Dr Rachel David spoke with ABC radio Melbourne about the value of health insurance

Transcript
Station: ABC Radio Melbourne
Program: Mornings
Date: 18/7/2024
Time: 9:10 AM
Compere: Raf Epstein
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia AND David Clarke, CEO, Australian Patients Association

 

RAFAEL EPSTEIN: Some other people willing to answer your questions on private health, Dr Rachel David. She’s CEO of Private Healthcare Australia, so they represent the private health insurers. She joins us from our studio in Sydney. Rachel, good morning.
RACHEL DAVID: Good morning, Raf.
RAFAEL EPSTEIN: Thanks for having- giving us some of your time. And joining us in Melbourne is David Clarke, he is with the Australian Patients Association. So I guess in many ways he represents you, represents patients. Hi there, David.
DAVID CLARKE: Good morning, Raf. Good to be here.
RAFAEL EPSTEIN: And I think Rachel and David know each other well. This is not their first debate. This is not their first rodeo. Rachel, I might start with you.
RACHEL DAVID: Sure.
RAFAEL EPSTEIN: Let me give the- let me give you the prosecution’s case. It costs me the earth to get private health insurance, and then when I try to cash it in, it costs me more again. It does not feel like it is worth it. Am I right?
RACHEL DAVID:

Well, look, it really depends on your stage of life. But let me start by saying that for every dollar that you pay in premiums to a health insurance fund, you get $0.86 back on average, which is way higher than any other form of insurance. I think the next level is general insurance, which is $0.65 in the dollar. And- but for different people at different stages of life, the value is achieved in different ways. So if you’re a person in early to midlife and you’re absolutely dependent on working to pay your other bills, and you develop an unexpected, painful condition, you could- at the moment with the public sector struggling after COVID and in the current economic circumstances, it could be months or even years before you get an appointment in a public hospital, let alone surgery. And many people can’t deal with that uncertainty. If you’re a hairdresser or a nurse and you have to be on your feet all day and you need something done, that’s absolutely untenable. And that’s a big driver for people in midlife to have private health insurance.

Access to the mental health system is another issue, and that’s also very difficult in the public sector unless you’re incredibly unwell. And then for older people, like as you get further and further over 50, that’s when you see the value from a number of elective surgery procedures. So for people between 55 and 70, a lot of orthopaedic procedures and joint replacements are common. And for people over 75, you see a lot of heart procedures. So the stents that you get for chest pain from coronary artery disease, pacemakers and so forth. Now for just one of those procedures, say just for a standard normal hip replacement, that with no complications, standard number of people in the OR, that’s about $28,000 to $30,000. To be able to get that in the public sector, we’re talking about a wait of years …

RAFAEL EPSTEIN: Much longer wait time. Yeah.
RACHEL DAVID: And if you wanted to fund it yourself, you’re talking about close to $30,000.
RAFAEL EPSTEIN: Okay. So there’s a few specific examples there from Dr Rachel David, who represents the private health insurers. I think we’re all familiar with joint replacement, and that’s a big one that people wait for. Heart surgery, and other things. Mental health, I think people are very familiar with that and how that can be different with private health insurance. David Clarke, you’re with the Patients Association. Is it worth it for most of us?
DAVID CLARKE: Well, it’s a big question, isn’t it? I think Raf, we’re in a really unusual and perverse situation in the country today in our healthcare system. It’s perverse in the sense that private health insurance is worth it when the public system isn’t working. And when the public system isn’t working, we have a serious problem in this country. We have- and we currently do. We survey more than a million Australians every six months, and they’re really, really concerned about what they see as a decline right across the board now. It’s not just emergency departments, it’s access to GPs, and people making decisions for cost of living reasons and not just associated with the current inflationary situation, but that’s making it worse. People are making decisions not even to go to GPs in the first place. And so they’re turning up later, sicker to emergency departments, which are already crowded and are already significantly under strain within that public system. So it’s very, very difficult to have a conversation about private health insurance without looking at the overall cost of the system itself and what’s going wrong with that system. I’ll say one other thing about the cost of private health care: there are a number of ways in which it’s reasonable, in that it does reflect the cost of care, but underneath that is the cost of care. And why is that going up over CPI regularly year upon year upon year?
