ABC Radio Hobart program interview with Dr Rachel David on the subject of public hospital waiting lists, PHI value and membership

Station: ABC Radio Hobart
Program: Statewide Mornings
Date: 1/2/2021
Time: 9:23 AM
Compere: Leon Compton
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


LEON COMPTON: Last week, we saw some alarming figures out of a new Productivity Commission report on government services. Just over half of patients on the elective surgery waiting list in the most urgent category, 51 per cent, experienced extended delays longer than the recommended treatment time of 30 days. It showed 66 per cent of emergency patients, 58 per cent of emergency cases presenting to emergency departments as well were seen on time. That got us asking this question: is there a link between the growing public waiting list in Tasmania’s hospital system and the number of people pulling out of private health?

Dr Rachel David is the CEO of Private Health Care Australia, and good enough to talk with us this morning. Dr David, good morning to you.

RACHEL DAVID: Morning, Leon.
LEON COMPTON: Is there a connection between the growing public hospital waiting lists in Tasmania and the number of people falling out of private health because they just can’t afford it anymore?
RACHEL DAVID: Look, I think we’re seeing this is an issue Australia-wide as well as in Tasmania, and the root causes are three. Number one is that we’re trying to fit a large baby boomer population to a hospital system that was designed many years ago. And they are demanding surgery like joints, like joint replacement, cataracts and so forth at record levels, because understandably, they want to keep fit and healthy and working and active for longer. Secondly, what we’ve seen is the impact of COVID-19, where a number of hospitals have mothballed their services as they waited to see how to respond to the pandemic. And that’s really caused a spike in wait times for elective surgery around the country. And thirdly, there is the issue of private health insurance and affordability, which we’re working pretty hard to address with the Federal Government. But it has to be seen in context of the whole system being under pressure as a result of those other issues.
LEON COMPTON: And unfortunately, one of the consequences of private health becoming ever less affordable is that young people are choosing to drop out of it as they try to make ends meet, meaning that there are fewer potentially sicker people paying premiums.
RACHEL DAVID: Well, that’s right. With the young people that tend to join understand that often the services that they might need, particularly in mental health or [indistinct] addiction and treatment after sporting injuries and so forth, are provided very efficiently in the private sector. But the reality is it is expensive and there are some things we need to do to get those costs down. Firstly, in light of the pressure on waiting lists, we had made representations to the Federal Government that the rebate on premiums for lower income earners, it’s been frozen for some years, it used to be a 30 per cent rebate, it’s now dropped to 25 per cent. For lower income earners that needs to be restored to help keep premiums affordable for that group. And secondly, we need some help from the Federal Government about reducing some of the really expensive, wasteful costs that we see for surgery in older people.
LEON COMPTON: We’ve been talking about that issue for years, though. Why hasn’t it been addressed to this point, Rachel? What are we waiting for?
RACHEL DAVID: Well, look, I think one of the issues is that it is complex to turn back some of the overregulation in our sector. But I think we’ve really reached a point now, particularly with some of the excessive costs that we pay in Australia for medical devices and equipment, that there’s a real momentum for change. We’ve been talking to doctors. We’ve been talking to hospitals about how we can put some pressure on to get these costs down, because there’s absolutely no reason in the world why Australian public and private patients need to be paying the world’s highest prices for these things that are available much cheaper elsewhere.
LEON COMPTON: Is the question for the private health insurance industry, and indeed for those that administer the state’s public hospitals, year after year, the private health insurance industry tends to ask for above CPI increases in premiums and most cases they get them. If it continues like this, I mean, there’ll be very few people left in private health.
RACHEL DAVID: I think we’ve seen that as a result of the pandemic, many people have reconsidered their position with private health insurance and are hanging onto it. But we do owe those people that are in private health insurance and people that want to get into the system to get quick access to surgery, that we do owe them the need to be very efficient and to keep costs down. To our great frustration, most of the excessive costs that are keeping premiums above CPI are as a result of government regulation that obliges funds to pay the world’s highest prices for some medical equipment and devices. And that’s a problem in the public system as well. And also, the services that are actually surplus to requirements and may not be needed in metropolitan areas.
LEON COMPTON: So can you give me an example? Just pick one real world example of where regulation is the problem in terms of the cost of providing a medical service?
RACHEL DAVID: Sure. So there’s a whole heap of things that are used in surgery, like skin glues and sponges and so forth. The Federal Government regulates the price of those things, and the health plan has no line of sight into what that is or any ability to bring that down. And in some cases for these things, you’re paying five to 10 times the retail price. And these are things that are used in very high volume in surgery, they’re very worthwhile, but we need to develop a mechanism to bring some of those costs in line with world prices. And we put a very well considered proposal before the Federal Government around that issue. We’re talking to surgeons, we’re talking to hospitals about how we can do that, because we think it’s critical that people that want access to surgery on time are able to afford it.
LEON COMPTON: Dr Rachel David’s our guest this morning, the CEO of Private Healthcare Australia. Rachel, can you give us an example compared to 10 years ago, what is the national take up rate of private health insurance as a percentage of the population compared to, say, 10 years back?
RACHEL DAVID: Well, look, it was about roughly half the population had hospital cover about 10 years ago, and that’s now dropped to 45 per cent. Say the number of people who have a dental plan or plan for extras is somewhat higher at 53 per cent, because there’s no Medicare equivalent for dental cover. But that was in hospital cover from 50 per cent to 45 per cent is due to some of the increasing costs. We’ve put a very clear plan before the Federal Government about how premium increases can actually be reduced for CPI and we’ll be discussing that with them over the next few weeks.
LEON COMPTON: Appreciate you talking with us this morning, Rachel David, the CEO of Private Health Care Australia. Thanks for your time, Rachel.
RACHEL DAVID: Thanks, Leon.
LEON COMPTON: Dr Rachel David, on Mornings on your local ABC.
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