And in addition to that there will be some plus categories that perhaps might mean that there’s more flexibility for certain people, so there will be some things that are added to each one. So a gold, I think it’s pretty clear that a gold policy will cover people for everything that’s covered under top hospital cover. And you know, and that’s something that should be fairly easy to understand. The same goes for basic which has been marketed in the past as a starter type product. This is an entry level product for younger people who may only need to claim for things like sporting injuries, accidents, and so forth. That is being retained as a low cost entry level product for people and they will have access to treatments to a certain number of- small number of treatments the things that a young person is likely to have. But it really covers your mental health and accident type issues. So in the middle, this is where things might get a little bit more complex as to what characterizes the silver and bronze tiers. In the bronze tier you’ll be covered for a number of things that are serious medical issues that are pretty much unlikely to happen. So things like cancer, for example, will be covered in bronze. In silver you quite a few more of the chronic diseases that are serious and significant but are more likely to happen. So, your heart disease and vascular disease is covered in silver, and then you move up to the top hospital level at gold.
LEON BYNER: So when this comes into effect, and I presume that you’re doing the mailing out now …
LEON BYNER: … are you selling out a kind of a one page fact sheet which nails all this? Because I think one of the problems people have had is that they’ve made assumptions about coverage. And then, for example, with top cover there are hospitals that have relationships with health cover insurance companies and so there’s generally no cash or payment before or after. And then as you go down the tiers in terms of silver, bronze and basic, that changes. Is that the way this is?
RACHEL DAVID: No. Look, there will still be- there are still some co-payments or extra payments that are inherent in the health system, and I think people do need to be aware of that. If you have gold cover or top hospital cover, that basically pre-supposes that you will not have a co-payment when you go into hospital. But if you do have outpatient treatments in association with your illness, health funds aren’t allowed to cover that. The other issue that people might encounter is if they have taken out a policy with an excess. The excess will still be payable. Now the excess is a small amount of money. It’s going up a little bit because it’s gone up with inflation, but if you take out an excess as an individual you may have to pay $750 or as a family $1500.
LEON BYNER: Got a question. If I said to you, because you hear this around all the time: junk health policies. What do they cover you for?
RACHEL DAVID: Well look, junk policies is not a term that we use.
LEON BYNER: I know it’s not, but you know the [indistinct].
RACHEL DAVID: Yeah, we’ve heard this before. There are low cost policies and there are top cover gold policies and they’re there to serve different people for different reasons. The lower cost policies are for healthy people who basically want an entry level product so they don’t- so they’re covered for certain basic things, so they get their in a public hospital. But then- they get to avoid the Medicare levy surcharge and they get to avoid the lifetime health cover loading. But for the most part, people that have those policies as they get older and start families they upgrade to more expensive policies. So it’s important to have that contribution to the system and give those people an option when they’re out there- you know, when they’re not actually earning …
LEON BYNER: … How much are policies going up by this year? Do we know?
RACHEL DAVID: Just over 3 per cent for most people.
LEON BYNER: And what do you say to those who argue this is just getting too much for me, I want insurance but I just can’t afford this?
RACHEL DAVID: Well look there are a couple of things. And one is people really need to consider what would happen if they did have a significant illness and they were required to seek treatment. Now, our public hospital system is fantastic. It is very good at treating acute, urgent care, major trauma and very complex health conditions. But if you had- but if you need planned non-emergency surgery for a painful condition, like a hip or a knee replacement, or you need mental health care for a condition that’s stopping you working or being at your best like chronic anxiety or depression. You might not get access to a public hospital. There’s a lot of concern about waiting times, but unfortunately the way waiting times are reported greatly understates the waiting time for surgery in particular because what they do is they report the waiting time between your outpatients appointment in the public hospital and surgery. They don’t routinely report the waiting time for the outpatient appointment.
LEON BYNER: Alright. In your words, what’s the most – in a nutshell – what’s the most significant change in these four tiers that start in July this year?
RACHEL DAVID: Look, I think what’s happened is that the treatment areas have been made much easier to understand, are much more inclusive. There’s no more slicing and dicing into treatment areas, so covering half of heart surgery or half of orthopaedic surgery. It’s very clear what you’re covered for at each level and it makes it very clear what’s appropriate at what life stage. So the a big issue with lower cost policies is that people were taking out for whom they were really unsuitable, people who already had some chronic condition, and this will make it easier for people to access an appropriate policy for their for their circumstances.
LEON BYNER: Rachel, thank you for joining us. That’s the CEO of Private Healthcare Australia, just explaining in some detail how this new system will work.
* * END * *