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

Station: ABC Radio Melbourne
Program: Mornings
Date: 21/09/2020
Time: 8:48 AM
Compere: Ali Moore
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


ALI MOORE: Rachel David is the CEO of Private Healthcare Australia which is the peak body for the private health insurance industry in this country. Rachel David, good morning.
RACHEL DAVID: Morning, Ali.
ALI MOORE: How do the private health insurers justify an increase when pretty much none of us can use our private health insurance?
RACHEL DAVID: Well look, health funds don’t want to increase premiums by a single dollar but it is necessary for some health funds to put up premiums by smalls amount with time to ensure they remain financially viable as health costs increase. The only reason health cost- health funds put up their premiums is to keep revenue in line with health costs and claims.
ALI MOORE: But one would imagine that their coffers are looking pretty healthy at the moment.
RACHEL DAVID: Well not exactly. Health inflation hasn’t changed as a result of the COVID-19 pandemic, health funds have continued to pay out claims throughout the pandemic at lockdown for urgent cases and Telehealth has-
ALI MOORE: [Interrupts] But overall, in percentage terms, how much of those claims been reduced?
RACHEL DAVID: Well what we’ve had to do is to put some money aside for cases that were postponed; so for surgeries that were planned but were postponed, and that’s a regulatory requirement – so that’s been about just over $1 billion over the whole time. And in addition health funds have paid back half a billion dollars to their members already, particularly for those in financial distress and who are on JobKeeper and JobSeeker.
ALI MOORE: But the argument here is that okay, maybe we haven’t had to pay out a huge amount of claims over the time of the restrictions, but there’ll be a catch up.
RACHEL DAVID: There is. And in states outside of Victoria we’ve already seen surgery come back very quickly. So for joint replacement surgery – the surgery where you get more hips and knees replaced – in June that was 124 per cent of normal as surgeons were rescheduling cases that had been postponed during the pandemic. And in Victoria we’re already seeing surgeons begin to reschedule those cases. So our regulator requires us to put some funds aside to make sure we can cover those claims as well as the increase in costs of healthcare.
ALI MOORE: So that’s the surgery where there might be a catch up, but what about all those other things – the physio for example, the dentist, the optometrist – things that there won’t be a catch up. You know, you’re not going to suddenly go and have three dental appointments where you might have had, you know, just because you’ve missed them.
RACHEL DAVID: Well look for dental we are actually seeing it a little bit in states outside Victoria. So the dental appointments are at about 111 per cent of normal as people have- who have ongoing dental issues have rescheduled. You should be aware that for a number of allied health modalities like psychology and for some physio, health funds actually continued to pay claims during the lockdown via Telehealth. And, you know, and as a result of the remaining appointments being cancelled we did make some savings, but the majority of those have been paid back to members in terms of relief for people on JobSeeker and JobKeeper and whose incomes have been negatively affected as a result of the pandemic.
ALI MOORE: So what sort of an increase are we looking at in October? And then again, what happens in April, which is the usual time for an increase? Do we get another one?
RACHEL DAVID: Sure. Well look, it is a small amount – it’s the lowest average increase in 19 years – and that reflects work that we’ve been doing with the Federal Government which regulates the claims that we pay out, to take out some wasteful costs. So the same process will go through for the April 1 increase next year. If we can keep the wasteful costs down, there’s no reason for premiums to go up by much at all in April of next year. But we do require the cooperation of the Federal Government because, unlike some other forms of insurance, the Federal Government, the Federal Health Department, actually determines what health funds pay claims for. So we need to work with them to make sure that expenditure is worthwhile.
ALI MOORE: So just before I let you go, the average increase from October?
RACHEL DAVID: It’s about 2.9 per cent across all the health funds, but some funds won’t be putting up their premiums at all.
ALI MOORE: Well thank you. I’m quite sure there are people sitting there thinking, what can I- what can I do to use what I’m paying for. Because I know many of us are feeling like we’re not getting bang for our buck at the moment when it comes to private healthcare. Rachel David, thank you for talking to us.
RACHEL DAVID: Thanks, Ali.
ALI MOORE: Rachel David there, the CEO of Private Healthcare Australia.
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