ABC Radio Adelaide Afternoons program interview with Dr Rachel David regarding commitment made by Australian health funds not to profit from the COVID-19 restriction

Station: ABC Radio Adelaide
Program: Afternoons
Date: 25/06/2020
Time: 2:32 PM
Compere: Sonya Feldhoff
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


SONYA FELDHOFF: During the COVID lockdown, if you have private health insurance you may well have been saying, well why have I got it? I can’t actually access the physio or the doctor or elective surgery because it was on hold during that time. I’m being told to stay home so I shouldn’t be heading out to these extra things. And it was during that time that private health companies assured us that savings achieved during that time would be passed on.

Today, Choice has made comments that will no longer happen. Now is that the case? Dr Rachel David is the CEO of Private Healthcare Australia which is the peak representative body for the private health insurance industry in Australia. Dr David, good afternoon.

SONYA FELDHOFF: Has the situation changed at all?
RACHEL DAVID: Well, no it hasn’t changed. What’s happened is that at the beginning of the crisis, if people can think back to the first few days of the pandemic there was speculation that some of the hold on some of the less urgent elective surgery and community services like dental might go on for six months or more. In fact, the restrictions on elective surgery were removed about five weeks into the crisis. And so because there was some pent up demand it’s come back stronger than it was even before. So we’re now back in many areas to 100 per cent of what we were doing before and in dental about 75 to 80 per cent. Now that doesn’t mean that customers won’t get anything back because there was a period when it was hard to claim on particularly extras like physio, massage, dental and so forth for that six-week period. And some funds have begun to do that already. So you’ll see there’s been some press releases out there that- we’ve had one fund decide to give cash rebates, – a couple of funds actually have decided to roll over the benefits into a new year so that instead of you know, how sometimes you have $1000 worth that you can claim in one year and it expires at the end of the year?
RACHEL DAVID: That’s rolling over to the next year. And some funds have yet to calculate what the shortfall will be. But I think people both need to bear in mind that the time during which people couldn’t access services was much shorter than expected and that the amounts of money saved on premiums on a per person basis is actually quite small. It’s about $50 or under. So funds have to make the decision, do they return that to the customer or do they give them some other benefit? And by the time we know that it will be a bit later in the year, by about August this year when the results from the full length of the crisis have been determined.
SONYA FELDHOFF: And is it likely that you will see those refunds – if refunds happen – on those savings more in the extras area than the hospitals area? Given that what you’re saying is that while it was quiet for that six weeks perhaps it’s now busier than it normally would be.
RACHEL DAVID: Well that’s right. Because people didn’t actually have their surgery cancelled, they had it postponed and most of those procedures that were postponed have actually been rebooked. And in fact, the reason that we’ve seen a bit more demand than we expected is because a lot of the public hospitals haven’t been able to recommence elective surgery. And so by necessity some people with more urgent cases are seeking out care on the private side.
SONYA FELDHOFF: So the argument then is you haven’t missed out on any of that cover if you still have the surgery, whereas you might have missed out on a massage or a physio appointment…
RACHEL DAVID: That’s correct.
SONYA FELDHOFF: …or a dental appointment.
RACHEL DAVID: And some funds are dealing with that by either giving people more benefits, rolling over the benefits or giving them a cash refund. It will vary between the funds and it will vary according to the financial situation of the fund as well. But I think folks will find that most funds are doing a bit extra for their members at the moment as a result.
SONYA FELDHOFF: As an industry, when are you expecting to hear where the savings were in fact made during that time?
RACHEL DAVID: We have forecast data at the moment that shows that a modest amount of savings have been made through extras but we will know the final industry wide data when our regulator, which is APRA, publishes its report in August which will cover the end of this financial year.
SONYA FELDHOFF: And so you mentioned that certain funds are doing- making decisions one way and others are making decisions the other way. As an organisation that represents all these funds, will you be directing how funds should do that or will you leave it in their own hands?
RACHEL DAVID: No. Well look, it’s a competitive industry and these are registered businesses. So while we can give them information and the ACCC has given us an authorisation to discuss how we might manage members needs throughout this crisis, including the economic crisis, it is absolutely not appropriate for us to direct funds to behave in a particular way in terms of pricing or benefits that would be actually against the Trade Practices Act. But we are- we have an authorisation to be able to discuss how we can perhaps meet members needs to this time and in the best way.
SONYA FELDHOFF: And is there a chance, come September when these results come through, that there will be no savings to pass on?
RACHEL DAVID: Well some funds could potentially be in that position, not just because of the claims they’ve had to pay out on rebooked elective surgery but because of some of the hardship provisions they’ve had to put in place for the crisis. Overall about one to two per cent of health fund members have suspended their premiums because they’re in rough shape financially as a result of COVID but for some funds that’s hit harder than others. But I suspect that most of them you know, every fund is looking into ways they can help members during this period and every single fund is committed to you know, not to profiteer in any way as a result of the crisis.
SONYA FELDHOFF: Dr Rachel David, thanks for your time.
SONYA FELDHOFF: CEO of Private Healthcare Australia.
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