RAFAEL EPSTEIN: [Interrupts] That’s a long-time problem, isn’t it? Health insurance always runs- sorry, health inflation always runs ahead of regular inflation.
DAVID CLARKE: That’s right. And there are a number of reasons for that. But I am quite certain that we could do an awful lot to improve the accessibility of the system, the affordability of the system if we got rid of some of the inefficiencies in the system, and that would cut health care cost.
RAFAEL EPSTEIN: We might get to the inefficiencies. I want to see if we can boil this down to your choices. David’s got that in the background. That is really important, what’s going on in our public hospitals. But right now, with a focus on the bills I’m paying, 1300-222-774, I want to see how I quantify sort of value for money. I tell you what, let’s go to an example. Let’s go to Sally, who’s in Preston, then I’ll get to some of the basic things that both David and Rachel might think are good for you to know. Sally, what happened with your- what do you want to raise?
CALLER SALLY: Hi. I pay over $700 a month in private health insurance for my family of six, and I have a son with severe Crohn’s disease. Every month, he gets a infliximab infusion at St Vincent’s Private. However, that infusion is not covered because it’s considered a category C infusion, and private health insurance say, oh, that can be done in a GP rooms, when in fact it can’t because it needs a blood test to test for white blood cell count to make sure it’s safe to administer. So I pay $750 a month privately for him to have his infusion even though I have top tier cover for his Crohn’s disease. And just to make a positive about St Vincent’s, they offered to actually waive the fee because they felt sorry for us, for the situation.
RAFAEL EPSTEIN: Right. That’s- [indistinct] private who made that offer?
CALLER SALLY: Yeah. Yeah.
RAFAEL EPSTEIN: Okay. If I can stop you there, Sally, because it’s a great example. Top level cover for Crohn’s, but it doesn’t actually cover what your son needs. Can I throw back that back to you, Dr David? I- you might not know the details of the policy, but that’s a common experience for people, isn’t it? They get the top cover, it doesn’t help them when they need it.
RACHEL DAVID: Well, it’s actually not a common experience. Most people with top hospital cover are- have it because they’re in need of a very expensive procedure, or they have a chronic condition. And for the most part, it does cover what they need. This is a pretty…
RAFAEL EPSTEIN: [Interrupts] I have a lot of calls with people with a similar- they say they’re in a similar situation. Got top cover, doesn’t cover me for what I need.
RACHEL DAVID: But what this situation is about is one of the more difficult legacy regulatory issues that we’re dealing with in the system that we’re trying to change. So a fundamental characteristic of private health insurance in Australia is we are not- or the funds are not by law permitted to fund procedures or consultations that occur as outpatients. And that means they’re not allowed to fund GPs in the community and they’re not allowed to fund specialist visits in the community. Now that’s something that essentially the funds don’t agree with, but over many years, it’s created a lot of complexity in the system and a lot of confusion. So in- so for- and then the other layer on top of this is that there are a couple of things that Sally mentioned there that are covered by the Commonwealth Government through the Medicare system. So the actual cost of the medicine and the pathology tests are covered by the Commonwealth Medicare system so we can’t cover those.
RAFAEL EPSTEIN: [Interrupts] Okay. Can I stop you there, Rachel? I appreciate the detail, but I don’t want people to get lost in the detail. I think it’s important, the point you made, you don’t get cover from the private insurer for the GP or the outpatient issue. I think that’s a legacy policy issue about protecting the public system, the public system that David says is in crisis. But what’s your response, David? You represent the Patients Association. How do you hear Sally’s issues?
DAVID CLARKE: We hear these all the time. I think we say Sally’s experience is common. And so there’s a difference there. Although, to be frank, I wouldn’t necessarily point towards the private health insurers as the cause of the problem.
