ABC Radio Melbourne Mornings interview with Dr Rachel David about using private health insurance in public hospitals

Station: ABC Radio Melbourne
Program: Mornings
Date: 11/03/2019
Time: 8:38 AM
Compere: Ali Moore
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


ALI MOORE: Well, I wonder whether you’ve got private health cover. I’ve got a text here from Anne saying: top health cover, out of pocket $8500 in private hospital for a bowel operation, cover levels changed by Medibank, only benefit to keep it going is no waiting period for the operation. Another here says I got rid of extras but kept hospital, I’d rather pay for extras as they arise, I was wasting money it’s too expensive. Well, private insurers say that they’re being used as cash cows by public hospitals.

Dr Rachel David joins us. She’s the head of the private health insurance’s industry representative body, the private- it’s called Private Healthcare Australia. Doctor David, good morning.

RACHEL DAVID: Morning Ali.
ALI MOORE: So what do you think is happening in public hospitals?
RACHEL DAVID: Look, what we’re responding to this time is yet more reports of people going to a hospital in an emergency, to a public hospital, and being put under pressure to sign up as a private patient even though they’ve presented as a public patient. This particular set of reports came from a large children’s hospital in New South Wales, where people felt that they were put under a lot pressure at a time when their family was under stress. There’s been very significant growth in the last five years also in hospitals hiring staff to trawl emergency departments and try and get as many people as possible to use other sources of income like private health or a veteran’s card in a public hospital. And that’s putting pressure on the system for anyone. It is- you could not get a better example of a lose-lose situation.
ALI MOORE: But doesn’t that raise really significant questions about the value of private health cover? I mean, surely you would think if you’re paying for private health cover, you’d want to use it. So the fact that people are not using it would seem to indicate that there’s a problem.
RACHEL DAVID: Well look, these are not people who are going in for planned surgery or a planned admission. There’s always been a stable number of people who’ve had treatment as a private patient in a public hospital because that’s either the only place that was available or the only place that their particular medical care was available. What we’re talking about is people presenting to public emergency departments expecting to be treated free of charge as a public patient and then finding that they’re either pressured to use their private health insurance or they just wind up as a private patient anyway, which leads them to a situation where they may receive out-of-pocket costs they hadn’t expected and it actually, because these people would normally have been treated as Medicare patients, it pushes premiums up for everyone else.
ALI MOORE: But does that that mean that there are now more private patients, more private health- people with private health cover using the public system? Because if you look at it, I mean, excesses have gone up so if you go into a- you know, if you use your private health cover, you’ve got to pay the excess and also your out of pocket expenses are also- can be quite significant as we just heard earlier from Anne who had the bowel operation. So I mean, doesn’t it show that there’s a dysfunctionality between how the system is meant to work?
RACHEL DAVID: Yes, look, I think that you’ve highlighted correctly a number of issues that we are seeing with the system and I’m pretty horrified to hear that someone received an $8000 out of pocket for a bowel operation. That is unusual. Only about 2 per cent of surgeons are charging those very high fees and it’s why we totally agree with the federal government proposal to make that more transparent for patients and their GPs. But basically, coming back to the public hospital system, I think we’re at a bit of a risk here because what we’ve seen from national data is- data released last year showed that people treated as private patients in public hospitals do get treated faster than people that are on waiting lists of public patients. And by bringing in extra private patients to raise revenue in the short term, that does displace public [indistinct] for people on very low incomes from public hospital beds. So I think we’re a bit of a risk here unless we address the transparency in the situation and look at the whole functionality of the health system that you’ve suggested, because it’s not working out very well right now.
ALI MOORE: No, but what about people who have got private health cover but then don’t end up being covered? I’ve got a text here from Paul who says: I’m a doctor by background, I’ve got private health cover but it’s been completely useless for me in the treatment of a serious cancer.
RACHEL DAVID: Look, I think there are a couple of issues there as well and that’s one reason why we’ve, as an industry, have done so much work over the last couple of years with the federal government to- on the gold, silver, bronze, basic tiering system …
ALI MOORE: Which is being introduced on April 1, yeah.
