Dr Rachel David interview with Leon Byner, 5AA Mornings program

Station: 5AA
Program: Mornings
Date: 16/07/2018
Time: 10:07 AM
Compere: Leon Byner

Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


LEON BYNER: Now, there’s going to be a new system very soon of private health. In fact, we’ll have the Health Minister in the studio early tomorrow and we’ll go through a lot of this. But it’s going to be on bronze, silver, gold, what will be covered, what won’t be. I think one of the great problems for private health customers is that you pay a premium for a certain level and then when you need that level of private care, you then find that you’re hit with costs that you didn’t anticipate or had an understanding that these costs would be covered. So, one would hope that the new system will fix this.

Let’s talk with the CEO of Private Healthcare Australia, Dr Rachel David. Rachel, good morning.

RACHEL DAVID: Morning, Leon.
LEON BYNER: Explain this new system.
RACHEL DAVID: Well, look, we have spent the last two years working with the Federal Government, doctors, the AMA and hospital executives to go through health fund products line by line to create this classification of gold, silver, bronze, basic, which is designed to help consumers choose the right policy for their life stage needs and also to use their health insurance when the time comes.
LEON BYNER: Okay. Well, that’s a motherhood aspiration. So, again, wouldn’t the system already be doing that with what we’ve been using before?
RACHEL DAVID: Well, look, we’ve had feedback over a number of years that consumers have found the system increasingly confusing, both as the health system itself has got more confusing but also as more products have been launched from the health insurance point of view, which have – in an effort to maintain the affordability of premiums – have excluded some treatment areas and that’s made it very difficult for consumers to compare products between health funds and also to purchase health insurance that’s right for them. So, this will be a step in the right direction so that people understand the level of cover they’ve got and they’ll also be getting a communication which clearly states what is covered under their policy and what is not covered. And that’s an important part of the system as well.
LEON BYNER: Now, will the price necessarily change depending on the level of cover people have got? One would presume that at the top list you’ve got premium or gold, so that’s the higher premium and so it moves down when the premiums are lower, but does it mean that any of the premiums will go up?
RACHEL DAVID: No. Look, this is a classification system. It shouldn’t in itself make premiums go up or down, what it’s doing is better labelling the products and classifying the products that are already on the market. In some situations what we’ve done is we’ve removed some historical features of health fund products that have made them confusing for consumers like restricted cover and benefit limitation periods. So, those things have been tidied up but in those cases we’ll be communicating very carefully to the people that have those products so they understand how they’re going to change and whether those treatments which had restricted cover are now going to be excluded or they’re going to be moved up to full cover. So, basically there’s going to be no change to premiums as a result of this measure but people will find it easier to understand the cover they’ve got and to choose new cover.
LEON BYNER: Are they going to have different cards now? Because you carry a card with the health fund, of course, and you use it for various things depending on what level you’ve got. And again, the question is, we’re still going to see the rises which come through – I know there’s been talk about Labor capping them but I think that’s about to be reneged upon – so at the moment private health funds are passing on charges that they argue are because medical technology- I note that pregnancy, for example and work with expectant mums is going to come at a higher cost, why is that?
RACHEL DAVID: Well, look, it’s not going to change the cost of pregnancy cover. This measure won’t change the cost of pregnancy cover. Pregnancy at the moment is covered only under the top hospital product. And the reason it is so- the premiums for pregnancy cover are so expensive is because if a woman of child bearing age joins a health fund, it’s a high likelihood a pregnancy- admission for pregnancy is going to happen, whereas it’s a much lower likelihood that she might develop a rare cancer for example. And in addition to that, the pregnancy itself comes with some pretty significant risk that if something goes wrong – which could happen quite quickly and unexpectedly – it can result in an intensive care admission for both the mum and the baby, which is very expensive. Now…
LEON BYNER: [Interrupts] But if you’re somebody that is not going to be affected by pregnancy because of their age, then you won’t have that risk, therefore your premium should be less, shouldn’t it?
RACHEL DAVID: Well, you’ll be able to choose the product that doesn’t include pregnancy or IVF services. So, this will make it easier to make that choice and that product may, for example, come in under the silver tier.