RAFAEL EPSTEIN: So, Rachel’s right. It’s a design issue.
DAVID CLARKE: There are, some- well, in part, but also there are tremendous number of people who are exposed to what we call shock costs. So they have full cover, they organise to have a significant procedure, and at the last moment they discover, maybe the day before their operation when it’s fully booked two months after seeing a specialist, that the specialist is now going to be charging a significant amount of money to that person. And they’re in a situation- it’s not informed financial consent at that point. We consider it coercion at that point. It’s a really significant issue and it is happening to a lot of people. So there is a gap there. So when we buy- normally, when we buy what we call comprehensive insurance for anything, for our house or car, we think it’s comprehensive. But there is a- there are gaps in health insurance.
RAFAEL EPSTEIN: Can I bounce that directly back to you, Rachel David? Because David Clarke’s raising issues there. People booked in; they’ve got a procedure. They only learn their out-of-pocket costs after they’re booked in, after they’re locked in. Do you think that happens a lot?
RACHEL DAVID: There is a percentage of medical specialists that are behaving very badly in this area. And this is something that we’re talking to the peak consumer bodies and the Government about, about some solutions. The Medicare system and the health insurance system is, by law, unfortunately not able to control what private doctors charge. Most- all of the health funds make an attempt to cover the gap for medical fees. So they pay something. But in an inflationary environment, they can’t keep chasing doctors’ fees that keep going up and up. They can only pay a certain amount without putting premiums up as well. So the informed financial consent process is incredibly important. And what that should mean in the ideal world is if the doctor wants to charge an extra fee before surgery is booked, he or she needs to discuss with the patient a quote and the likely costs. And we know that …
RAFAEL EPSTEIN: [Interrupts] Can’t the insurer be a part of that process?
RACHEL DAVID: Well, at the moment, we’re not permitted to be. We can advise doctors that that’s our preference. But for private doctors in Australia, they believe they have a constitutional right to own that process.
RAFAEL EPSTEIN: OK. I just want to remind everyone who you are listening to. It’s 9:22. That’s Rachel David. Dr David is the CEO of Private Healthcare Australia, so they represent the private health insurers. David Clarke is with us as well from the Australian Patients Association. David, and I can see you’re sort of pushing back a bit there on the surprise medical costs, but I just want to try and give people some practical advice. It’s a minefield. Every time I talk about this on the radio, like a lot of things, I guess, I have to sort of, yeah- how does it all work? And I have to sort of remind myself- how do I begin to work out- like, what are the first questions you would ask yourself about your policy? How do I begin to get early notice of surprise costs? Make sure I’m getting value for money? What are the first questions someone should ask themselves?
DAVID CLARKE: Well, I think for me, when I think of private health insurance and decisions made about what to purchase or whether to purchase, one of the things to consider is how is my health? Self-assess. What was the health of my parents? What sort of conditions am I likely to experience in my life? Sometimes people don’t take- just stop and consider their own future and what health conditions they may acquire over time. So I think the first thing to do is self-reflect and consider what the options are for yourself, what some of the likely conditions are, and then start to go hunting. And there are places you can go hunting that can help you choose good health insurance. You know, if you want to compare insurance policies, it’s privatehealth.gov.au.
RAFAEL EPSTEIN: [Talks over] That’s a government…
DAVID CLARKE: It is the government site and it’s …
RAFAEL EPSTEIN: [Interrupts] So that’s a bit of comparing apples with apples.
DAVID CLARKE: It’s a good site in the sense that it does allow you to compare those apples.
RAFAEL EPSTEIN: Yeah.
DAVID CLARKE: If ultimately, we’ve got a question about whether or not I should take out private insurance in the first place …
RAFAEL EPSTEIN: [Talks over] Separate question.
DAVID CLARKE: … that goes back to the question of are you comfortable with the public system? Do you feel it’s going to meet your needs? One of the- and educating yourself a little bit on things like wait times for elective surgeries and those sorts of things.
