Interviews and Transcripts

What we’re pushing for, and the Federal Government has said prior to the election that they’re open to reform, is for people to get a single quote before they have surgery or well before they have surgery so they have the chance to plan for if there are any out-of-pocket costs. Rather than the drip pricing that goes on, where it really is they’ve got actually no idea what they’re going to be up for until, sometimes, even after the surgery.

Well, look, there is huge variation in out-of-pocket fees around Australia for exactly the same procedure and for doctors with the same level of qualifications. The reason that regions like the ACT pay more is because they are away from the big capital cities so the number of doctors is constrained and there’s less competition. But particularly in the ACT, household incomes are higher than average, and so there’s a perception that the market can bear higher prices. But for people in a cost of living crisis, what they don’t have is visibility on the fact that if they were prepared to drive two or three hours, they could actually get a much better deal.

But it’s a bit more complicated than that. Money won’t actually solve this problem. The issue is that there are fewer births now because the economy is not as good as it was. There is a workforce shortage of skilled obstetricians, midwives and nurses, which is affecting that Healthscope Hospital, as well as hospitals all around the country. And furthermore, the cost of seeing an obstetrician in their rooms to manage the pregnancy and then, say, in the nine months leading up to the actual birth in hospital, is only allowed to be covered by Medicare, not by private health insurance.

And the out-of-pocket that are charged by obstetricians can be above 5,000- between $5000 and $10,000, and, in a cost of living crisis that just completely puts people off. So, there’s multiple factors that are playing into this and hospitals, private or public, have to be able to do a certain number of births every year to be considered a safe place to give birth.

Well, look, we read the report that was put out by the APHA, which is a group that represents some of the private hospitals. And our first reaction was really that it was a bit tone deaf. What they’re doing is they’re asking people who have paid their premiums and paid top dollar for their health insurance to start paying extra fees to be treated in a private hospital, right in the middle of a cost of living crisis. Now, the health funds are not going to let that happen, and the federal government’s not going to let that happen. In fact, the federal government has just done a viability review of private hospitals which showed that on average their profits, even in what was a pretty tough year for everyone, ’22-’23, was a margin of 7 to 8 per cent. And what they seem to be asking for in this proposal is a margin of 25 per cent, which absolutely no business is getting out there in the economy at the moment.

And we understand that they’ve done it tough, like in the pandemic and in the inflationary environment after like every other business has in Australia. But the answer is not to grab more money out of consumers’ pockets. It just won’t work. People will drop their health insurance, they’ll stop using the private sector and they’ll be no better off.

Look, we’re not really looking for affection, but look, we are not a necessary evil either. We are an essential part of Australia’s health system. The health funds pay for 70 per cent of the elective or planned surgery that takes place in Australia, and 54 per cent of the mental health admissions. So I think this idea that it’s not value for money and is some kind of blight on Australia is really not true. And if you look at how Australia’s health system, its mixed private and public health system ranks in terms of health outcomes compared to other economies around the world, we’re number one. The UK health system, which has minimal private health insurance is way down the list, as is the US health system that doesn’t have the universal health care that Medicare provides. So we’re doing really well as a consequence of having the private element.

Well, you’re paying twice already, both through your taxes, through Medicare and through your private health insurance. What the Labor- what the Minns Government has done last week is they’ve introduced legislation to make- to really make 4 million people with private health insurance in New South Wales pay a third time. They’ve introduced an extra tax on private health insurance. This stuff about the bed rate is a complete misdirection. It’s straight- it’s a straight revenue grab. As you and anyone else who’s been admitted to a public hospital well knows, there are no single rooms routinely made available for private patients coming to emergency departments. That is just a distraction. The problem that we have is that the Government has introduced legislation to increase premiums for people with private health insurance, on average, $156 for a family right in the middle of a cost of living crisis. And look, I think that’s pretty cruel for people who are already paying for the New South Wales health system through their taxes. And they’re trying to do the right thing by paying a little bit extra through their private health insurance.

Well, look, we’ve seen this very big increase really since the Morrison government drew attention to it by allowing people to take out $20,000 fairly early in the pandemic. It is something that people- you can basically fill in some forms and apply to the tax office to take out your super early on medical grounds. But what is concerning us about this is that traditionally, this was really used for the people at the end of life, when they really had two- 18 months to two years left. But now, we’re seeing it used a lot for cosmetic surgery and for some procedures like spine surgery and weight loss surgery that have a very high failure, and also attract high out-of-pocket costs. And the rate that it’s happening now, we’re seeing it actually contribute to the rapid inflation of medical out-of-pocket costs in these areas.

Yes, but the number is going up and it will increase again this year. So we are continuing to pay hospitals more. We are continuing to pay hospitals in a way that permits them to keep up with inflation. But don’t forget also what the root cause of the problem is for Healthscope, and it’s their owner, Brookfield. Brookfield is a trillion-dollar global company that purchased these hospitals for way above the price the market expected. It sold the hospitals and the lion’s share of the profits went back to North America. And then it entered into a lease back agreement, which meant that- which didn’t take account of rising interest rates. So now it has a problem with debt, and it is completely unreasonable for Brookfield and Healthscope to expect that health funds and their members, which are Australian mums and dads struggling with a cost-of-living crisis, are going to dig them out of that hole. It is completely self-inflicted. It has nothing to do with private health funds in Australia, and it’s not fair for them to expect Australian households to bail them out.

Well, look, that is simply not true. We’re in a cost of living crisis right now. And the first thing that I’d say is that our responsibility as health funds is to our 15 million members, and we are not going to take any action that’s going to result in big premium increases next year. Our sole focus is keeping downward pressure on premiums.

Well, look, we’ve seen really strong growth in private health insurance membership and participation since 2020. And that’s related to a couple of things. One, it’s strongly related to immigration. But also, people really- a fall-off in confidence of the public hospital system because of several things.