Interview with Rachel David, Head, Private Healthcare Australia about the cost of private health care

Station: 2UE
Date: 22/08/2016
Time: 3:32 PM
Compere: Tim Webster
Interviewees: Dr Rachel David, CEO, Private Healthcare Australia
TIM WEBSTER: Now, this has been concerning me deeply for some time, the general- and I mean general, cost of health in this country but we get a bit specific here, and we talk about it often on the program, the exorbitant cost of health- private health care becoming really unaffordable for many Australians. And according to Rachel David the head of the Private Health Care Australia, one reason is the soaring cost of prosthesis. Now, we’re paying, sometimes, in some cases, three times more than they do in other parts of the world like Canada and Britain for prosthesis and is there a reason why? Well, let’s ask the question, Dr Rachel David is on the line now. Hi, thanks for your time.
TIM WEBSTER: Yeah but when you look at this piece in the paper and I’m assuming they’re being as accurate as they can be, it’s significantly higher in Australia than Britain and Canada, isn’t it?
RACHEL DAVID: Yes look [inaudible] and some years ago, the Commonwealth Government fixed the price that health funds need to pay for medical devices at what is now know to be world-high prices so that Australian patients, Australian private patients are actually paying between two and five times as much for medical devices as patients in the public system, through their taxes, or patients in a number of comparable countries overseas like Europe, the UK and Canada.
TIM WEBSTER Okay, so just in case the listeners didn’t see this story, it’s in The Australian newspaper and let’s just use a couple of examples that everyone- me included, I’ve had knee, the operation they would have. In Britain and Canada, it’s about roughly the same, $8 or $9000. Here, between $23 and $28,000, how can that be for the prosthesis?
RACHEL DAVID: Well look, a big driver of the cost of the procedures in Australia is the medical device that is used in surgical procedures where you need some kind of implant, whether that’s … in your eye or a hip or a knee, when you need them replaced and a big driver of the cost and as it goes to health fund premiums, is actually the fact that some years ago the Commonwealth fixed those prices or what the fund had to pay at really high levels and since that time, the prices for many commonly used medical devices like hips and knees have fallen all around the world. So, for example commonly used hip replacements, the metal hip, if you were to get that hip in a public hospital, the public hospital pays $4500 but for the same hip at a private hospital across the road that’s exactly the same device, the Health Fund Benefit is $11,000 because the Federal Government has said that’s what it’s got to be. Now, Health Fund members pay for that through their premiums and with half our …
TIM WEBSTER: Well, that’s it, that’s it, yeah.
RACHEL DAVID: And what we’re suggesting is the Commonwealth Government needs to rethink this and deflate these benefits in line with medical device prices around the world.
TIM WEBSTER: Okay so, I mean, we were talking about it in the office, how much we all pay for our private health insurance and, you know, I’ve been happy to do that for a very long time, I’ve been in private health insurance since 1976 when I probably couldn’t afford it and my grandma used to help me out with it but, you know, it’s good cover but you’re talking now, you know, $400, and in excess of $400, a month. Now, it’s going to get to the point, Doctor, surely, where a lot of Australians are going to say well look, I just can’t afford it.
RACHEL DAVID: Look, a lot- we find some repeated customer research that people are very happy to have health insurance because it helps them get treatment when and where they need it …
TIM WEBSTER: Exactly yes.
RACHEL DAVID: … but it just can’t keep going up as much as it is because about half of our members are on incomes of $50,000 a year or less so if- you know, at the trajectory it’s going, one of our biggest frustrations is there are so many of the input costs to the premium that are beyond our control as health funds and a big one is these medical devices. This can be very easily fixed, the public hospitals pay, you know, as I said, two to five times less than private patients are currently paying and what we’re doing is we’ve had some very good discussions with Health Minister Sussan Ley about how this can be fixed and we’re looking forward to a quick resolution.
TIM WEBSTER: Okay. Well, that’s terrific. Well, you know, you would have noticed today I’m sure and some of these organisations are not for profit and some are private businesses and the NIB has said look, you know we did okay financially and maybe that might reduce the inflation in premiums in the future but doesn’t necessarily mean the premiums will stay static or god-forbid go down, does it?
RACHEL DAVID: Well, that’s right because there are a number of costs in the health system that goes into establishing the premium. A big one’s medical devices, that’s about 14 per cent, there’s also the cost of the hospital accommodation which depends on things like nursing wages and maintaining buildings and high tech equipment and the cost of medical specialists as well. Now, all of these things are beyond the control of the Health Fund but what we’re focusing on here is the medical device prices because unlike the good work of doctors and nurses, there’s absolutely no reason for them to be this high.
TIM WEBSTER: Yeah so is this the case of you guys-and god bless you for doing it, attacking this issue by issue so let’s deal with these medical prosthesis first and then, you know, get to the Government and say look, is there other ways that we can streamline this and have it cost less because I’m just fearful, Doctor, I really am, and I have been for some time, that it’s going to get to the point where a lot of Australians just won’t be able to afford it and that will, of course, and obviously put more pressure on the public system.
RACHEL DAVID: Look, that is absolutely right and so we’re working with the Federal Government which is our main regulator on a number of ways to help keep premiums down. We’ve talked about one of them, prostheses prices but also the Government is doing some very necessary work in the Medicare system and how it works with the MBS and private practice for private doctors to make sure that there’s no waste and that we’re not paying for procedures that don’t work. We’re also looking at some other things in terms of how we regulate health insurance that might make it easier for us to get control over premiums as well and you’ll be hearing about some of those as time goes on.
TIM WEBSTER: Great. Alright, well I must just have a chat with the Minister too, but it seems to me in the conversations I’ve had with Sussan Ley that she really is willing to have a listen and try and get this reformed. Do you get a good ear from her?
RACHEL DAVID: We certainly do, she’s really taken the concerns of people with health concerns and with private health insurance very seriously. She’s been one of the first ministers to do that in a long time and we’ve really, really appreciated working with her given that focus.
TIM WEBSTER: Good on you. Thanks very much for the chat today. Appreciate it, thank you.
RACHEL DAVID: Thank you, bye, bye.
TIM WEBSTER: Dr Rachel David from the Private Health Care Australia organisation and apologies for that noisy telephone too folks. We have a few issues with telephone noise and drop outs and things so apologies for it but I’m sure you got the general gist of what she had to say.
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