PHA’s CEO Dr Rachel David spoke with radio 5aa about the implications of withdrawing super for dental and medical treatment

Station: 5AA
Program: Mornings
Date: 23/5/2024
Time: 9:55 AM
Compere: Matthew Pantelis
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


MATTHEW PANTELIS: Now, I want to move straight into dental care, because a lot of people are draining their super for work on their teeth. And that is pushing up the cost of dentistry, according to Private Healthcare Australia. The CEO is Dr Rachel David and she joins me know. Rachel, good morning.
RACHEL DAVID: Good morning, Matthew.
MATTHEW PANTELIS Yes, this is certainly concerning.

Yeah. Well, look, it is, and I think one thing that we’ve noticed is because the bar for early access to super on medical grounds has been set so low, we’ve seen a lot of people taking out all their retirement savings to pay for everything from dental care, restorative dentistry, weight loss surgery, some cosmetic procedures, and so forth. And the trouble with that is, is that that in itself is causing inflation in the cost of these things and these treatments, including inflation in the out-of-pocket. So when- during the previous government there was a large amount of super was able to be- was released into the community and the rules were dropped for a while. That immediately caused a spike in out-of-pocket costs for a number of these hard-to-access treatments.

So what we’re suggesting is that- look, we really need to put the brakes on this, because people are losing out twice. They’re paying more than they need to for these services and more than the market value of these services, and they’re also draining their retirement savings.

RACHEL DAVID: And I think, as was rightly pointed out, like, $10,000 out of your super when you’re in your 30s is a six-figure sum that comes off your retirement income. And consumers need to be much better informed about the implications of these decisions.
MATTHEW PANTELIS: That’s because no one understands how super works, primarily. But anyway, we’ve got that. And I see some people using their super for hair transplants, for goodness sake.
RACHEL DAVID: Yeah. Well, look, I mean, we also know by- from our market research that a lot of people end up really regretting these decisions …
RACHEL DAVID: … five to ten years afterwards. A lot of the treatments that we see people using their super for, you know, they don’t even have a great success rate.

So we’re talking about things like weight loss surgery, where at best the long term outcome is that probably only half the people that have that procedure sustain the weight loss. And then they’ve spent a fortune, they’ve paid more than they need to, the treatment hasn’t worked and they end up on the Age Pension in retirement unnecessarily.

So look, we do think the rules need to be tightened, and this exploitative type of business that’s sprung up, these apps that encourage people- say that they can help people access their super. I mean, there needs- seriously needs to be a crackdown on that.

RACHEL DAVID: I mean, people can actually do that for free. And the fact that some unscrupulous health professionals are actually spruiking this stuff in their rooms and at the time of consultation is- that is just taking advantage of vulnerable people.
MATTHEW PANTELIS: I think when you’re quoting figures, as I’m reading here from the authorities, the Australian Prudential Regulation Authority, showing out-of-pocket fees for dentistry have risen by 53 per cent in the- is it the last financial year now? You can give me that info, but certainly recently. And that just- that’s uncontainable, really.
RACHEL DAVID: Yeah. And look, it’s not just- as I mentioned, it’s not just confined to dentistry. Some medical procedures, the out-of-pockets have also jumped by the same amount.
RACHEL DAVID: And now that people have run down their savings, they’re just not going to have the money to do those things, and it becomes a vicious circle. So then you have more people taking out their super and then the prices just go up to match what people have in their super account.
MATTHEW PANTELIS: Yeah. Indeed, Rachel, it’s a big problem. Thank you for your time this morning.
RACHEL DAVID: Thanks, Matthew.
MATTHEW PANTELIS: Dr Rachel David there, CEO, Private Healthcare Australia. People draining super for, well, cosmetic type work including dental work. And as she says, if you do it- you know, you take out 20,000 at the age of 40, well, you’re going to be $100,000-plus short at the age of 67 in your super because of the compounding effect of superannuation.
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