ABC Radio Canberra Early AM program interview with Dr Rachel David and co. on the value of private health insurance

Station: ABC Radio Canberra
Program: Early AM
Date: 16/7/2019
Time: 6:09 AM
Compere: Sabra Lane
Interviewee: Nathan Wood, former health insurance customer; Stephen Duckett, Health Program Director, Grattan Institute; Dr Rachel David, CEO, Private Healthcare Australia


SABRA LANE: Is private health insurance value for money? A growing number of Australians, especially younger people think it’s not and they’re dropping their cover. The Federal Government claims its delivering the most significant reforms to private health insurance in over a decade to make it more affordable. But a new report says the system is becoming increasingly unfair and costly. Political reported Stephanie Borys has more.
REPORTER: It was a trip to the hospital that resulted in Nathan Wood cancelling his private health insurance.
NATHAN WOOD: It was over $90 a month and the benefits just weren’t outweighing the costs in the end.
REPORTER: The 33-year-old had basic cover but paid for more than $1000 in out of pocket costs for day surgery and he wasn’t the only one questioning value for money.
NATHAN WOOD: I was talking to one of the nurses when I went in and she asked if I had health insurance and I said I did, but I have a basic package and it didn’t seem to cover anything. And she said we find that quite a lot actually and that we usually just mention to young people that it’s probably not actually worth it a lot of the times.
REPORTER: Stephen Duckett is the Health Program Director at the Grattan Institute.
STEPHEN DUCKETT: Health insurance policy in Australia is a complete and utter muddle.
REPORTER: The independent think tank examined the history and purpose of private health insurance, finding it’s unfair, costly and confusing.
STEPHEN DUCKETT: Health insurance appears to be and is claimed to be in a death spiral. Basically over the last decade or so, younger age groups, everybody under 65 is dropping out of health insurance.
REPORTER: There are subsidies and financial penalties in place to try to boost the number of people on health insurance. But Nathan Wood says he isn’t fazed by paying an extra fee.
NATHAN WOOD: I did a quick cost analysis at the time and it’s nowhere near as bad as what it would be in terms of paying that 90 odd dollars a month.
REPORTER: The Grattan Institute report warns that if current trends continue, more young people like Nathan Wood will drop their cover. That will force premiums up, leading to a further exodus of healthy users and placing insurers under immense pressure to contain costs.

Rachel David is the CEO of Private Healthcare Australia.

RACHEL DAVID: If more people drop out, I think what you’re going to see is increasing pressure on hospital waiting lists, particularly for essential non-emergency surgery like joint replacements.
REPORTER: Stephen Duckett says the Government needs to address why penalties and subsidies are becoming less effective.
STEPHEN DUCKETT: So Government is going to have to step in sometime, probably in the next 18 months or so and it’s going to have to confront the issue about its very policies, its red tape needs to be addressed, and how is it going to do that and what is the future of the industry.
REPORTER: Rachel David says subsidies are one of two measures the Government needs to address so more people sign up to health insurance.
RACHEL DAVID: You can increase the subsidy to low and middle income earners to help them access non-emergency surgery. You can reduce wasteful costs like inflated medical device prices and unnecessary care occurring in hospital.
REPORTER: A spokesman for Health Minister Greg Hunt says the Government is liaising with the health care sector to identify and implement reforms that will ensure health care is more affordable and sustainable.
SABRA LANE: Stephanie Borys reporting there.
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