PHA CEO Dr Rachel David talks to Radio 6PR about barriers preventing health funds paying for chronic disease management programs

Station: 6PR
Program: Afternoons
Date: 9/2/2023
Time: 12:12 PM
Compere: Jo McManus
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


JO MCMANUS: Well, this is something that actually affects all of us. It’s about private health insurance. And private health insurers have come up with a plan which would allow their customers to claim against chronic health conditions being treated by their GPs. So not hospital visits, but something that your GP was looking after. To do this, they would need to see a change in laws that govern their business, their health insurance business. It sounds like a good idea to me because it could take the pressure off hospitals and possibly make health insurance more viable for customers and more valuable to them. It depends on how it works.

Well, Dr Rachel David is the CEO of the body which represents private health funds, Private Healthcare Australia. Good afternoon to you, Rachel.

RACHEL DAVID: Good day, Jo.
JO MCMANUS: Look, thanks for your time. First up, what is your idea? Can you explain it to our listeners?
RACHEL DAVID: Well, look, traditionally, we’ve only been allowed in private health insurance, really, to cover for hospital care, dental, and some other allied health in the community. There’s legislation that specifically prohibits us from funding GPs. But that was put in place years ago in 2007, and now we’re in a situation where 750,000 people have joined a health fund in the last two and a half years because they’re struggling to access health care in any respect, particularly in public hospitals. And we’re seeing general practices all around the country struggle to attract doctors and to have enough resources to continue operating and seeing as many patients as they need.

So what we’re proposing is that legislation is changed to allow us to provide some block funding to practices so they can offer good chronic disease management and preventive health care to their members, particularly in some areas where we’re seeing a very big increase in demand. And that is in the area of substance use disorder, particularly alcohol use, and in the areas of mental health and prevention of conditions like cardiac disease, heart disease and diabetes.

JO MCMANUS: So how would it work? Like, would it mean that it would cost customers of health funds more to do that? Or is the idea that it would actually reduce costs?
RACHEL DAVID: No. Look, I think in the long run, it would actually reduce costs. We’re not talking about just paying extra money in a fee-for-service basis. We’re talking about very targeted funding for preventive care and chronic disease management with the objective of keeping people off waiting lists and keeping them out of public emergency departments because they’ll be managing their health better.
JO MCMANUS: Yeah, okay. Look, I understand that. So what would what do you need to do to get this over the line? You’ve made a submission to the Federal Government ahead of the budget. Is that right?
RACHEL DAVID: Yes, that’s right. This is something we’ve been talking about for some time because we believe the economics really stacks up. But I think now there’s a burning platform given what’s happened as a consequence of the pandemic and many, many years of having GP rebates frozen and frozen, very low compared to the money that specialists can make for hospital care. That’s not only inequitable, it’s actually preventing people from getting healthcare when and where they need it, which is before they get really sick, not after their diseases develop to such a terrible extent that they need to be admitted to hospital.
JO MCMANUS: Yeah. Okay. Now, you also think that high income earners should pay a higher Medicare levy.
RACHEL DAVID: Yes. Well, if you’re a higher income earner in Australia right now and you don’t have private health insurance, you do have to pay a penalty which is attached to the Medicare levy. It’s called the Medicare levy surcharge.
RACHEL DAVID: Now, there are about 400,000 people that are paying that penalty and we’ve researched this. We’ve talked to those people and we know that most of them aren’t conscientiously objecting to the idea of private health insurance. They’ve just forgotten that their income has crept over a certain threshold. So basically, what we’re suggesting is to improve the fund- to both- to raise revenue but also to improve the uptake of private health insurance and reduce pressure on our public hospitals for people that can afford it, that that penalty is increased.
JO MCMANUS: Okay. So by how much?
RACHEL DAVID: We’re saying by a hundred basis points or a percentage point.
JO MCMANUS: Okay. By 1 per cent of their income.
JO MCMANUS: Yeah. Which is quite- which could be quite a lot if you’re a high income earner.
RACHEL DAVID: Yes. Well, that’s right. But we are in a situation where people- you can’t just let these things slide. Our health system is in crisis…
JO MCMANUS: That’s true.
RACHEL DAVID: …and people that can afford to pay more probably should at this point.
JO MCMANUS: Okay. So what I sort of want to get my head around is that one of the big criticisms of private health funds is that they are very, very expensive, and that’s why people have slipped away from it. Because it’s one of those things where they think it’s discretionary and it may well be when they’re younger, not so much when they’re older. Is there anything that the health insurers can do to bring down their costs?
RACHEL DAVID: Look, absolutely. And we’ve been working closely with the Federal Government and Minister Mark Butler on ensuring that premiums remain as low as possible. The last premium rise that he and our regulators approved was well below inflation. But there is more that can be done. As much as health funds are trying to find value wherever they can, the Commonwealth- there are a couple of areas that the Commonwealth probably should look at and one is the regulated overpricing of generic medical technology which- like hips, knees, lenses…
RACHEL DAVID: …we pay the highest prices in the world for these things in Australia and there’s really no reason for it.
JO MCMANUS: Why? Why do we?
RACHEL DAVID: Well, because the Commonwealth regulated those benefits and those prices many years ago in 2006. And firstly, they set the prices far too high relative to the global market. And secondly, they fixed the prices at that level so they didn’t come down as the cost of technology decreases over time.
RACHEL DAVID: Now, we have been campaigning about this for many, many years and, finally, reform is happening. Some of these benefits- the Commonwealth is beginning to reduce some of these benefits and reduce regulation in this area, but it is happening at a glacial pace. If we were to reduce those benefits that we pay for these commonly available items to world prices, we could probably save families an extra $40 a month from their premiums.
JO MCMANUS: That’s a lot.
RACHEL DAVID: Well, we think the Federal Government really needs to review this in light of cost of living pressures on families.
JO MCMANUS: Yeah. Well, look, Rachel, thanks for explaining it to us and good luck because it sounds like a pretty good idea to me.
RACHEL DAVID: My pleasure, Jo. Any time.
JO MCMANUS: Yeah. That’s Rachel David there, the CEO of Private Healthcare Australia.
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