ABC Radio Adelaide Interview with Rachel David on 1 October premium increase

Station: ABC Radio Adelaide
Program: Afternoons
Date: 16/09/2020
Time: 2:51 PM
Compere: Sonya Feldhoff
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


SONYA FELDHOFF: Rachel David is CEO of the Private Healthcare Australia group. Rachel, good afternoon.
SONYA FELDHOFF: Now, back in March or April you decided to put a freeze on those premiums that were due to come into force in April, but that’s now stopping.
RACHEL DAVID Yes. So, for many funds for most people, we’ll put premiums up by a small amount from 1 October. It will be the lowest increase in close to two decades. But because elective surgery has come back in every state outside Victoria and is running at higher rates than normal, it means that that small increase is necessary so that health funds can maintain some revenue to keep up with health inflation and claims.
RACHEL DAVID: [Talks over] People want-
SONYA FELDHOFF: Was there every any consideration to sort of extending that beyond the six months?
RACHEL DAVID: Yeah, look, most funds for people on JobSeeker or JobKeeper, or for any other reason which has caused them significant financial distress and a loss of income, funds are offering and will still continue to offer discounts and hardship provisions post 1 October. So, anyone in genuine financial distress or on JobSeeker or JobKeeper should contact their fund to discuss their options. But for people whose circumstances have not changed, many funds will be putting up premiums by a small amount, and it’s because that underlying rate of inflation in health costs and claims has not stopped as a result of COVID.
SONYA FELDHOFF: This won’t probably impact on many South Australians, but many may know people in Victoria. Will this also apply to those in Victoria where, as you mentioned, elective surgery isn’t back up and running, certainly not to the level that we know?
RACHEL DAVID: Yeah it will. And the reason for that is that what we have to account for is procedures that were postponed, and most of the cases that were planned to take place that are now suspended in Victoria will happen at some point in the next financial year. So, what the funds have done, what they’ve been in fact directed to do by the prudential regulator APRA is to put those funds aside until those cases are rescheduled. So, in fact what we look at is the underlying rate of growth in health costs, and not- and for one off events, we make that provision for the future.
SONYA FELDHOFF: Rachel David is CEO of Private Healthcare Australia. Rachel, the- you mentioned that elective surgery is now occurring at a greater rate. Is that making up for the downtime that we saw through April, May?
RACHEL DAVID: So, in April, May, the private sector was still doing urgent procedures. So, things like if you needed your appendix out for instance or you had a heart attack, you could still be treated in a private hospital, so we still paid those claims. But then for things like hip and knee replacements and lens replacements for cataract, those would have to be postponed. Now we’re seeing them coming back as surgeons start to reschedule those procedures at rates greater than normal to make up for the downtime. So, we’re seeing those joint replacements running at about 124 per cent of normal in most states, and things like weight loss surgery, 109 per cent; for plastic and reconstructive surgery and cataracts, it’s just under 100 per cent. So, it has taken- because there are no wait times in the private hospitals, it’s actually rebounded very quickly.
SONYA FELDHOFF: Is this just regarding hospital kind of cover? What about extras?
RACHEL DAVID: So, extras, we’ve seen strong growth. Again, what you’re dealing with is a lot of small businesses that do need to get back up and running and start to bring their patients back in to maintain their own viability. So, we’re seeing a strong growth in dental in particular, about 110 per cent of normal across most jurisdictions.

Bear in mind also that with extras we were able to provide a lot via telehealth, particularly the mental health treatment areas.

SONYA FELDHOFF: Yeah. I noticed also I know I’ve spoken with a couple of physios who- we’ve talked recently with physios who say: ooh, gee, they’re back up and running now with a lot of people with sport injuries with community sport back and running. But I spoke to physios who said: look, we didn’t really drop off as such because you’d have an increase in, for instance, people who had weird back issues from working in weird positions at home, you know, because they’re not at desks and those sorts of things.
RACHEL DAVID: Yeah. Physio is an interesting one because we worked quite closely with their peak body, and they’ve done a lot of research on telehealth. And in fact, about 30 per cent of physiotherapy services can be provided via Zoom or an iPad, so long as the person isn’t frail or requiring supervising. If they’re just rehabilitating from a sporting injury, their physio can actually direct the exercises and the program via Zoom. So, in fact, we were able to pay some claims for physio even for non-urgent cases during the lockdown.
SONYA FELDHOFF: Now, look, I can’t verify these figures but I’ve got a text here who says, Rachel, that: my private health insurance is going up 5.7 per cent while inflation is at 1.7 per cent, and the current CPI is minus point three. The funds still were getting money even when elective surgery wasn’t happening. What happened to that money?
RACHEL DAVID: So, that money has gone to pay for claims that occurred during that period. So, for urgent surgery and medical cases and so forth. The money that would have been spent on non- on surgery that was scheduled but that was postponed has been put aside in a separate account by the funds, and this is what they were directed to do by their regulator for when that surgery is rescheduled. And we’ve seen that happen in every state except Victoria. So, we do have to provision for those delayed claims.
SONYA FELDHOFF: So, it’s kind of promised claims, basically.
RACHEL DAVID: Yeah. In addition, the funds have paid back about half a billion dollars to members of that money in terms of hardship provisions, and through this- and by the suspension of the premium, the planned premium increase for six months.
SONYA FELDHOFF: Another question from Mark is: if you are on JobKeeper, are funds reducing payments or just deferring them?
RACHEL DAVID: It does vary a little bit between the funds, but some are reducing them by about half and some are permitting people to defer until they get back up on their feet.
SONYA FELDHOFF: Rachel David, look, thank you very much for your time. Rachel is CEO of Private Healthcare Australia.
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