5AA program interview with Dr Rachel David on the value of PHI and membership increasing as a result of COVID-19

Station: 5AA
Program: Mornings
Date: 5/3/2021
Time: 10:34 AM
Compere: Leon Byner
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


LEON BYNER: Now, one of the other very important costs in our community is private health insurance, and it is interesting that the number of Aussies taking out private health increases despite the fact that the prices are going up. I just wouldn’t be without it. Swelling public hospital wait times has caused a very big increase in the number of Australians taking out private health insurance premiums, despite the cost that’s risen by almost 3 per cent in October, that’s last year, which normally causes a drop in private insurance membership. So, I think the pressures are such that people are taking out some insurance.

So, let’s talk to the Private Healthcare Australia CEO, Dr Rachel David. Rachel, good morning.

RACHEL DAVID: Morning, Leon.
LEON BYNER: Is this something that’s unusual? Because previously, when I would read your releases, it would inevitably be the case that you put the price up and then some people would drop out. But not this time round.
RACHEL DAVID: No. Well, look, we’ve had four years of slowly declining membership complete- you know, particularly of that top hospital cover level, that’s pretty expensive, particularly for older folks. But what we’ve seen this time is, I think COVID-19 and this pandemic has been a big wake up call for people and they’ve stopped to really reconsider what their healthcare means to them. And if something happened, would they be able to get access to hospital treatment? And the answer is, unfortunately, for many people living in certain areas, the fact that public hospital beds are being mothballed for so long during the pandemic, means that for some common procedures, you really are not going to be able to get access for even years. And what we’re talking about is your hip and knee replacements, and lens replacement for eye disease, and that type of treatment that is expensive that is essential, but we call elective surgery, which means that you can wait for a long time if you don’t have hospital cover.
LEON BYNER: So, which are the people now that are much more on board than only a couple of years ago? Would it be the millennials?
RACHEL DAVID: Well, look, we are seeing an increase in almost all age cohorts of people either keeping their health insurance or are taking it out. But it is still very much the older cohort and over 65s that are joining or hanging onto their insurance, even if it means they have to pay a bit more because they’ve waited to sign up. And the reason for that is lack of access to treatment and cost of treatment that they’re seeking in the public system.
LEON BYNER: Yeah. There’s another issue here, and that is that I sometimes wonder, and you and I have talked about this before, Rachel, I sometimes wonder whether people who sign up actually know what they’re really going to get, because sometimes they have an expectation, and they might say, well, I’ll go to the lowest premium, but there’ll be a hell of a difference between what their need might be – God forbid if something happens – as opposed to a higher table.
RACHEL DAVID: Well, certainly, if you’re older, if you’re over the age of 55 and you haven’t looked at what you’re covered for, it is worth checking again. And for hospital cover, you hope that you won’t need, you’re not going to need a hip replacement or you’re not going to go blind. But these things are common as we age, and no one likes getting it, no one likes getting older. But also no one wants to be told that they’re not going to be able to do their job, which involves standing up or driving a car because they’re going to be on a wait list for two years.
LEON BYNER: Alright. So just for the record, I notice that one of Bupa’s executives, they’re one of the big players in health insurance face, they are saying that in comparison to the public hospital procedure, the wait for the same procedure in the private system is much less. Do we know by how much?
RACHEL DAVID: Well, look, it’s almost that you don’t need to wait. It depends on the particular doctor and how quickly that they can schedule your procedure and also what pre-surgery medical checks you might need. So, it really is once you have an appointment with a surgeon, they’ll tell you whether you need any checks before your surgery and when they can schedule you in. And it can be as little as two weeks.
LEON BYNER: So, I notice that in the 2020 year, the benefits paid out was, what, ? *
LEON BYNER: That’s a lot of money, isn’t it?
RACHEL DAVID: It is. And it actually only decreased slightly from what we normally would have paid because we were in the private hospital sector where they would have rescheduled surgery very quickly after the lockdowns and catch up on a lot of those procedures that had been put off. So that was excellent. And it really goes to show how our private system backs up our public system, because it is able to get both elective procedures through very quickly.
LEON BYNER: One other point. You’ve got a sort of a card system now, or gold and silver, are people understanding the differences?
RACHEL DAVID: I think they’ll understand the differences more than they did in the past. And that’s reflected in the fact that our customers and the feedback that I’m getting is our customers are making active choices about what they want to be covered for. Most younger people are taking out the basic levels or the bronze levels and they- that really cover you for something very unlikely to happen, like being in an accident, and needing a lot of post-operative treatment. But we’ve got an important caveat in that if you have one of those lower levels of cover and you have an unexpected mental health episode, you can upgrade, the day you get into hospital and get a cover note on that day.
LEON BYNER: Is there a qualification period for the upgrade or does it happen literally straight away?
RACHEL DAVID: No. There’s no waiting period. And I think the reason for that is it is hard for younger people on a basic policy to really predict their risk of having a mental health condition. So, I think that that has made the system a lot safer for everyone and a lot more transparent.
LEON BYNER: Rachel David, thank you. That’s the CEO of Private Healthcare Australia.
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