RAFAEL EPSTEIN: I’ll get some general advice from Dr Rachel David as well, but let’s go to a few more calls. If you’ve got any private health insurance experience, it’d just be good to hear from you. Just trying to help everybody sort their bills. Steve’s in Carlton. What happened, Steve?
CALLER STEVE: No, I think health insurance is one of the best things I’ve ever done. I look at- saying that, it all depends on how old you are. So, I’m 63. Honestly, the last four years, I’ve had skin cancer removed from my nose. I’ve had hernias done, both left and right side. I’ve- what else…
RAFAEL EPSTEIN: It’s been value for money.
CALLER STEVE: Yeah. Absolutely, absolutely. Can I mention the company or no?
RAFAEL EPSTEIN: Yeah, you can, because it might be relevant.
CALLER STEVE: OK. So- so I used to go to a mate of mine who was a dentist, and he was very good to me. He gave me cheap prices and stuff.
RAFAEL EPSTEIN: Yeah.
CALLER STEVE: But then after a while, like, just having my teeth cleaned was like $320.
RAFAEL EPSTEIN: Yeah. Not cheap.
CALLER STEVE: I had high dental cover, but because he was a private dentist, I couldn’t get a lot back. One of my mates said, why don’t you go to a Bupa dentist? Which I did, and now I get my teeth cleaned, I think …
RAFAEL EPSTEIN: [Interrupts] So you actually switched dentist to get your costs covered?
CALLER STEVE: Yep. Yep. And I can get my teeth cleaned for nothing.
RAFAEL EPSTEIN: OK. Really interesting, Steve. I guess that’s getting good at burrowing into the detail. Rachel David, what’s the- I mean, I asked this of David. What’s the- you know what people don’t like, they don’t like those shocks. They don’t like those surprises, but if they want to work out what cover they actually need, what questions should we be asking ourselves?
RACHEL DAVID: Well, I think David really nailed it in that it depends on your- firstly on your life stage and what- then what conditions you might be experiencing or you’re more likely to experience at your life- at that particular stage in life. And I would point out that for people under 50, the biggest reason that they get admitted to hospital and use their private health insurance is for a mental health condition, and that’s men and women. And it can be really difficult to self-assess that you might be likely to experience a mental health problem. So that’s just a little cautionary remark that I would make. But that is the biggest reason why. And the public sector in terms of what it can- the public hospitals can offer for people with mental health conditions …
RAFAEL EPSTEIN: [Talks over] Yes. [Inaudible]…
RACHEL DAVID: … it really is limited to people that are- have a psychosis …
RAFAEL EPSTEIN: [Talks over] Yes. Look, we …
RACHEL DAVID: … or a severe drug withdrawal or drug induced situation.
RAFAEL EPSTEIN: Yeah. Look, we talk about that a lot. I just want to give as many people a chance to get their queries in as I can. Robert’s in Mornington. What happened with you, Robert?
CALLER ROBERT: Good day, guys. Yeah. So my wife has to get a double mastectomy for prophylactic reasons, preventative reasons. And the surgery, plus the reconstruction is going to cost us out of pocket $16,000 …
RAFAEL EPSTEIN: [Talks over] Wow. Sixteen.
CALLER ROBERT: … now, we’ve had- 16. And we’ve had private health cover for hospital for coming up to 40 years. And it just seems- it beggars belief that after all of that time of putting in money, you can’t get something that you need to get done covered.
RAFAEL EPSTEIN: I’m sorry that’s happening to you and your wife, Robert. I’m really grateful you called though. Is that- that’s going to go ahead? Are you going to pay them?
CALLER ROBERT: Yeah. We- you balance the risks …
RAFAEL EPSTEIN: [Talks over] Sure. Understood.
CALLER ROBERT: … versus benefits and you’ve just got to do it …
RAFAEL EPSTEIN: [Talks over] Yeah.
CALLER ROBERT: … you know, it’s her decision, of course.
