ABC Radio Brisbane Drive program interview with Dr Rachel David regarding the increasing number of Australians without private health insurance

Station: ABC Radio Brisbane
Program: Drive
Date: 26/7/2019
Time: 4:48 PM
Compere: Kelly Higgins-Devine
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


KELLY HIGGINS-DEVINE: And you’re with Kelly Higgins-Devine this afternoon, asking the question have you given private health insurance the flick? Last week a report from the Grattan Institute warned the industry is facing a death spiral. Now the latest official data shows the number of people who don’t have is the highest it’s been in 15 years. In fact around 63,000 Australians gave it up last year alone. Why? Is it because it’s expensive? There’s often a gap on top as well. So what is the health fund industry doing to make sure it stays alive if fewer and fewer of us want its product?

Dr Rachel David is chief executive of Private Healthcare Australia. Dr David, thank you for talking with us this afternoon.

KELLY HIGGINS-DEVINE: Why have private health insurers seemingly priced themselves out of the market?
RACHEL DAVID: Well look, just to be clear a lot of people still do have private health insurance. In fact we have no trouble whatsoever selling health insurance to people aged over 60. The reason the problems that are being raised in the media have come about is largely because of younger people dropping out. And we’d be the first to acknowledge that is because of the cost. What we have in our system- we have a very unique system, the way the private health sector is regulated in Australia. It’s called community rating and that means we don’t charge a higher premium to sicker people. You pay the same, whether you’ve got diabetes or heart disease or whether you’re completely healthy.

And that’s been a very fair system up until now. But what we’re seeing now is actually a problem for the whole health system, including the public part. We’re seeing a very large population, the baby boom population, hitting the age when they’re requiring a lot of surgery and medical intervention. And the population of Gen X-Y that come after that are a lot smaller. They’re at working age and they’re finding that to fund the health needs and the aged care needs of that larger population, they’re needing to pay more in their taxes for the Medicare side and more in their health fund premiums for the private health side. And they have the perception that they’re paying a lot but not necessarily getting back what they thought for it.

KELLY HIGGINS-DEVINE: Why do you think Australians- I mean you’ve sort of answered this question, but if it’s those three generations how is the private health system going to address that?
RACHEL DAVID: We’ve known about this for a long time, as have our regulators which are the federal government and APRA. In fact, right back in the year 2000 there was a thing called the intergenerational reports that were put out by Treasury which articulated that this would be a problem for the whole health system in generations to come. But if we’re going to keep that community rating system that means we don’t charge extra to sick people or people at high risk of illness, who have say a family history of the disease.

If we’re to keep that system, which our major political parties think is the fairest way you can only really do two things. You can take action to take wasteful costs out, and most of what the health funds pay out in claims is regulated by the Commonwealth government so that means they need to work with us on that. The second thing is you could look at increasing the subsidy to private health insurance, the rebate or the subsidy to younger people. And I think those are options we are considering and discussing with the government. Obviously they go together somewhat. You don’t want to put money into a system if it’s just being wasted, and we want to make sure that every dollar in the system goes towards high-quality healthcare. But we do need to explore both options, at least for the next 10 to 15 years.

KELLY HIGGINS-DEVINE: The chief executive of NIB was saying earlier in the week that Medicare should be scrapped. Do you support that?
RACHEL DAVID: No, we don’t support the notion that Medicare should be scrapped. The combined public and private health system we have in Australia is absolutely unique and it’s actually one of the best-performing health systems in terms of quality – if not the best – in the whole world by any objective metrics. And it’s interlocked. What you’ve got is through the Medicare Benefit Schedule, which pays private doctors, the public and the private sector are actually one thing or one system. So for private doctors, the government pays Medicare benefits and we pay the hospital benefits and some of the gap on top of that. So really you’re talking about one system. It’s a really good, well-performing system at the moment. But if you rip out one part of it – like the Medicare part for instance – the rest isn’t going to function very well. It’s either going to become very costly or very hard for people on average incomes to access healthcare.
KELLY HIGGINS-DEVINE: Dr Rachel David, thank you very much.
RACHEL DAVID: Thanks Kelly.
KELLY HIGGINS-DEVINE: Dr Rachel David is chief executive of Private Healthcare Australia.
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