ABC News Breakfast Program interview with Dr Rachel David regarding APRA data showing record lows of people with health insurance hospital cover

Station: ABC News
Program: Breakfast
Date: 14/02/2018
Time: 7:46 AM
Compere: Sandy Aloisi
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


SANDY ALOISI: Over 12,000 Australians have dropped their health insurance hospital cover over the past three months of 2017. That’s according to new data from the Australian Prudential Regulation Authority. The data shows the percentage of people with hospital cover fell to 45.6 per cent by the end of December – that’s the lowest in seven years. Joining me now is Dr Rachel David, the CEO of Private Healthcare Australia – the Australian private health insurance industry’s peak representative body.

Dr David, good morning to you.

RACHEL DAVID: Good morning, Sandy.
SANDY ALOISI: What do you make of this data?
RACHEL DAVID: Well, look, if you look into it, it’s quite clear this is a concerning trend, but what we’ve also seen is that people that have health insurance, particularly hospital cover, are using it more. More benefits are being paid out and that’s what’s contributing to the premium increases which are so unpopular. What we’re also seeing is that the trend is really impacting people as a result of their incomes not going up. So we’re seeing an increased drop out in younger people and people that are living in areas of Australia where there’s more restraint on incomes – the Northern Territory, Tasmania, and South Australia.
SANDY ALOISI: I think you hit the nail on the head when you said that the premium rises are very unpopular. Is that not the reason why people are opting out of private health insurance altogether?
RACHEL DAVID: This is right, and it’s also the reason why we’ve had a number of processes in train with the Federal Government to work on keeping premiums more affordable by controlling input costs. That’s the only logical way you can stop premiums going up as our population get older and people are using their hospital cover more, and that’s very clear from the APRA data what’s happening.
SANDY ALOISI: What do you say though – I’m sorry to interrupt you – what do you say to people who pay, perhaps, top hospital and medical cover and yet find they’re still out-of-pocket after perhaps visiting hospital for a procedure? No wonder they’re dropping out, they’ll say to you.
RACHEL DAVID: Look, I think it’s important to understand this has long been a feature of Australia’s health system, but again, with fixed or low wages growth, this is now becoming a very acute problem in some treatment areas.
SANDY ALOISI: But Dr David, with respect, when there was wages growth in this country, people e still out-of-pocket after they took out private top cover health insurance. So it’s not just the fact that wages are stagnant at the moment, is it?
RACHEL DAVID: But that’s what’s causing the current decline at the moment. The out-of-pocket issue has been vexing people for some time – for years, actually. Most treatments come with a low or no out-of-pocket, but some treatment areas, particularly in areas where people are particularly vulnerable, like cancer and obstetrics, can attract a large out-of-pocket. We’ve got a process happening at the moment with the Federal Government where we are looking at ways of making sure that consumers know about this in advance and get the opportunity to compare different specialists with their GP in terms of price. Health funds are not allowed to cover the out-of-pocket costs for out-of-hospital treatments, like seeing a specialist in the community. We’re prohibited by law from doing that. And indeed, for many years specialists have strongly guarded the right to charge what they like. Most charge reasonable amounts and talk to their patients about it, but there are few in some treatment areas that have resisted that. This process, which surgeons, obstetricians, and other specialist are involved in, we hope will provide some [inaudible] who are concerned about price are able to go.
SANDY ALOISI: So can I just ask you – and we had a couple of drop-outs there, so I hope your phone line stays with us – what do you say to people who would say to you, look Dr David, I would love to stay in private health insurance but the premiums keep going up; I’m out-of-pocket whenever I seem to go to hospital and have something done, or even when I go to see my GP, so what is the point?
RACHEL DAVID: Well, certainly what we see from our data is people with private health insurance do use it, and particularly as they get older and hit certain life milestones, like having children. The number is 55, the age of 55, where after they start to claim a lot. If they do start to use it and start to access services, which more than compensate for, in many cases, for the premiums they’ve paid …
SANDY ALOISI: [Interrupts] But what about when you have children, for example – and I’m sorry to keep interrupting you, but we’re not getting to the crux of it. You are out-of-pocket when you give birth to a child. So when you say that’s a milestone, if that’s something that’s coming up and people know they’ll be out-of-pocket, why would they stay in private health insurance?
RACHEL DAVID: Well, they stay [inaudible] covers the majority of the cost, as it does for a number of procedures that people access, and access in large numbers throughout their life, like hip replacements, knee replacements, lens replacements, mental health admissions – for many of these things. Some are not offered in public hospitals at all, and for some that are offered in public hospitals, the waits can be well over a year for people that are in pain or might be going blind from a cataract. So, in fact, what we see is that people with private health insurance, in spite of the challenges, over 80 per cent of them really value the product and what they’ve got because they are accessing services in the private health sector. What we need to do is make sure, as much as possible, that any waste or dollars going astray in input costs, like overpriced medical devices or services that are low value, need to be removed.
SANDY ALOISI: And I noticed you say that people in health insurance value it, and yet there are still people who are opting out. An interesting debate, Dr David. I hope to speak with you again.
RACHEL DAVID: Thanks, Sandy.
SANDY ALOISI: Dr Rachel David there, the CEO of Private Healthcare Australia – the Australian private health insurance industry’s peak representative body.
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