5AA Mornings program interview with Dr Rachel David regarding proposals to attract young members to take out private health

Station: 5AA
Program: Mornings
Date: 4/10/2019
Time: 11:09 AM
Compere: Leon Byner
Interviewees: Dr Rachel David, CEO, Private Healthcare Australia


LEON BYNER: But I want to talk about private health insurance for a moment because there’s some interesting things going on behind the scenes, and that is that the private health insurance industry has done a fair bit of homework about trying to get means to attract younger members of the health fund. Because what’s happening is this – there’s a big pressure of rising payouts as baby boomers increasingly claim on their cover, and at the same time young people cancel their policies.

And I put this today to the head of the Private Health, Dr Rachel David.

RACHEL DAVID: Look, this is exactly right, and this is the big demographic challenge that’s facing not just private health but the whole health system, is baby boomers – which is a large population age – and make record claims on their health insurance. So to address that and the address the perspective of younger people, that they’re paying more and getting less, we have done a very detailed proposal that we have to put to government. It’s been well-researched. We’ve talked to over 5000 people around the country, and what we’ve asked is that we get employers involved, that we have an FBT exemption, so people under 40 can pay for their private health insurance in pre-tax dollars.

And then secondly we’ve asked that the rebate for low and middle income earners on premium, there’s been a 30 per cent rebate from the government on premiums. It’s been frozen for some years now. So it’s now only 25 per cent, we’ve asked that that be restored to 30 per cent for people aged under 40. So if we can bring more younger people in, we’ll actually stabilise premium for everyone including older people.

LEON BYNER: Are we really saying here that because you’ve got this big dropout rate, and also you’ve got dropouts from people even in the older demographics who for whatever reason believe the value for money is not as good as it could or should be. I mean, the big thing Rachel, and you’ve heard this so many times, but callers on this program tell us that the real problem for them is these out of pocket expenses. Which often, when they sign up they think: oh yes, there’ll be some. But they’re must greater than what they thought. That’s certainly one of the big barriers, isn’t it?
RACHEL DAVID: Well, that’s right. And that’s why we haven’t limited our discussions with the government and with the private health stakeholders to this proposal. We’ve also got a companion proposal which we’ve been discussing with government, which is about the cost in the system. We’re not saying that more investment needs to be made in the system when there is still unmanaged costs. So one of the things we’ve been talking to the government about is about their transparency measures about out of pocket costs.
RACHEL DAVID: We feel very strongly that unless proper informed financial consent is made, and unless GPs are involved in the referral process from the get-go and are able to direct patients to ethically charging specialists, then these measures will not work. So we’ve been very clear that addressing egregious fees with out of pocket costs is a part of this. Although just to be clear, it’s only a minority of specialists that are doing this, that their actions really give everyone else a bad name, and are helping to reduce confidence in the sector.
LEON BYNER: If things just continue the way they are, and nothing much changes – what is the scenario?
RACHEL DAVID: Look, if we continue to have younger people dropping out, two things will happen. One is that premiums will start to escalate very quickly for those left in the system, but even though now we’re having no difficulty whatsoever providing private health to people aged over 50, they’re going to start to get squeezed out of the system as well. And when that happens, what we’ve modelled is that if participation hospital cover was to drop from where it currently is at 46 per cent of the population back toward 30, we would say wait times for most common procedures basically double in Australia. And the investment that would be required to actually move people through private hospitals- sorry, public hospital waiting lists, is about four times what it would cost to address the problem now.
LEON BYNER: That’s the Head of Private Health, Dr Rachel David. Now, I need to tell you something else that you may be aware of. In South Australia, our health bureaucracy – and they’ve been given about, what, $44 million of taxpayers’ money to do this – are actually taking patients out of public hospital beds, putting them into private, which costs more to do. And it is not a panacea to solve the problem, because ultimately it’s a very expensive way to operate. But you see, what that’s doing, and we’ve already had callers tell us this – you might be fully insured privately, you go to a private hospital and you’ve got something that you need to have done, I’m not talking about an emergency, but nevertheless important, and you’re told: sorry, beds are full.

So, I’m going to- I’ll tell you what I will do next week, I think we need to this. We need to talk, because the Wakefield have just opened up a fantastic new hospital, multi-floored, and we still have this bed shortage issue. Now one little trick, and I’ve had a couple of specialists talk to me in the last day or two, and that is that when you are in a situation where you need an operation and it’s very important, sometimes the specialist can be very good at getting you a bed where the hospital itself, if you ask them, may not have the availability. So again, it’s not what you know, it’s who you know.

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