RAFAEL EPSTEIN: I understand, but 40 years. We hear what you’re saying, Robert. David, is that familiar?
DAVID CLARKE: Yeah. It is. Could I ask you a question, Robert? Did you shop around?
CALLER ROBERT: So we …
DAVID CLARKE: [Interrupts] So just to clarify, I don’t mean private health insurers, I mean specialists to conduct the operation.
CALLER ROBERT: So obviously, if you’re going to go in for this sort of massive procedure or set of procedures …
DAVID CLARKE: [Talks over] Yeah, yeah.
CALLER ROBERT: … you go with the best. So we are definitely going with the people who- the surgeons who are considered, you know, top in their field.
DAVID CLARKE: Yeah.
CALLER ROBERT: And we’ve always done that, you know, I mean, why would you go to somebody who’s learning how to do it and hasn’t been- you know, it’s not the experts. [Laughs]
RAFAEL EPSTEIN: Why did you ask that, David?
DAVID CLARKE: Well, I asked because, you know- and Robert is expressing something that I think we can all relate to. So you want the best. If you’re going to have a life changing procedure …
RAFAEL EPSTEIN: [Talks over] Yeah.
DAVID CLARKE: … or a life threatening procedure, you want the best specialist in the country if you can get them.
RAFAEL EPSTEIN: Is he right to be outraged? Forty years of paying and then having to fork out that much?
DAVID CLARKE: Well, it’s a simple fact that specialists who are the best charge what they want and still go there. Now, it’s interesting in healthcare that- you know, that people will always go in those situations to make that choice. What I would say is that there are some tremendous specialists in the country, right across all the disciplines. They are fantastic. A lot of people. And there are always a significant number in this country of specialists who can conduct all of the procedures that their speciality requires and conduct them extremely competently, because the training in this country …
RAFAEL EPSTEIN: [Talks over] Yeah.
DAVID CLARKE: … for specialists is extremely good.
RAFAEL EPSTEIN: It’s a hard decision, isn’t it? You hear that that person’s the best, and even though it’s a fortune, you go- I mean, it’s your life. It’s your body.
DAVID CLARKE: That’s right.
RACHEL DAVID: Look, Raf, can I make a comment?
RAFAEL EPSTEIN: Yes.
RACHEL DAVID: I don’t want to be seen to interrupt, but I think this is a really important point. And Look, I’m so sorry to hear what’s happened to Robert. There is big variation in medical specialist fees around Australia. And again, as David said, the quality of medical specialists is pretty much always good, bar a very few. But what …
RAFAEL EPSTEIN: [Talks over] Easy to say when it’s not you getting the procedure, right?
RACHEL DAVID: Well, that’s right. And I’ve also had major surgeries, so I’ve been through this before. I’m not speaking as a complete- completely objectively. But the things that determine what specialists charge are the amount of competing specialists in their community, and overall the average household income …
RAFAEL EPSTEIN: Yeah …
RACHEL DAVID: … in their community, it’s not really- and I don’t in any way want to question or disparage Robert’s decision. That is his decision.
RAFAEL EPSTEIN: Of course it is.
RACHEL DAVID: He’s probably got good advice. But price and quality of medical specialist care in Australia are not related. It’s …
RAFAEL EPSTEIN: [Interrupts] Okay. I won’t- forgive my interruption, Rachel. I just want to get some news headlines. Then I want to get some points from- some final points from both you and David. So I’m just going to press pause for a moment. I want to get to a few more calls as well, talking about the costs of private health insurance and how you can get yourself a better deal. But let’s just get some news headlines with Melissa Brown. Good morning.

[Unrelated content – news headlines]
RAFAEL EPSTEIN: Doctor Rachel David is here representing the insurers. David Clark is here representing patients. I just wanted to go to James in Port Fairy who’s got a query. What is it, James?
CALLER JAMES: G’day, Raf. How are you?
RAFAEL EPSTEIN: I’m good. Go for it.
