Sky News Interview with Dr Rachel David on APRA’s March 2020 quarter PHI stats


Station: Sky News Live
Program: Newsday
Date: 19/05/2020
Time: 1:28 PM
Compere: Ashleigh Gillon
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


ASHLEIGH GILLON: New data is painting an early picture of the consequences of the COVID-19 pandemic on the private healthcare centre. Visits to private hospitals dropped significantly, leading some analysts to call it a windfall for healthcare providers. So, should customers be offered more financial relief?

Joining us live now is Dr Rachel David, she’s the CEO of the Private Healthcare Australia group. Appreciate your time. These APRA figures have been released today, and it is the quarterly private health insurance statistical publication for the last March quarter. What sort of snapshot does it give us of the impact of the pandemic on the private health sector?

RACHEL DAVID: Well, at this point, we need to remember that the data’s only for the first quarter of this year, so it’s still showing health funds paying out more benefits for things like elective surgery and allied health than before. And we’re just starting to see at the end of that period a fall-off in claims for services like dental, physio and optical, which we expect will continue throughout April and May, and then start to come back.

Now, most elective surgery was put on hold from the end of March. We’re starting to see a little bit of that creep in. But in terms of it being a windfall gain for health funds, we’ve also seen health funds lose money and actually lose profit as a result of the hit on the financial markets during the same time.

So, is it a windfall gain? Yeah, there’s a little bit in terms of reduced claims, but it’s not a major amount. We’re keeping track of it for the next quarter. And should it look like there are- there’s an excess in profits that haven’t been anticipated and that we don’t need to use to provision for a future blowout in claims, then that will be a return to members.

ASHLEIGH GILLON: Because some providers have already reduced premiums, haven’t they? But there have been calls, I know, for premiums to be slashed by at least half. There’s also these reports around, of course, that health insurers should really stop charging for benefits that aren’t actually available during the shutdown. There was some modelling by, I think it was The Australia Institute, looking at hospital insurance benefits and suggesting they could be reduced by between 50 and 70 per cent, extra claims down by 10 to 30 per cent. Wouldn’t it be better for customers if that was built in earlier in terms of cutting some of those premiums?
RACHEL DAVID: I think we need to be clear that health funds have continued to pay claims even throughout this period. It was only the non-emergency surgery that was stopped, and a number of allied health services [indistinct] actually continued to be provided through telehealth, particularly psychology and some rehab-based physio. So, everything didn’t stop because of COVID. And admittedly, like- if everything had stopped that we paid for for an entire year, maybe the incredible predictions of The Australia Institute wouldn’t have come through. But we had about four weeks in which we’ve seen a major slow-down in surgery; it’s now come back. There will be some excess capital that’s retained as a result of that, but we need to make sure that with the expected blowout in demand for elective surgery that’s going to come at the end of this, that we’ve got enough money to cover that.

That being said, we’re going to look carefully at the data from the second quarter of this year, and if there are permanent savings that have been made for the funds, which is- let’s be clear, this is members’ money, we’ll work out a way to return it to them. But we can’t do that in advance before we know what the claims are going to be.

ASHLEIGH GILLON: Rachel, has there actually been an exodus from private health insurance by Australians since the pandemic began?
RACHEL DAVID: No, actually. It’s been pretty interesting. We’ve been monitoring consumer sentiment about the health sector very carefully, as you can imagine. What we’ve seen is the usual decline in young people in their 20s who are under unprecedented levels of economic pressure. But, we’ve had an increase in people joining aged over 55, and a great reluctance from people to actually give it up at the moment because they’re very much aware that it’s going to be a long time before the public sector is going to be able to resume tackling the elective surgery waiting list. In fact, if you haveone of a number of common procedures, you’re in category 3 at the moment, it’s unlikely you’ll be treated in the public sector before Christmas of next year. So, for people that are relying on private health to provide access to surgery and particularly mental health care at this time, they’re doing everything they can to hold onto their private health insurance, which is why we’re doing everything we can to keep it affordable.
ASHLEIGH GILLON: Dr Rachel David, appreciate your time. Thank you.
RACHEL DAVID: Thanks, Ash.
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