ABC Radio Brisbane Interview with Dr Rachel David (PHA) and Leanne Wells (CHF) regarding Gold, Silver, Bronze and Basic health cover

Station: ABC Radio Brisbane
Program: Breakfast
Date: 19/10/2018
Time: 9:10 AM
Compere: John Taylor and Rebecca Levingston
Interviewee: Leanne Wells, CEO, Consumer Health Forum; Dr Rachel David, CEO, Private Healthcare Australia


JOHN TAYLOR: Do you have private health insurance? And do you know exactly what you’re covered for and what you’re not covered for? Or do you find purchasing private health insurance stressful and confusing? From 1 April next year the federal government says they’re going to make things a lot simpler introducing a new rating system for health funds; basic, bronze, silver or gold cover. So I suppose the question is though what does this mean for you as a policy holder?

Leanne Wells is the CEO of the Consumer Health Forum and Dr Rachel David is the chief executive of Private Healthcare Australia. Good morning to both of you. I suppose firstly Leanne Wells, why the changes?

LEANNE WELLS: Look the changes are a response to exactly what you said in your introduction, it’s a response to how confusing people find the private health insurance market. And you know, almost 50 per cent of the population, around 50 per cent of the population have private health insurance policies. Many set and forget but with cost of living being a concern to people on no wage growth, it is an increasingly important decision for families. It’s also subsidised by taxpayers through a rebate, so it’s only reasonable that we look for ways to help people shop around for the best value possible out of their policies. So that’s what this new system of categorising existing policies into clearer tiers with minimum requirements and standard clinical categories so that they can easily see at a glance what’s what in their policies and the next [indistinct] as communication flows around this it’s a really good time we’re saying to have a good look at, you know assuring yourself that your policy is what you think it is, and if it’s not, to have a good look around at your choices.
REBECCA LEVINGSTON: Rachel, this is across all private health care funds. Can you just talk through in simple terms what is going to change for people?
RACHEL DAVID: Okay, well look we’ve worked on this with the Consumers Health Forum and Leanne for over two years going through health fund products line by line to remove some of those features that were very confusing for people, and also to ensure that we had a system in place that would really help consumers choose and use the right policy for them. Affordability is a concern but we want to make sure people also get policies that cover them for what they need. So what we’ve done is we’ve classified the product into four tiers; gold for people who know they might be getting on in life or about to have a baby. So they know they’re going to need higher cost health services. Basic, right through to basic and bronze level for people who are healthier, they want an affordable option but they need cover for unusual but serious events that might occur like cancer or the consequences of serious accidents. So we’ve basically done that first.

And secondly what we’ve done which is even almost more important than that is we’ve gone through and clearly defined each treatment area so that we know that if you’re covered for one type of surgery and one health fund, if you change health funds your cover for that treatment will be exactly the same. There’s going to be no more confusing features like restrictions or benefit limitations or all of these things that limited cover in the higher level, that’s all been removed. So if you are in a high level, silver or gold, you will be covered for your hospital treatments. And we’ve also made it clear that if you think that you’re covered for an area like mental health or ear, nose and throat you’ll be fully covered and there’s no more slicing and dicing into treatment areas.

JOHN TAYLOR: So there will be no more surprises that when you get sick that suddenly you’re checking your cover and you go oh I’m not covered for this.
REBECCA LEVINGSTON: Well that’s the idea and I think in addition to informing everyone of the colour or the tier of their health fund product, everyone’s going to get an information statement that says what they’re covered for under their current policy, what it does not cover and some options if that person is therefore unhappy and feels they need to change to something to more affordable or with more value.
REBECCA LEVINGSTON: Dr Rachel David is from Private Healthcare Australia. From 1 April next year there’ll be a new ratings system for you, for everyone who’s got private health care from basic to bronze to silver to gold. Leanne Wells is from the Consumer Health Forum.

Leanne, Newscorp last week we were reporting that one million health fund members will have their insurance policies axed. Is that accurate?

LEANNE WELLS: Oh look, I don’t know whether they’ll have their health insurance policies axed. I think there are four key things that people need to understand with these changes, and often the nuance is important here. I think the first thing is that they do apply to hospital cover. They don’t apply to general or extras cover. And as Rachel said there’s no change to your policy…
JOHN TAYLOR: Could you just explain the difference between hospital and general cover?
LEANNE WELLS: Yeah well hospital cover covers you for inpatient services and procedures in hospital. General cover or what used to be known as extras cover covers you for things like dental, physio, those sorts of things.
REBECCA LEVINGSTON: So those services, the dental, physio are you saying they’re not guided by this new rating system?
LEANNE WELLS: So the new rating system applies to hospital cover insurance products, that’s right.
REBECCA LEVINGSTON: Okay. Alright, so you said – so there are four things. One is understanding that difference; what else?
LEANNE WELLS: Yeah, one is understanding that difference. The other things is – well, as we’ve said before, it’s a way of categorising existing policies. If you’re happy with your existing policy; great. There’s nothing that will prompt you to change, unless you want to use this as a trigger to shop around and compare and contrast what you’ve got, particularly if you’re a bit of a set and forget person. I think the other thing, as Rachel said, is that they are- these gold, silver, bronze categorisations – are just that: they’re categorisations, they’re tiers with minimum requirements and standard clinical definitions.

