PHA CEO Dr Rachel David spoke with ABC Tasmania about the increase in superannuation withdrawals to fund medical procedures

Station: ABC Northern Tasmania
Program: Drive
Date: 2/3/2023
Time: 5:11 PM
Compere: Kim Napier
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


KIM NAPIER: And yesterday on Drive, we spoke about people raiding their superannuation to pay for elective surgery. There are over 9000 people on the waiting list in the state, and some are using their super to pay for their elective surgery and get off the waiting list. We spoke with Bruno Muraca, a personal insurance claims advocate and CEO of AFRM Claims Advocacy, who says there’s a better way.

BRUNO MURACA: Less than 40 per cent of working Aussies know they have cover within their super, which should be able to cover them if they are awaiting elective surgery and recovering from elective surgery. We help people all the time who’ve had hip, knee, shoulder replacements, et cetera and not able to work. Their super should not be touched.

[End of Excerpt]
KIM NAPIER: Dr Rachel David is the Chief Executive of Private Healthcare Australia and agrees there is a worrying rise in people draining their super for medical procedures. Good afternoon.
RACHEL DAVID: G’day. How are you?
KIM NAPIER: Yeah, I’m good. Why do you think people are turning to their super?
RACHEL DAVID: Look, I think a number of people have grown desperate with the length of waiting lists and also with rising medical out-of-pocket costs in some areas. I also think, though, that there are some charlatans out there that are convincing people this is a quick fix for some problems that really aren’t life threatening. And we’ve seen an unfortunate rise in people using super for things like cosmetic surgery and cosmetic dentistry. And that is really- that might seem like a good short term fix, but in the long run, it could lead to a very uncomfortable retirement.
KIM NAPIER: Now, you mentioned you’re concerned about the medical out-of-pocket costs and the inflation that goes with that. Can you actually explain what that means?
RACHEL DAVID: Well, look, we’ve seen the- a very sharp rise in medical out-of-pocket costs for some services, which can be hard to access on low incomes like dental surgery and weight loss surgery, for example. And this has caused the normalisation of those out-of-pocket costs. And it’s gone up really since it’s become easy to access super for some of these treatments. We’re really concerned about some of the charges that we’re seeing in this market for- particularly for some dental services and some of the co-payments for surgery in some areas. And so we do think there’s good evidence it’s inflationary. And some of the other concerns that we have is it’s bringing in some pretty predatory financial intermediaries into the market that have a conflict of interest. So we’re seeing these financial services advertising in doctor’s rooms. There- the patient might be convinced by the doctor to have the surgery and then the doctor signs off on the material to go to the tax office to access the super, and then the doctor charges a fee as well as the financial intermediaries. So by that stage, you’re seeing a lot of people with a conflict of interest getting into your super.
KIM NAPIER: So these are the unregulated commercial operators putting their hand up to help people write the applications to release the super funds, correct?
RACHEL DAVID: That’s right. And in fact, the forms are readily available from the tax office. It’s really not that much of a stretch to do it yourself, but some of these companies are charging $680 to help people access their super. And some doctors are charging a further hundred dollars or more just to sign the form, let alone what they’re getting back from the procedure. So this has become a very problem area. It’s an and particularly for people with a chronic condition that might come back or a condition that might lead to where there might be complications, I would really consider getting some independent financial advice before going down this path. It is not a risk free option.
KIM NAPIER: There is, as we spoke about yesterday, options of personal income protection in your super that you may not be aware of, but cosmetic surgery, are we talking about a, what do you call it, not a recreation, saying you’ve had your breast removed with breast cancer, a reconstruction? Or is it like a boob job where you just want to be an extra size up?
RACHEL DAVID: Well, look, we’ve seen quite a lot of stuff happening after childbirth and after weight loss surgery, so quite a few tummy tucks coming through. But again, while these things are- this might seem like a good short term solution, if your super balance is cleaned out, you could be living a very long time in pretty poor circumstances on the aged pension. And it really pays to get independent financial advice and to shop around and not just take the first quote that you’re given from a particular surgeon, particularly if they’re also promoting some kind of savings plan or financial intermediary.
KIM NAPIER: Has this happened since COVID, when Scott Morrison, who was the prime minister at the time, allowed people to access their superannuation for a one off $10,000 payment to help people get through either shortened workweeks or losing their jobs entirely? Has it grown since then?
RACHEL DAVID: Yeah. There has been a growth. There has been growth in this area since then, and unfortunately, a corresponding growth in out-of-pocket costs in some of these hard to access surgical areas. So it really hasn’t benefited consumers much at all. And I think that there are a number of things that we- that the government does need to do to perhaps tighten this up. And some of the things that we would like to see are superannuation for health reasons really needs to be for end of life care or a life threatening illness. And even in those circumstances, I’d think twice about drawing down on the principle. So I think that people- so the regs around that really need to be tightened up. I think the government needs to use its regulators and financial services to crack down on some of the practises of the financial intermediaries in the conflict- of conflicts of interest, which are completely inappropriate. And finally, I think that really we need a new renewed public education campaign about compound interest and about the value of superannuation for retirement, which at the end of the day is what it’s for.
KIM NAPIER: Well, yesterday we ran a poll asking if you would consider dipping into your super to pay for an operation. It was a simple yes or no, and the results were 65 per cent of the respondents said yes and 35 said no. Is that worrying?
RACHEL DAVID: Look, I think that goes to the fact that there’s not a lot of information going to consumers about, A) the health system and what options are actually open to them, and B) what their super is for and what the impacts of drawing down on the principal early in life might be. We’d like to see this tightened up and more public education, both in the health literacy piece and financial education, about both the purpose of superannuation and how you can access- how you can best access cost effective health care.
KIM NAPIER: An ongoing conversation then. Thank you so much for your time this afternoon.
RACHEL DAVID: Thank you.
KIM NAPIER: That’s Dr Rachel David, chief executive of Private Healthcare Australia, and agrees- she agrees about the worrying rise in people draining their super for medical procedures.
* * END * *