Dr Rachel David discusses the value of private health insurance with 5aa’s Leon Byner

Station: 5AA
Program: Mornings
Date: 22/11/2022
Time: 9:34 AM
Compere: Leon Byner
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


LEON BYNER: But in the meantime I want to talk about private health insurance, because I’ve always had it. And in many cases, when one hasn’t had work to do there’s been a temptation I’m sure by many to dice it, but nah – it is a big thing to keep. But is it unaffordable for many, and really for those people they have to rely on the public system. So let’s talk to the chief executive of Private Healthcare Australia, Dr Rachel David. Rachel, thanks for coming on today. Just to…
RACHEL DAVID: Pleasure, Leon.
LEON BYNER: …start this conversation, what proportion of workers in this country are actually able to join or be members of private healthcare benefits?
RACHEL DAVID: Look, it’s over half the population. And in fact, over the last nine quarters – so that’s over the last two years during the pandemic years – we’ve seen really strong growth in membership. And I think that really reflects the value for money that people perceive they’re getting, particularly as issues around the public system continue to build up, particularly waiting lists and ambulance ramping.
LEON BYNER: Now, what do you make of claims by many advocates that the private health funds, if you’re a member, are not giving you a bang for your buck? What do you say to that?
RACHEL DAVID: Well, look, I think I have seen some of the claims in the press this morning, and I did find it particularly concerning that really the big end of town in terms of the medical specialists seem to be clamouring for more of a share of private health insurance money to go to them rather than to members. But that aside, Leon, I mean, private health funds pay back more for every dollar you spend on premiums than any other form of insurance in Australia.
RACHEL DAVID: So at 86 cents in the dollar, you’re getting more back through the private health insurance than any other form of insurance. Secondly…
LEON BYNER: [Talks over] What about premiums? I just want to ask you about, because a lot of people listening will say: look, I’d love to be able to keep my private health, but I’ve had to forgo it because I’ve got other cost pressures I’ve got to meet.
RACHEL DAVID: Look, and we really understand that. For many families that have private health insurance, it’s the second biggest cost that that family has after their mortgage or rental. And so we are doing everything in our power to ensure that we keep a lid on inflation in our sector. Unfortunately, health costs do rise. That’s due to- and premiums reflect the underlying health costs in the community, and that’s to do with some long term factors like the ageing population, but more recently some of the issues that hospitals are facing as a result of the economy inflation- in the economy, like the cost of recruitment, the cost of power and the cost of food.
RACHEL DAVID: So we will need to cover those costs. But at the same time, we’re doing everything in our power to ensure that we’re not spending a dollar on anything that is wasted.
LEON BYNER: Alright, I’ve got a question from Cesar in North Adelaide. Cesar, what’s your question for Rachel David?
CALLER CESAR: I’m just interested to know what her thoughts are. I pay for private health for myself and my two daughters. It’s about 540 a month, and I don’t think I’m getting the value, but it’s there as the insurance – it’s what it’s meant for. What’s her thought on making it a tax deduction, your premium for those people that pay it, as an incentive to encourage others to take it up?
LEON BYNER: Interesting question. What do you think, Rachel?
RACHEL DAVID: Look, that was the system many years ago, and now there’s a different system. People do receive a rebate from- on their premiums from the Federal Government, which spends about $7 billion a year on this rebate. It is means tested so that it does cut out over a certain income level, but that is the way in which the government is subsidising private health insurance now. And the reason for that is that when it was done through the tax system, a lot of very low income earners – and we do have a number of people on the aged pension, about 400,000 people on the aged pension who still managed to keep up their private health insurance – a number of those people would miss out if it was done through the tax system.
LEON BYNER: Okay. In general, just to get the ballpark here, and if you are privately insured- see, there are many who would say to me: Leon, no matter what happens, I’ll try and afford it. Others say, look, it’s a luxury I can’t afford. How many people have dropped out of private health and how many people have signed up?
RACHEL DAVID: Well, look, over the last nine quarters, we’ve had pretty significant growth. So we haven’t really been seeing the people dropping out- or we haven’t seen a net dropout of people…
RACHEL DAVID: …over the last nine quarters. And that really takes into account the pandemic period during which public hospitals were just overwhelmed. And many of them have had to shut down elective surgery in some treatment areas So I think the public understands on the whole that this is value for money, and that when people take out insurance, what they’re doing is they’re making space for someone else on a public hospital waiting list who might not be as fortunate as they are.
LEON BYNER: Now just- and I’ll ask you this in a moment, but John in Allenby Gardens has a question. John, what would you like to ask Dr Rachel David?
CALLER JOHN: Yeah, g’day guys. Listen, I’m just wondering, I’ve been with an institution now, just a single, for about nearly 45 years – although they tell me it’s 25 years, but they forget the mutual community days. I just wonder, I’ve got to get a knee replacement, and I went in to do all the tests and everything to get that done. Now it ranged from $1500 to 3700 out-of-pocket on my top hospital and topped extras. I find that ridiculous. Like some of these people, these doctors, these surgeons, they can just seem to charge what they like and mutual community and the Medicare side of it, they just pay whatever it is and they don’t pay any more. And that’s crap. I mean, I’ve been with you for 45 years for- and I’ll say the company, Bupa.
