6PR Interview with Rachel David on the Choice Research

Station: 6PR
Program: Perth Live
Date: 22/07/2020
Time: 3:13 PM
Compere: Oliver Peterson
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


OLIVER PETERSON: Let’s bring in Rachel David, who is the Chief Executive of Private Healthcare Australia, and she joins me live on 6PR this afternoon. G’day Rachel.
OLIVER PETERSON: You have just heard from Dean. What do you make of Choice’s research here? Is it true that both the BUPA health insurer and Medibank are going to be increasing their premiums from 1 October?
RACHEL DAVID: Well, I think just to take a step back – and I do want to address that issue – but to take a step back, I was a little bit surprised to hear just then that health funds have somehow made windfall gains of over a billion dollars that we’re sitting on and not passing back to consumers. Since the beginning, in the first week of this crisis when there was a national lockdown, health funds suspended planned premium increases, and every single one put in place hardship provisions, to which 100,000 people have already applied and had their premiums stopped. Now, in addition to other things the funds have done, like $5 million that Medibank paid for Beyond Blue, depression charity. And you know, $2.5 million that HBF in Western Australia spent on COVID-19 assistance. You know, this adds up to over half a billion dollars that was spent in the first few weeks of this crisis by the health fund without any money being saved by the funds whatsoever. So, look, I really need to challenge that claim. Anybody who has a problem paying their premiums, all they need to do is call their own health fund.
OLIVER PETERSON: [Talks over] So, the health funds are going to take a hit to their profits this year regardless, Rachel, there’s nobody making any additional money out of the coronavirus.
RACHEL DAVID: No one is making any additional money out of the coronavirus. And so the second point that I’d make in relation to this is that at no point during this crisis was all elective surgery and all allied health was cancelled. Most surgery was postponed until a later date, and in fact quite a bit of surgery actually went on during the lockdown because it was too urgent to put off. So in fact, what the funds have done- you know, is to pay some of the money from the postponed surgery back to members in terms of hardship provisions, but they’ve had to put some aside, you know, at the direct instructions of our regulators to fund surgery that’s been postponed to later in the year. And bear in the mind, we don’t know what’s going to happen with COVID-19. There is still a major outbreak of COVID-19 going on in Victoria as we speak. So we can’t be making definitive statements right now about what may be a permanent saving and what might not be. But in spite of that, the health funds have still paid more than a half a billion back to their members. And in addition, there is no person out there that has anything like a reasonable reason that- you know, for financial hardship that can’t have their premiums suspended.
OLIVER PETERSON: [Interrupts] So, that is available through every single health fund?
RACHEL DAVID: That is available through every single health fund.
OLIVER PETERSON: Okay. Could there have been a scenario here, Rachel, where there was a freeze though on increasing premiums? We’ve got HBF confirming that they’re not going to be increasing their premiums, but it looks like Medibank, BUPA going up on 1 October; what about HCF? What about NIB? Can they not just be frozen for another 12 months?
RACHEL DAVID: Well look, the reasons that premiums go up is because the underlying rate of health inflation or increasing costs in the health system is going up. It’s a very tightly regulated process. No fund is able to put their premiums up without a very good reason, and no fund wants to put their premiums up and possibly result in losing members.
OLIVER PETERSON: Sure, but with the cancelled surgeries as you mentioned there, a lot of the elective surgery hasn’t gone ahead in 2020. Could there not have been, from Private Healthcare Australia, an arrangement, an agreement with not only the health insurers but also the Federal Government, just to provide all Australians with a break, with a freeze for 12 months?
RACHEL DAVID: Look, at the moment an agreement like that would firstly not be legal, and secondly it wouldn’t be possible with the underlying rate of health inflation that has barely changed. I mean, the COVID-19, the impact that it had on elective surgery was barely a blip, and now we’ve gone back to 109 per cent of normal in same cases as some providers try to catch up.
OLIVER PETERSON: But if it’s good enough for HBF, why isn’t it good enough for everybody else, Rachel? How have they been able to do it, no one else has?
RACHEL DAVID: Well, in WA, fortunately HBF has been an extraordinarily well-managed fund over a lot of decades, and was able to accumulate a large amount of cash that has enabled it to be able to do this for its members. Not every health fund is in that position, and not every health fund has the same structure and type of members that HBF has. They’re all very different businesses in different states with different business models. So some may only put their premiums up by a tiny amount or not at all, we’re still not there yet. And some might need to because if they didn’t, they wouldn’t be left standing in 12 months’ time.
OLIVER PETERSON: Rachel David, I appreciate your time. Thank you very much.
RACHEL DAVID: Thanks Oliver.
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