Importance of Keeping Your General Treatment Cover

TONY MCMANUS: Late last week we took a lot of phone calls with regards to ancillaries, ancillary extra – the extras as part of your private health insurance.

Benefits paid [clears throat]… excuse me, just got a funny throat coming through… benefits paid for all high claims in 2011 increased by 12 per cent on the previous year, with total payments exceeding $3.8 billion.

A lot of money. $3.8 billion. I wanted to clarify a few things. Private Healthcare Australia’s chief executive is Dr Michael Armitage. Michael, good afternoon.

MICHAEL ARMITAGE: Pleasure Tony.

TONY MCMANUS: This all came out of the conversation that we had with a lot of listeners last week, the afternoon program here on 6PR. It was a question of whether or not more people are considering dropping out of the ancillary or extras part of their private health insurance. What’s your feedback?

MICHAEL ARMITAGE: Well we’re seeing that people regard the whole package as important, and certainly if you look across Australia most people in fact have both hospital and general treatment cover.

Some people don’t. Some people have only general treatment cover. They tend to be younger people. But certainly the majority of people who have private health insurance have both, and we think that’s really important, because things like dental care, physiotherapy, et cetera can not only help your recovery, but they can actually help to keep you healthy as well.

And it’s so much better to remain healthy rather than to wait until you need to go to hospital and then have treatment at that stage.

TONY MCMANUS: Can I just go back on that dental care one Michael because that certainly came up last week as part of the conversation. So let’s say you go and you’re doing orthodontics for kids, and you can spend a lot of money on that as you well know, or whether or not you’re going for a check up – that’s if you can get in to your dentist. And that might come to say $400 for a dental appointment, or many thousands of dollars for orthodontics – there is still huge gaps. And that’s something that’s been under consideration for years.

MICHAEL ARMITAGE: Yes, and Tony let me say as the father of a – three children, two of whom had bands, I certainly understand the issue of orthodontics…

TONY MCMANUS: We’ve all been there done that Michael.

MICHAEL ARMITAGE: Yes yes I know. Look the dilemma for funds is that – and we do understand that there are gaps, but someone has to pay for the outgoings of the funds, and if in fact we were to pay the full bill of the dentist, which as you said are, you know, in many instances extraordinarily large, we would simply have to put premiums up. And that’s not what people want.

And the bottom line is that we pay out billions of dollars every year for people who need it and it helps them to have these sorts of procedures, and what we find really difficult to understand – and it’s our problem, we understand that too – but what we find difficult to understand is if people have a year where their car is not taken and stolen and torched they say oh well that’s great.

You know, I got away with it. Wasn’t that lucky. I’m happy to pay for my insurance again next year. Whereas with private health insurance people tend to say if I didn’t use it you know what a waste of money.

Well we think it’s much more important to be insured for those instances where you might need it for your healthcare rather than for something like your car.

TONY MCMANUS: All right, what’s the response, we had callers last week about this, what’s the response to when people say well look I don’t bother because I can get fantastic service when I go straight into the public system.

MICHAEL ARMITAGE: Yes. Most people that we speak to – and believe me many people are people who do not have a lot of money, five and a half million Australians have private health insurance with an income, family income of less than $50,000.

So that’s not – they’re not wealthy by any means, and many of these people say look, private health insurance is the last discretionary expenditure that I will get rid of if I’m forced under pressure financially, and the reason that they say that is because they don’t think they’re going to get very good cover in the public sector.

Certainly they know they’re going to have to have huge waiting lists. And you see, in a private – as you understand only too well, Tony, and I’m sure your listeners do as well, if you’re privately insured, you have a doctor of choice. You go into a private hospital, and you don’t have a waiting list. Now those sorts of things, when people are unwell are things that they absolutely love. And that’s one of the real benefits of private health insurance.

TONY MCMANUS: The other one that I wanted to touch base and just make sure we’re all clear – well there’s two: the question of ambulance, some of the funds have cut back on including ambulance in their cover?

MICHAEL ARMITAGE: Some funds don’t pay for ambulance services, and some do. I can’t tell you which ones do and which ones don’t. But each of listeners, if they want ambulance cover they should be speaking with their health insurer about that. And if their health insurer hasn’t got it and they feel it’s something they need, well this is a very competitive industry, and there will be other competitors who would have ambulance certainly in your state. So you know, that’s something they could do.

But look, the whole issue is that if people pay a small quantum for ambulance insurance and they have one usage of it, they are well in front. I mean, this is the whole question about private health insurance. No one likes paying the money; we understand all that. But, you know, we’ve literally released today, Tony, some figures that say that the highest benefit that we paid out on behalf of a single member last financial year was $370,000. Now that person may well have paid $1000 for their policy, or perhaps a bit more if they had a family cover.

Now they could pay that out for 370 years and still be in front. So private health insurance is fantastic value when you use it, and you never know when you’re going to use it. And that’s the whole point of insurance. You know, you just never know when you’re going to have an illness, or one of your body systems is going to give up or you’re going to get knocked down by a car, or whatever it might be.

So we know that people don’t like paying the money. We know that they’re under pressure, but it’s great value if you need it.

TONY MCMANUS: All right. What about the cherry… the notion of cherry-picking then, Michael; those that may have extras in their cover and things that they just get a sense they’ll never use?

MICHAEL ARMITAGE: Well mostly, the package that a fund offers is for literally that; it’s for a package of what we call general treatments. Some, I understand, offerings are more particular and they might have just dental and physio, for arguments’ sake. But again, it’s a matter of a consumer being an intelligent purchaser. And your listeners, if they think they’re never going to need one or two of the offerings in the general treatment package, I would suggest that they actually go on a website or ring up the fund and ask them what they’ve got.