CALLER JOHN: And yet, like a person can come up and join up, serve the six months and 12 months waiting period and get exactly the same benefits as I’ve been getting with this same institution for 45 years. And I don’t even get a free meal out of them.
LEON BYNER: Look, now, stay on the line, John. Rachel, a lot of people will repeat John’s story. What do you say?
RACHEL DAVID: Look, I hear you, John. And one of the issues that we’ve had in private health insurance, the way the whole system was designed with the Medicare system back in the early 80s, is that the funds can’t actually cover the costs of care that you have out of hospital, like going in for a scan when you get a Medicare rebate as well. Now, that is something that we have been working to change and trying to create, like, a new system where we pay, you know, a bundled payment to some doctors, or a payment that’s all- where everything is included to doctors to offer particular things, like joint replacement, knee and hip replacement, for example. But we do need doctors to come to the party. Under the Australian system, and in fact under the Australian Constitution, doctors can really charge what they like and we can’t continue to chase higher and higher out-of-pocket payments from doctors without putting up premiums. So we do need doctors to come to the party and offer to bulk bill under those schemes. Now, we’re working very hard on that. It has been possible in some places around Australia, but it’s not something we’ve been able to offer everywhere. The other issue is that for the hospital component of your care, you are fully covered. And if you’ve got top hospital cover, you will be fully covered, and that does run into really over tens of thousands of dollars for a knee replacement.
LEON BYNER: Stay on the line, Rachel, because I’ve got Steve of Kilkenny who’s got a question. Steve, good morning. Thanks for ringing. What would you like to know?
CALLER STEVE: Gidday, guys. I’m in the same boat as that old guy. I’ve had probably [indistinct] cover to the last [indistinct] community and my family are with BUPA. But I tell you what irates the crap out of me – pardon my French – is if I joined up now, I get six weeks free, right? Yet I’ve been there 45 years. When I rang up to query a few bills and this and that, I don’t get nothing.
LEON BYNER: Rachel, what do you say to that?
RACHEL DAVID: Well, look, I am very aware some of the funds are reaching out to younger people with some of these offers. But as you get older, you do get more value out of private health insurance, particularly if you do have conditions which mean you need admission to hospital. And sometimes we underestimate what the cost of those admissions to hospital are like. For example, for a basic hip replacement, with no other complications and no other health issues, if you were to pay for that yourself out of your own money, that would be to about $28,000.
LEON BYNER: $28,000.
RACHEL DAVID: Yeah. And, like, if you’re waiting on a hospital waiting list at the moment, it’s an absolute postcode lottery, and that’s not something that we would recommend for people that are in a lot of pain or unable to work because they can’t get around. So, look, I hear your frustration. The funds are doing what they can to work with the medical community and with the federal government so that we can have a more flexible offering. And around the country we are seeing some no gap joint replacement services emerge around the place, which is what we want to see. But- and we will do everything in our power to try and push that forward faster. But in terms of value for money for hospital care, I can absolutely guarantee that that is provided by private health insurance.
LEON BYNER: Rachael, stay on the line, because Wayne at Port Hughes has a question. Wayne. Good morning. What’s your question?
CALLER WAYNE: A question regarding when you have a disabled adult child. I’m in my early sixties and my son’s 34. Elizabeth’s got cerebral palsy. He pays a premium for private health, as do we, and I’ve tried for the last- I sense the legislation passed maybe nearly two years ago to get BUPA to come to the party without any success, and I’m unable to find somebody, a company, that will have him on our policy.
LEON BYNER: Alright. Rachel, what do you say to that?
RACHEL DAVID: Well, look, I am aware that some of the funds are offering family policies for people with disabled dependants, and that is up to age 65. So, there is an age cap on it similar to some of the age caps that are in the NDIS. What I suggest you do is go on to a website called www.privatehealth.gov.au. That’s the Private Health Insurance Ombudsman website, and there will be some advice on this issue on that site. If you don’t get any joy from doing that, please contact our organisation which is PHA.org.au and we’ll try and find someone to help you.
LEON BYNER: Yeah. I’m talking with Dr Rachel David. Rachel is the Chief Executive of Private Health Australia. Again, just do we get it out there, what proportion of people belong to a private health company?
RACHEL DAVID: It’s about 55.6 per cent of the population.
LEON BYNER: Have you had much drop out or take up or is it about the same?
RACHEL DAVID: Look, we’ve had nine quarters of strong growth in private health insurance membership, and that’s largely down to some of the issues that have occurred during the pandemic, which has made it very hard for people to access care in public hospitals.
LEON BYNER: Yeah. So, your advice to people who are considering public health, is there a time that you’ve got to wait before you get the coverage? What is it?
RACHEL DAVID: Leon, it’s extremely variable. It varies according to where you live. If you live a long way away out of town, it can be quite a long time and it depends on what condition you have. Around the country, we’ve seen a number of public hospitals cease providing outpatient services for some- in some areas because they’ve just become overwhelmed. And these are things like cataract surgery, that can be very hard to access at all, bariatric surgery or weight loss surgery can be very hard to access at all.
RACHEL DAVID: But for some other procedures, it’s very variable. So, it’s a cancer, it’s shorter. So say about, you know, it can be a matter of months. For things like joint replacements, we are talking years.
LEON BYNER: Years. Goodness. Rachel David, thank you. Rachel is the Chief Executive of Private Health Care Australia, answering some questions on 5AA.
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