I think the other thing we should remind people is that: we would still expect, as consumers, to see insurers competing for the consumer dollar and always looking for the way they can add value into their health insurance product. So, they’ll also be, what are called silver and bronze plus products on the market. That keeps choice and competition there, it doesn’t erode that. But it still keeps the transparency and easy to compare information up there as well.

So they’re the three or four things.

JOHN TAYLOR: Leanne Wells, do you think some private health insurance offerings have deliberately been tricky or misrepresentative?
LEANNE WELLS: Oh, look I don’t know – I wouldn’t say that it’s a deliberate strategy on the part of the insurers, I just think what we’re dealing with is a very, very complex market and a very, very complex array of policies – thousands and thousands of policies. Choice is good, competition is good. But I think it becomes confounded and that’s what we’re dealing with, and what we’re trying to navigate our way through now, trying to find a path to a simpler health insurance system. Private health insurance system is unpacking that a little bit so that some of that ambiguity, some of that fine print is easier to track your way through.

And as Rachel said: there will be, as part of these changes, a single page, a new single page private health information statement that contains mandatory information about what each policy covers. So in addition to the gold, silver, bronze categorisations or tiers, people will have access to that as well, which should make information about their policy and how it sits and rates compared to others, quite a lot clearer.

REBECCA LEVINGSTON: Leanne, how will the rating system changes affect people who are waiting for procedures or services currently?
LEANNE WELLS: I’m not expecting that that would make it – have any impact on those. So, as I said, if you’re happy with your policy – you know, one of the reasons people choose private health insurance, we know, is choice of doctor, being able to access treatment quickly and easily and fast in the private health system. So, that’s one of the value propositions of private health insurance and one of the reasons why over half the population have it.
REBECCA LEVINGSTON: But can you confidently assure people who have private health insurance now, that they won’t be worse off when these changes kick in on 1 April?
LEANNE WELLS: Look, I mean one of the things we’re always concerned about as a consumer’s health forum is the annual premium round, the premium increases. We’ve had low premium rises this year in April, we are assured by the insurers and by the minister that these changes will be premium-neutral. But it’s always – you know there’s always a cautionary tale in this. You know, the average figure that the Government talks about is just that; it’s the headline figure. So again, it’s – the message is: shop around. For people, an average is an average, and some people’s policies will go up more than that. Others may less, others may stay the same. So, I think it’s a nuanced message, but again it’s really: look at your policy, look at the detail. Use this new information to appraise and assure yourself that you’re getting the best value you can out of what you’re paying in premiums.
JOHN TAYLOR: So, Dr Rachel David, you’re from Private Health Care Australia. So, some insurance policies then are going to increase?
RACHEL DAVID: Yes, but I do completely disagree with the statements made in Newscorp, that a million people will have to change their health insurance policy; that’s simply not true. This system is not about increasing or decreasing premiums, or turfing people off policy. It’s about giving people the right information firstly about the policy they’ve got and secondly, once they’ve got that enough information to be able to compare apples with apples between health funds, so that they can choose a plan that’s appropriate for them in their demographic. That’s why we’ve got the plus categories, so health funds can continue to tailor affordable products for people at different life stages. The premium round is a completely separate process by which we, the health funds, assess the financial risk of the next year and price their product for the next year; that’s approved by the minister. And health funds do everything possible, everything within their power to ensure that prices do not rise. It is a disaster for health funds when health costs start climbing out of control. We do everything we can with the government to keep a lid on premiums, but this is a separate process. It’s about categorising products and helping consumers choose and use their health insurance.
REBECCA LEVINGSTON: Rachel, whose idea was it to make these changes?
RACHEL DAVID: Well look, this was something that came out of the Coalition Government a few years ago when they did a very big survey of consumers – and you’d be aware that over half the population has health insurance and relies on it to get access to non-emergency surgery, mental health and dental care. That’s very important issue for people. They did a survey of a large number of people and found that folks were concerned about how confusing it was getting. Health funds have gone through a long period of in trying to meet consumers’ needs with affordable products, they tailored products in ways that were very confusing. They got that feedback, they consulted with the consumer and competition experts like Graeme Samuel, and came up with this methodology. It was complex to put it together, it took two-and-a-half years of work with doctors, hospitals and consumer groups like Leanne’s to actually get it right. So, we’ve taken feedback and consulted all the way through the process, and we’re very confident that this system will actually be a lot better and a lot easier for folks to use.
JOHN TAYLOR: Alright. Well thank you very much for both of you for joining us today. You’ve been hearing from Dr Rachel David, the Chief Executive of Private Health Care Australia and Leanne Wells, the CEO of the Consumer Health Forum.
* * END * *