LEON BYNER: Now, what do people do if they want information about this, talk to their health fund or is the health fund going to contact them?
RACHEL DAVID: Well, look, the Government is going to be putting out more information as the year draws to a close. But next year the health funds themselves are going to provide information to consumers on or around about 1 April. So, there’ll be a very big attempt now by the health funds to make sure that everybody who currently has a policy has information about the new classification system. And we anticipate that will be complete by mid-next year. So, everyone with a health fund policy will know what category it’s in, what’s covered and what is not covered. And in addition, the ombudsman’s website, privatehealth.gov.au will be significantly upgraded so if people are choosing a new product, they’ll be able to compare across all the products on the market and that will be a much easier process.
LEON BYNER: What is your reaction to the story that came out of News Corp a few days ago, that health fund members paid $600,000, 40 health fund chiefs, three times the reps of many large companies on an all-expenses paid trip to Europe when their premiums are going up? Is this something that’s really bad timing, it doesn’t look good does it?
RACHEL DAVID: Well, look, I understand the concerns and, of course, every dollar that a health fund spends is rightly scrutinised by the community. But I just want to put this in perspective for a minute. Health funds in Australia are Australian businesses and their management expenses have been declining significantly year on year over 15 years and they’re now at an all time low. Because they’re Australian businesses, they do need the opportunity to interact with their global colleagues. And that does mean travel. They only do this once every two years and it’s a very robust program that enables them to compare notes on things like fraud, cybercrime and the efficient management of technology and new technology. So, I would defend it. I think there are very few senior executives and medical specialists in the health care community that don’t attend conferences; it’s an important part of their development and further education. But I do take the point that consumers are rightly scrutinising what health funds spend and…
LEON BYNER: [Interrupts] Well, there’s more than that because the contingent that we sent was three times greater than the US or Canada. Why would that be?
RACHEL DAVID: Well, if you’re in US or Canada, it’s very easy for you to be in contact with people in your own community and in Europe. In Australia it’s actually not that easy just to jump on a plane and go to and from the Northern Hemisphere whenever you want to learn something. So, they do organise…
LEON BYNER: [Interrupts] It’s not that easy? I could do it tomorrow if I wanted to.
RACHEL DAVID: Well, it would be actually more expensive than organising a planned trip once every two years where you can interact all at once. And I think that’s what they’ve done in the past because of the distances involved. And I’m completely unsurprised that a large number of Australians attended, that’s due to the fact that we are a long way away. We did need to…
LEON BYNER: [Interrupts] You’re blaming distance that there are more people than other countries?
RACHEL DAVID: Well, it’s easier for somebody who’s based in the UK to be in contact with their colleagues in Europe, it’s just a fact. And this is something that we have done historically over every two years…
LEON BYNER: [Interrupts] What, luxury cruises on the River Tagus, another dinner at the [indistinct], all that stuff?
RACHEL DAVID: I can absolutely assure you there was no luxury involved, it was more like a ferry around the harbour. And I think some of those aspects of the reporting were really an enormous beat up. So, I’d be very surprised to hear if anybody in the health sector was opposed to a conference [indistinct]…
LEON BYNER: [Interrupts] Well, Bupa didn’t send anybody from Australia, as we understand it.
RACHEL DAVID: Well, because Bupa’s a multinational and they have people based in England.
LEON BYNER: So, any other company isn’t?
RACHEL DAVID: No, there are no other multinationals in the sector.
LEON BYNER: Okay. So, they don’t have to do this where the non-multinationals do?
RACHEL DAVID: Well, it’s obviously not compulsory. But because of the need to interact with global colleagues and share information and education, that’s the way we’ve chosen to do it. We do understand the concerns about- and the perceptions of this. And we’ll certainly look at how these dollars are spent in future.
LEON BYNER: Are you then saying that maybe you’ve made an error?
RACHEL DAVID: I don’t think that people in the health sector looking to their global colleagues to educate themselves and to keep up with the trends about what’s occurring in their industry is the wrong thing to do under any circumstances. However, I think…
LEON BYNER: [Talks over] But you’d review it anyway.
RACHEL DAVID: …However, I think in terms of the perceptions of the way that this meeting was held, publicised and reported upon, we will be reviewing it in future.
LEON BYNER: Alright, Rachel David, thank you.
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