RACHEL DAVID: Yeah. So we know that a large number of people in the community have top hospital cover which will cover them for everything. And- however as health insurance and the health system has got more expensive, people have opted for lower cost products which do exclude some things. And to make it easier for people to understand what they’re covered for, this system has been introduced. Another reason why people with cancer might be getting large out of pocket costs is because that these days a lot of their treatment does not occur in hospital. And private health insurance, for the most part, is only permitted to cover for hospital treatment. So if you’re going and receiving treatment as an outpatient, your health insurance is not permitted to cover that under national laws. Now that’s something we’re working to change and some health funds have off their own backs introduced services like chemotherapy in the home to help people that are in this difficult situation. But it’s a bit of a relic of our health system from the 1970s that health funds are not able to cover outpatient services.
ALI MOORE: No, well it would certainly appear so, given that you can do all the other things. I mean, you can cover dental and you can cover physio and you can cover various other things that are not hospital treatments.
RACHEL DAVID: That’s right, but all of that is defined as allied health by the Federal Government, including dental care. If it’s a service provided by a doctor, for which a Medicare benefit is payable, then we can’t co-fund that. And that’s often the source of a lot of out of pockets that are received by cancer patients.
ALI MOORE: So tell me a bit about the changes that are being introduced on the first. This is where every policy is going to need to be classified as one of the four tiers; gold, silver, bronze or basic.
ALI MOORE: Is that going to be a foolproof, simple way of people knowing what is excluded rather than included? Because the biggest complaint about private health insurance is what it doesn’t cover.
RACHEL DAVID: Well look that’s right, Ali, and I think the changes that are being introduced will do both, they’ll give people a very clear statement about what is covered by their policy but also what is not. So there are the four tiers, as we’ve mentioned: gold, which is the equivalent if top hospital cover and right through to basic – gold, silver, bronze, basic – and basic is an entry level cover suitable for younger and healthier people that may not need to use their extras a lot, but not necessarily be anticipating going into hospital. The other thing, and probably even a more important thing that the reforms are doing, is to ensure that if a treatment area is covered then it’s fully covered. So we’re not splitting up areas of medical treatment in ways that are confusing for consumers. So if you’re covered for ear, nose and throat surgery then you know that you’ll be fully covered for that area, and if it’s excluded, you know that you won’t be able to get cover for that.
ALI MOORE: [Interrupts] And in some…
RACHEL DAVID: That is an important step.
ALI MOORE: In some ways, do you think though, Dr Rachel David, that this could lead to even less people ensuring themselves because when it is made very clear what’s not covered then – as many people are texting in – they just give up?
RACHEL DAVID: Well look, hopefully this is going to make it easier for people to find cover that’s right for them at their life stage. If you’re just getting into health insurance, the sort of things that you’re going to need to be covered for are in the area of mental health treatments, which are the in-hospital treatments, predominantly provided in the private sector and some extras cover, particularly dental. But you’re not going to need cover for a heap of things that can go wrong that are associated with old age. So in an appropriate life stage product is going to be in the bronze and basic tier. A lot of people, once they start having children, opt for top hospital cover and the gold and the gold plus categories will make sure that they know that they’ve got absolutely the full cover for their family as they move through that particular stage in life and as they get older. What we were seeing is when we had exclusions that were not well defined, people were very happy to get the cheaper premium but sometimes when they presented to hospital they were surprised to find they weren’t covered for particular things, and that will stop under the current system.
ALI MOORE: Well look, it’s a fascinating conversation. I’ve got another text message here saying: some public hospitals pay the excess if you use your private cover and I know that for a fact, from someone that I know that that happened to. So clearly there’s a lot going on, and other people who have texted in make the point, well if you’ve got the private cover, use it, it’s meant to take the pressure off the public hospitals. But clearly this story has a long way to go.

Dr Rachel David, thank you for joining us this morning.

RACHEL DAVID: Thanks, Ali.
ALI MOORE: Dr Rachel David there, she’s from the Private Healthcare Australia organisation, which represents the private health insurance industry.
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