Station: 4BC
Program: Drive
Date: 13/10/2017
Time: 3:09 PM
Compere: Ben Davis
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


BEN DAVIS: Look, there’s been sweeping reforms to private health insurance. They’ve been announced today. It’s aimed at youngsters – and when I say youngsters: teenagers and those in their early twenties. It’s also aimed at reducing premiums and making it easier to understand exactly what you’re signing up to, because we know there’s been an exodus of you abandoning private health insurance, because the burden of covering ballooning premiums is just too much to bear. Here’s the problem: the more people that get out of it, the higher the price will be. The Government needs you to come back in to private health insurance, and we know the young get in there, sign up to prop up the elderly. That’s how the insurance system works.

Now, among these changes – I’m going to step you through just a few of them – among these changes, aimed especially at the younger generation: a two per cent yearly discount that accumulates. So, if you’re under 30, for every year you sign up, you get a two per cent discount. The next year, that goes to four per cent then six per cent then eight per cent. It’s capped at 10 per cent, and that 10 per cent discount – after you’ve held it for five years – goes through until you’re 40. It doesn’t sound much, does it really? Ten per cent discount. Maybe they could have worked a bit harder on that. It’s an accumulative discount.

That’s one of the laws to get the young generation back in, but then they’ve done this: the removal of cover for natural therapies. This starts in 2019. Yoga, pilates, homeopathy, aromatherapy, tai chi; the younger generation, they get into this. They love their hot room yogas and all the pilates and that type of gear, and that’s supposed to be preventative. So, on one hand you’re trying to lure them back, but then you’re taking away the services they use.

There’s other reforms too: replacement of cardiac devices then those- replacements and cardiac devices, then those in the public system. There’s a new level of structure as well: gold, silver, bronze or basic categorising systems for policy. So, think about when you go check into a hotel – five star, four star, three star – it’s almost that type of deal, so you know what you’re going to get.

To step us through some of these things and if they are going to work, I want to bring in the CEO of Private Healthcare Australia, Dr Rachel David. Now, Private Healthcare Australia is the industry’s peak body, and they’ve actually worked closely with the Government over the last two years to put these reforms together.

Doc, good afternoon.

BEN DAVIS: Biggest reforms in health insurance that we’ve seen in a generation. Can we expect this to filter through to have lower premiums?
RACHEL DAVID: Look, I think we can, but the measures need to be seen as a full package. So, I can- you’re absolutely right stepping through all of those things. It is addressing affordability, helping consumers choose and use their health insurance, and helping particularly younger people to see the value of health insurance so it becomes relevant to a new generation, and in doing so, that will bring premiums down for everyone, because the more people with all different risk profiles that join a health insurance scheme, the more cost-effective and the cheaper it is.
BEN DAVIS: Yeah, and that’s the big key here: we need that younger generation to come through, and that’s- the whole system relies and pins their hopes on encouraging more under-thirties to sign up, but they’re the group that are facing the biggest cost of living pressures. You know, housing affordability, education, trying to pay back their HECS debts or HELP debts, unsustainable job prospects; I mean, what if they don’t sign up?
RACHEL DAVID: Well look, what we’ve been able to determine through our research is that, yes, young people are facing those pressures in their twenties, but there are two things that we consistently hear, and one is that there is pent-up demand for health insurance in that group, and the reason that there is is because of increased awareness about the need to be covered for things like a mental health problem or an accident that might keep you from working – a sporting injury, a skiing accident, that kind of thing – or one of the most common things that we see, particularly in young men, is a dental injury, having some teeth knocked out in an accident or playing sport, that if it’s not fixed can leave people with a very disfiguring outcome that becomes a problem if you are looking for work or looking for a relationship.

So all of those things together – dental health, mental healthcare, and sporting injuries – is actually quite common in people in their twenties, and they’re all things which are very difficult to access care for in the public system. So we are finding that people are wanting health insurance in that age group, and we’ve taken a number of steps to make that a little bit easier.

