6PR Mornings interview with Dr Rachel David re gold/silver/bronze/basic announcement

Station: 6PR
Program: Mornings
Date: 16/07/2018
Time: 9:24 AM
Compere: Gareth Parker

Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


GARETH PARKER: Now, we’ve talked about this private health insurance shakeup in the past – gold, silver, bronze and basic. That’s what your private health insurance policies are going to be marketed as. But we’re getting to the pointy end. It’s coming soon. Dr Rachel David is the chief executive of Private Healthcare Australia, that is the industry body that represents all of the insurers. Rachel, good morning.
RACHEL DAVID: Good morning, Gareth.
GARETH PARKER: When’s this taking effect?
RACHEL DAVID: Well look, the government has released the rules that govern the new system of gold, silver, bronze and basic and that means we’ll start communicating directly to health fund members up until 1 April next year, and including any changes that may occur to their products. But by and large, the classification system has been decided and we believe it will help consumers choose and use their health insurance.
GARETH PARKER: So, how’s it actually going to work? Is it going- I mean, the idea is that the consumer, that me and the listeners, can basically make better comparisons between all the various options on offer.
RACHEL DAVID: That’s right, and also consumers will be able to better understand the product they’ve got. So, what we’ve done is we’ve looked at all the products on the market and gone through them with a fine tooth comb, and according to the amount of stuff that’s covered, the amount of treatments that are covered in each area, we’ve given each product each product label. So, if it’s top hospital cover it’s most likely to be in the gold tier and if it’s a more basic level of cover – which often people in rural areas who only use public hospitals, they often have the basic level of cover so they get their doctor of choice – that is labelled as basic.

Now, there’ll be a couple of tiers in between, silver and bronze, and they’re probably more suitable for younger people in good health who need an insurance policy that doesn’t cover everything, but will protect them from unusual things like cancer, a serious mental illness or an accident. Every consumer will get that classification next year, as well as a simplified one pager on what treatments are covered by their policy and what treatments are not covered.

GARETH PARKER: So, how selective can I as the consumer be if I want some things in my policy and some things out of my policy? Am I able to do that under this system or are the tiers pretty well defined?
RACHEL DAVID: Look, the tiers are defined basically around the level of cover. It’s not possible under any health insurance system that exists to make a product completely bespoke because that will become more like a savings account and the premium would be pretty high. But we are enabling some form of tailoring by introducing the lower cost tiers, and they do things like, perhaps, for older people, they exclude things like pregnancy and IVF and come in at a lower cost, like silver cover. And for younger people they exclude a lot of the diseases of ageing. So, a bronze product might be a good entry level product for a young person who’s buying health insurance for the first time.
GARETH PARKER: Can we talk about pregnancy, because this seems to be one of the more contentious aspects of all of this? My understanding, correct me if I’m wrong, but my understanding is that pregnancy cover will only be available in gold policies, is that right?
RACHEL DAVID: That’s right, and that reflects the situation right now, where pregnancy cover is only available in the top hospital tiers.
GARETH PARKER: But if you are seeking pregnancy cover as a consumer, generally you’re a younger person, that makes obvious sense.
GARETH PARKER: So why would I want to pay for pregnancy cover if I was a woman, as well as pay for cataracts or other- hip replacements, things of that nature?
RACHEL DAVID: Well look, one of the reasons why pregnancy cover costs so much is that it is a high risk, and if a woman of childbearing age joins a health fund, there’s a very high likelihood she will be admitted to hospital to give birth. In addition, the reason that pregnancy cost so much is that when something goes wrong, it’s difficult to predict and it often ends up in an ICU admission for both the mum and the baby. We would love to be able to offer cheaper premiums for pregnancy cover, but that means we’d have to work hard to get the costs in this area down. We’ve already got a good dialogue with the College of Obstetricians and Gynaecologists that represents the medical specialists in this area, but it will take some measures that we’ll need to help drive the cost of those services down. At the moment the price is very high.
GARETH PARKER: Okay. So, do you think that a consequence of these reforms may be that some women and families of childbirth age drop their insurance cover for those things and the burden then falls back on public hospital systems?
RACHEL DAVID: Look, I hope not. That’s certainly not the intent of this policy. The intent of this policy is not to change premiums or pricing or participation in health insurance, but to help consumers understand the product they’ve got and choose an appropriate product. The issues around pregnancy and obstetrics are challenging in terms of the cost, but a lot of women choose private health for obstetrics because it gives them continuity of care from one highly qualified specialist, not a shift worker or someone who comes and goes, but one highly qualified specialist who they can call 24/7 if something goes wrong. And for many women, including myself, that was worth the price.
GARETH PARKER: Alright. We’ll wait and see how it all unfolds, but we’re aiming towards April next year. Is that right?
RACHEL DAVID: Yep. Thanks, Gareth
GARETH PARKER: Okay. Thanks, Rachel. Dr Rachel David, the CEO of the Private Healthcare Australia, that’s the industry body. We’ll wait and see how it unfolds. I wonder if your premiums will go up or go down. I’ve got a- I can take a guess, I can take a guess.
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