Sky News Live Now program interview with Dr Rachel David regarding the private health insurance rebate

Station: Sky News Live
Program: Live Now
Date: 2/4/2018
Time: 11:03 AM
Compere: Samantha Maiden
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


SAMANTHA MAIDEN: Joining me now live from Sydney is Rachel David from the Private Health Funds Association [sic].

Good morning, Rachel.

RACHEL DAVID: Morning, Sam.
SAMANTHA MAIDEN: Can we start in relation to Labor refusing to rule out some sort of change to the private health insurance rebate? Now, I know that Funds actually met with Labor in the wake of that speech that Bill Shorten gave in January. What did they tell you behind doors about what guarantee they were offering on the rebate?
RACHEL DAVID: Look, as you know, with all of these things, there are no guarantees. What we do know is happening is that should a Labor government be elected, the Productivity Commission would be asked to look at this. But we need to be clear, the private health rebate is paid to people, not to health funds, to help people on low and middle incomes access elective or non-emergency surgery, mental health cover and dental care in particular. These are things that the private health funds pay the majority of. So, two-thirds on emergency surgery, about 56 per cent of mental health admissions, and the majority of dental care that is provided to low and middle-income earners is subsidised by health funds. There is no plan B as I’m speaking now about how those services would be funded if there was no insurance. And without the rebate, the majority of people with private health insurance who are not rich, who are on lower and middle incomes – many of them pensioners and superannuants – would not be able to continue to afford to pay their premiums and therefore be able to access these services.
SAMANTHA MAIDEN: Yeah. Now, I noticed that you said that the private health insurance rebate is in place for low and middle-income earners. Do you think there’s any case, then, to restrict the 30 per cent rebate to those people? Because the 30 per cent rebate, of course, it’s not means-tested, as I understand.
RACHEL DAVID: Yes, it is means-tested, so the people that receive it are not rich. About 50 per cent who have private health insurance have an annual income of under $50,000 a year. The majority of those are either full pensioners, part pensioners or superannuants on low incomes. So, it is means-tested and it’s appropriately targeted. The other thing is that it is not 30 per cent of the premium anymore. Some years ago, the rebate was frozen – initially to CPI, and then frozen altogether – so it’s about a 25.5 per cent rebate right now.
SAMANTHA MAIDEN: Okay, but when you say that it’s means-tested, I mean, the majority of people currently receive it- a majority of people who take out private health insurance currently do receive the rebate. Do you think there’s an argument to actually bring down the income levels there a little?
RACHEL DAVID: In terms of bringing down the income levels, if you mean restricting it to an even lower income base, no, I don’t. I mean, we’re not talking about a group of rich people. Rich people don’t need private health insurance. They can pay for their own healthcare costs. This is a group of people who are, for the most part, on incomes of under $50,000 and they’re fixed. They’re either younger people who are starting in the workforce or people who are past working age and they’re on a fixed annual income. They would struggle immensely to be able to afford private health insurance if it weren’t for the rebate, and then what is the plan for how the two-thirds of essential non-emergency surgery, the 56 per cent of mental health admissions, and the 40 million dental services that are provided by the funds every year? What is the plan for how these would be funded? At the moment, it’s a deafening silence on that issue.
SAMANTHA MAIDEN: Okay, but the rebate currently does not cut out for families unless they have an income of $280,000 a year. Now, there’d be very few families that actually have a family income of $280,000 that are not receiving this rebate, don’t you think?
RACHEL DAVID: Well, look, the people that are not receiving the rebate are people- they’re about 10 per cent of private health insurance. I think for any family on that income living in a capital city who are dealing with the costs of a mortgage, sending their children to school, education costs and rising energy costs, I think you would struggle to find a family under those circumstances that described themselves as rich, particularly if both parents were not in the workforce. So I think even though the amount of rebate they’re getting is less than 30 per cent and is decreasing every year, it would have a devastating impact on those people if it were to be withdrawn.
SAMANTHA MAIDEN: Okay, because currently, the means test doesn’t actually expire unless you’re earning $140,000 for singles and $280,000, as I mentioned, for families. If Labor was to bring that income threshold down further, for example, you know, for singles or $200,000 for families, what would happen? Do you think people really would drop out? Wouldn’t they stay in because they’re worried about other elements of the changes kicking in? For example, the tax penalties?
RACHEL DAVID: Look, I think the main reason that people stay with their health insurance – and this has been very, very well researched – is that as they get older and are more at risk of needing to use it, they get very frightened about giving it up, particularly as in many areas around Australia, it’s the only way that you can access essential non-emergency like joint replacements and lens replacements. The waitlists for these things are very long; over three years in some areas around the country. And it’s certainly the only way you can access mental health care in hospital for a large number of people. So people would be scared- the people that are risk of getting sick actually value their health insurance, are really scared of giving it up, and I think it would be absolutely cruel to put pressure on those people and families by taking away the one thing that’s keeping it affordable.
SAMANTHA MAIDEN: Okay. Now, you mentioned that for the majority of Australians, those under sixty-five, the rebate is worth less than 30 per cent; 25 per cent. But of course, it’s worth more for older Australians. It’s worth, I think, around 33 per cent for over seventies and a little bit more, nearly 30 per cent for over sixty-fives. What’s been the argument of why those people receive a larger rebate?
RACHEL DAVID: Well, a lot of those people are on fixed incomes and they’re approaching the age when they’re going to need health insurance. Often we’re talking about people who’ve paid into a health fund over very many years, and one of the biggest fears that they’ve reported when asked is that just at the time they’re going to need to access their health insurance, that they’re going to be priced out of the market. And bear in mind, these are people who’ve paid their Medicare levy and paid their health fund, they’ve paid their taxes, paid their Medicare levy and paid their health fund premiums – sometimes over many decades – and it’s their biggest fear, really, that at the time they need to access health services, they won’t be available to them.
SAMANTHA MAIDEN: Now, Catherine King also has accused the Government essentially of a cover-up, that there were that were essentially offering products that didn’t meet the standards, that left those customers vulnerable, potentially, to being refused those tax advantages of taking out that cover. She said that there were thousands of people that were affected by this. How did the health funds allow this to happen? Can you just explain what has been going on here since 2007 and those changes Tony Abbott introduced?
RACHEL DAVID: I was so disappointed to read this story in the press, because it really was completely wrong and a complete beat-up of what actually occurred. No consumers have been affected at all by this. What happened was health funds have been working with the Government and with other people in the private health sector – doctors and hospitals – on ways over the last two years we can help consumers choose and use their health insurance. And as part of that process, we looked at some of the older product features that were causing confusion to consumers, and agreed co-operatively to get rid of some of those features. And one of those was what we call a benefit limitation period, which is a type of waiting period that a number of the funds have had on their products; some since the 1950s.

When the department started to look into the legislation around benefit limitation periods, they found that in 2007 they had made a minor mistake in the drafting of that legislation which needed to be fixed. But regardless of that, we were going to get rid of benefit limitation periods to make it easy for consumers to understand what they were buying. So really, there’s no news here. The consumers haven’t been affected, this is part of the process that we’ve engaged with the Government to help make it easier for consumers to understand the health fund products at the time of buying them.

SAMANTHA MAIDEN: Alright. Rachel David, thank you very much for your time today. We appreciate it.
RACHEL DAVID: Thanks, Sam.
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