5AA Mornings program interview with Dr Rachel David on a range of private health insurance issues

Station: 5AA
Program: Mornings
Date: 31/12/2019
Time: 10:36 AM
Compere: Matthew Pantelis
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


MATTHEW PANTELIS: The other story that was around yesterday and sort of lingers today is the value for money one, where people are basically, we’re hearing, dumping their private cover – it’s been happening for years anyway, the expense of it – and people are leaving funds. Is that really what’s happening? We’ll find out from-

[Audio error]
RACHEL DAVID: Good morning, Matthew.
MATTHEW PANTELIS: Now, tell me- let’s start off with the benefits issue. So, the last day today; is there any realistic chance of people getting in to see somebody to get the most out of their benefits?
RACHEL DAVID: Look, to be honest, I have. I’ve got an appointment with my optometrist this afternoon. I’ve worn glasses for many years and I think that for people who do have an extras policy that resets on 1 Jan, you know, it might be worth giving it a go.
MATTHEW PANTELIS: And so if you order today, you’re right, are you? That’s all fixed and done and whatever – you won’t get the glasses till, what, mid-January probably. But it’ll be fine?
RACHEL DAVID: Yes, you can. So as long as it’s today, and so long as your extras policy covers optical.
MATTHEW PANTELIS: Alright. Is it worth having extras?
RACHEL DAVID: Well look, for me it is. And for me- I have a family, and the biggest benefit of extras is, bar none, is the ability to get your dental care covered, and a number of preventive dental services provided completely free of charge. Many health funds will also send reminders and encourage people to maintain their dental health. Overall, 44 million dental services per year are rebated by health funds, versus 1.7 million provided by the government. So from that perspective, for keeping your teeth healthy, it’s a big bonus.
MATTHEW PANTELIS: What about the story yesterday that people are bailing out- no, people aren’t renewing the expense of the [indistinct] policy, and it’s again driving up prices.
RACHEL DAVID: Well, look, the story that came out yesterday was placed by an interest group, and the data that they released was actually completely wrong. The government and my organisation put out a corrective statement yesterday that over the last five years we’ve actually seen a net 400,000 people join private health insurance. The 2.2 million stat that they had out there about people dropping was just wrong. But the big challenge we have is that we have a large baby boom population that’s now reached the age of 70 that’s claiming at record levels. And the younger generation – perhaps, quite rightly – feels that by cross-subsidising this generation, they’re paying more and getting less.

So that’s where we’re trying to focus, to actually improve the benefit to younger people, firstly by delivering the lowest premium increase in 19 years earlier this year, and secondly by providing a youth discount, which is 2 per cent per year, up to 10 per cent for anyone under 30. And this has been pretty well received, because mental health is a big reason why young people keep their health insurance, and the private sector is often the only place where you can get hospital treatment for mental health conditions.

MATTHEW PANTELIS: Yeah. For somebody- and I’ve got it, I’ve got the private health, and I always think, look, I’m paying 250 or whatever dollars a month for it, and all I ever claim is a pair of specs like you. Got the family, you know, we’re all right with the rest of it. So I can’t help but wonder every time I have a look at my wages, and fortunately it comes out before I get paid otherwise I’d really be steamed up about it a lot more, I think, because I’m not missing the money as much, but I do think – am I really getting value here? I suspect I’m not, to be honest.
RACHEL DAVID: Well look, compared to other types of insurance, health insurance actually pays back far more for every dollar that consumers spend in premium. So for every dollar that you spend on your premium, you get 87 cents back with health insurance, versus 64 cents from general insurance for things like home and content. But the thing is, it’s not spread evenly. So as you get older, obviously your health tends to deteriorate over time, so older people get more of that benefit, and younger people tend to get less of it. But the deal is that as you get older, you too will begin to benefit.

Now, that doesn’t mean that we don’t need to focus on wasteful costs. We know that many consumers are struggling with the expense of health insurance because actually getting treatment on time means a lot to that. And so we’re working with the federal government on a second round of health reforms to actually help stabilise premium that make sure that people are getting value for money as well.

MATTHEW PANTELIS: If people- more people are joining, like you talk about that net increase of four hundred odd thousand over five years – why are premiums continuing to rise and not fall?
RACHEL DAVID: Well, it’s because of a couple of things. Firstly, we have no difficulties selling health insurance for people aged over 55, but they’re also the group that claims the most. And secondly, premiums rise for one reason only, and that’s because health funds are paying for more health care. And that’s not just the volume of services that we’re reimbursing for people, mostly older people, but it’s also the cost of those services. So technology, particularly the cost of medical devices in Australia, has been inflated and continues to go up. So that’s something we’re working with the government on managing to make sure that we are paying a fair price for medical equipment compared to the rest of the world.
MATTHEW PANTELIS: So is- are the costs there being passed on, or the savings there, I should say. Because that was one of the arguments we heard yesterday, that this medical equipment that we’re getting, the savings that are being made, just aren’t being passed on in terms of premiums to policyholders.
RACHEL DAVID: Well look, every dollar of any savings that have been made through health reform is being passed on, that’s why the health funds were able to introduce the lowest premium increase in the last 19 years. But- so that was really actually completely wrong. Our premiums submissions, including what funds get passed on to consumers, are very highly regulated, both by the Australian Prudential Regulation Authority and the health department, and we can absolutely reassure consumers that if savings have been made through health reforms, that they’ve been passed on.

One problem that we’ve had is that some of the big American medical device companies, as the prices have fallen as a result of government regulation, they’ve continued to drive the volume of medical devices and sell them [indistinct] to Australia to continue to make up the value- the very good value they’ve managed to derive from the Australian market. So it continues to be a concern for us, the cost of medical devices, but we’ll continue to work with the government to keep a lid on it.

MATTHEW PANTELIS: And Rachel, I bet once you’re off the phone, I can imagine, people will start ringing in saying, oh look, I tried to claim X and I was refused and it was furious and we were arguing about technicalities and- the stories that people have about trying to get what seems to be a decent claim – and I suppose you’ll say, well, read the fine print – but isn’t that the thing? That people think they’ve got the insurance, they should be covered for X, Y, and Z, and then suddenly find they’re not.
RACHEL DAVID: Well look, we understand the system’s complex. That’s why we invested a lot in the government’s first wave of health reforms which have helped classify products in an easier way, into gold, silver, bronze and basic tiers, but also removes some of the more confusing features of private health insurance, like benefit limitation periods of limited cover in certain treatment areas and so forth. So that seems done, and if people do need information about their health fund products, they can go to the website privatehealth.gov.au, which is a government website that provides very comprehensive information. However, in addition, I would advise that if anybody has been referred for major surgery, that they do firstly tell their GP if cost is going to be an issue so they can be sent to a lower cost provider. And secondly, that they ring their health fund before they have major treatments to make sure that they’re covered for everything.
MATTHEW PANTELIS: And that might be the shock there, where you think you are, and suddenly find you’re not. And the reasons for that, again, it causes a controversy and people saying: well, what am I paying this for?
RACHEL DAVID: And look, we understand that, and that’s why we’ve invested a lot in the process with the government to make the system easier to understand.
MATTHEW PANTELIS: All right. Rachel, thank you for your time this morning.
RACHEL DAVID: Thanks very much Matthew.
MATTHEW PANTELIS: Rachel David there, who is the CEO of Private Healthcare Australia on a range of issues, including the fact that all your benefits will reset tonight. So if you can get into your optometrist or whatever you’re covered for there with your extras, grab the second pair of specs, that’s the day to do it. Good luck though trying to get an appointment today, it’s probably moving on a little bit.
* * END * *