We need to be careful about what we’re calling a “junk” policy

Station: 5AA
Program: Mornings
Date: 17/03/2017
Time: 10:11 AM
Compere: Leon Byner
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia
LEON BYNER: Let’s talk with the CEO of Private Healthcare Australia, Dr Rachel David. Rachel, thank you for joining us today.
RACHEL DAVID: Pleasure, Leon.
LEON BYNER: In your opinion, for those people who will be thinking a lot about what sort of policy they’ve got, what they’re paying, what’s your attitude, first of all, to junk policies?
RACHEL DAVID: Look, I think we need to be a bit careful here about what we’re calling a junk policy. We have large numbers of consumers in our members who are making a conscious choice to purchase a lower priced product because that’s what’s right for them. These are people who are younger, know they’re unlikely to need a high level of hospital cover, and know that they’ll upgrade in future at a future time like when they have children, exactly what Laura was describing. There are also people who live in regional areas who have a particular specialist, but the only option is to be treated in the local hospital, which is a public hospital. There’s no point in making those people or forcing those people to purchase a higher level of cover for services they don’t need.

So that’d be the first thing I’d say, is that there are a number of people – and we have them contacting us all the time, because they want more bespoke options for their health insurance – who don’t have high incomes, but who want lower priced options which are right for them. The problem is, as we’ve discussed, is consumers who may have purchased one of these policies and not realised that they don’t- they’re not covered for everything, and there are a number of ways in which people should check that their needs are going to be met by the health insurance they’ve purchased.

LEON BYNER: For example?
RACHEL DAVID: For example, you can use a comparator website to compare different offerings. You can go to the- a website run by the Ombudsman, called PrivateHealth.gov.au, which will give you an independent source of information, which is very good. And alternatively, a number of the health funds themselves have very, very easy to understand websites and apps that will take you through not just exactly what your cover’s for, but likely out of pocket for some in some areas and how much money you’ve got left in things like extras cover.
LEON BYNER: Rachel, in your opinion – and you’d be in a position to know this – what proportion of customers would likely have policies that aren’t really suitable for them. Do we know?
RACHEL DAVID: Well look, in terms of suitability, this really depends- what we’d need to do really is to survey everybody at the time that they chose to use their health insurance, and really take it from there. But we do know that the number of people on the very, very low value of products – which are the public hospital only or accident and that’s all they cover – is really very small, and that’s a- a number of them are legacy products that are no longer offered.

I think what’s important is that when we do market research – and we survey thousands of people, both health fund members and non-health fund members every year to understand their attitudes to this – is that of people that have private health insurance, over 80 per cent of them are actually really happy with what they’ve got and want to keep it. But the biggest problem they have is affordability of premium increases. And it’s keeping the premium increases under control that is the biggest … challenge that our industry has. So for people- it’s completely rational for our members to want to choose lower priced products, but they need to make sure, through all of those options available, that they’re choosing a product that meets their needs.

LEON BYNER: Rachel, thank you for joining us today. I think that information is more than helpful, because I just got a note from my health people this morning. I sent an email. Your premium’s going up another $22 a month, and I thought okay. Oh, and by the way, there are changes to your cover. So I [laughs] I kind of will read all that stuff when I finish today. But these are the things you really- and when you- I’ll probably end up ringing them up and saying listen, I want some clarification, because you want to know- see, often the commercials are very enticing, to get you to ensure with Medicare or Bupa or whatever, but it’s when you need a payout that the interest comes. So again, it’s always good to ring your provider and tell them you’ll shop around.
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