CALLER JAMES: Question for Rachel. So as someone who has other types of insurance, such as life insurance, why isn’t health insurance underwritten, taking into consideration my health? I mean, I feel as a healthy person, I’m lucky to be healthy. I pay for those that aren’t so healthy and use the system a lot.
RAFAEL EPSTEIN: Rachel?
RACHEL DAVID: Yeah. Look, it is different in that respect. Life insurance and general insurance are what you call risk rated, which means that your risk is assessed and that determines the price of the premium. Medicare and private health insurance are bolted in together through the medical- through the Commonwealth system. And it’s what they call community rated, which means that if you’re very sick, you pay the same premium as someone who is very healthy of the same age.
RAFAEL EPSTEIN: Keeps it fairer, doesn’t it Rachel, in some ways?
RACHEL DAVID: Well, look, it does, because people often can’t help the fact that they’re sick. I mean, there’s not always a link between someone’s behaviour and the development of chronic illness. It could be due to their socioeconomic status or genetics. So it is a really fair system. And yes, there is- there are some cross-subsidies in there, but it basically means that people on lower incomes who are very sick or who have a number of conditions do get a lot out of the system. So people that are in it for life will actually draw down more benefits than people who come in and out.
RAFAEL EPSTEIN: David, do you think it’s fairer that way?
DAVID CLARKE: Yeah, we do on balance, I know it’s a difficult philosophical discussion for a lot of people, but at the end of the day, we don’t think healthcare should be as much a business as it needs to be a community good.
RAFAEL EPSTEIN: [Interrupts] But it is a business.
DAVID CLARKE: Well, that is- that’s right. It’s a hybrid thing. But it’s also something that the community funds for the good of the community. And we think it’s fair that people who are unwell, regardless of the reason why they’re unwell, get equal access to the system.
RAFAEL EPSTEIN: What’s the one thing, David, you want people listening to take away from all of this?
DAVID CLARKE: If there was one thing, I would really urge people to consider their own circumstances and go back to that key point. We do have a strange hybrid system. I think people, when making a decision about whether to take up private health insurance, and I’ll just- as a disclosure, I have private health insurance. I think it’s important for people to consider their own future health and try to look into the future a little bit and make that- it’s the same with any insurance. At the end of the day, you have to wonder whether it’s going to happen. If you then don’t draw down on it for years, you might think it wasn’t worth it. But you can’t read the future, so it’s a form of risk management for the future. Some people are going to be drawn to that, and others less so. But in the current environment, as it’s currently structured, private health insurance plays a very, very important part.
RAFAEL EPSTEIN: Rachel, what’s the one thing you reckon people should take away from this?
RACHEL DAVID: Well, look, everything that David said about self-assessment, but also keep an eye on the general economy and what’s going on in the health sector. So in Victoria, the public hospital sector is facing massive budget cuts. Having private health insurance doesn’t just protect you from long waiting lists and, you know, the possible chaos of having to find an emergency or outpatient appointment. But it also takes the pressure off the public hospital system. So, you know, maybe that’s a bit more altruistic, but it’s something that should be considered.
RAFAEL EPSTEIN: Well, there’s so many policy questions we haven’t even got to. We will get to them next time. Doctor Rachel- sorry, briefly …
DAVID CLARKE: [Interrupts] Could I just add one last thing, Raf? And that is that I talked about the system as it currently sits. I just would like listeners to know that as an advocacy organisation, we’re advocating pretty hard for significant change in the public system to deal with the problems that it currently faces …
RAFAEL EPSTEIN: Yeah, no doubt.
DAVID CLARKE: … so that people don’t have to make difficult choices like this.
RAFAEL EPSTEIN: That’s David Clarke from the Australian Patients Association. David, thank you very much.
DAVID CLARKE: Pleasure. Thank you for having me.
RAFAEL EPSTEIN: [Talks over] And Doctor Rachel David is the CEO of Private Healthcare Australia. Doctor David, thanks so much.
RACHEL DAVID: Thank you, Raf.
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