BEN DAVIS: Alright. I’m a big advocate to have mental health, easier access to that, and the sporting injuries, dentists: sure. But, if you’re taking away some of these incentives- and I mentioned before, yoga, pilates – look, not my go, but I know plenty of those under 30. They loved getting into it, they see them as preventative measures so they don’t get sick down the track. If you take those incentives away, are you really expecting the under-30s to join up?
RACHEL DAVID: Look, that was not something that we particularly wanted to happen …
RACHEL DAVID: … but what we found was that we did have to make some compromises on that. One of the issues was that some of the wackier therapies that were being covered, like homeopathy and iridology, the medical peak bodies that represent doctors were very unhappy about those being covered, because they felt that some people were inappropriately using those instead of proper medical care. The one thing that we have lobbied to retain is remedial massage and sports massage …
RACHEL DAVID: … that will remain covered, and that is the main area that we do pay out for – pay claims for a natural therapy – and young people can be reassured, and people with extra cover can be reassured that all of the main issues, like preventative dental, physio, optical and chiro will still be covered.
BEN DAVIS: If you’re under the age of 40 I’d love to hear from you this afternoon. 131873. I know they’re aiming at the under thirties, but even forties here, when you’ve decided not to either take up health insurance or give it a flick, are these measures that we’re talking about- will they lure you back? What would lure you back, if not these? My guest this afternoon is Dr Rachel David, she’s the CEO of Private Healthcare Australia, the industry body for the private healthcare system.

Now, doc, I’m just having a look at this. The new category of systems: gold, silver, bronze, basic. I like the idea behind this.

RACHEL DAVID: Yeah. What we’re trying to do there is to classify the products that are out there, because a couple of things have happened over the last few years: one is the health system itself has become a lot more complex with new technologies and new treatments coming on, and the other thing is that, in a kind of effort to make health insurance products more affordable at different life stages, health funds have been offering different bundles that have excluded some treatments and included others, and that’s made the system quite confusing for customers who are trying to compare different products and move from one fund to the other.
BEN DAVIS: Yeah, and they’re junk policies too, aren’t they? They’re loaded up with stuff you’re probably never going to need, but there’s one in there you go: yup, I’ll rip in and grab that. So this makes it, what, a lot clearer?
RACHEL DAVID: This makes it much easier for people to, firstly, get a product that’s affordable, but also to get a product that actually meets their health needs, which is really important, because the needs in your twenties, as I’ve explained, are quite different to the health needs who’s aged over 65 or 70.

So, what- we’ve invested in three things. One is the classification of existing products. Number two is medical terminology to describe what’s in and out of products that’s the same between all the health funds, so that folks can compare apples with apples, and the third thing is a bigger investment in the Government’s independent comparison site for health fund products, which is called, and it’s run by the Commonwealth Ombudsman, so that’s going to be made better, and the fourth thing we’ve done is in the mental health area, which means that if people have – particularly younger people are on a low-cost policy that doesn’t give full cover for mental health – if, for some reason, they are admitted to hospital with a serious mental health condition, they can upgrade on the spot and get that admission covered so they don’t have any big out-of-pockets, which they would have if they were on a basic table policy.

BEN DAVIS: Alright, I like the sound of that. Now, one of the savings in the scheme, too, is the costs when it comes to the different prostheses. I guess, like your hip replacements, your knee replacements; we’ve spoken about this at length, where the cost of getting a knee done or hip done in this country is so expensive compared to other countries, and even from state to state. So, those costs have been brought back to the heel?
RACHEL DAVID: Yes, that’s right. The whole system and the whole supply chain was flawed here. It was not the fault of any one player, but the fact is that the standard generic medical implants like hips, knees and artificial lenses: the prices in Australia had been set by the Commonwealth, they have been set far too high. It was done 10 years ago and not revised in any way, so that people in private hospitals in some cases were paying five times what public hospitals were being charged.

Now, the Government has taken some steps to both deflate those benefits in line with market prices in Australia and around the world, and to actually improve the whole system of evaluating medical devices so that, whether you’re a public or a private patient, you get a qual- [cuts] …

BEN DAVIS: Food for thought there, especially for the younger market, because that’s the lynchpin: they need to sign up so they prop up the backend of the market with the elderly and aging population, but one day, they’ll be elderly themselves. Doc, appreciate your time. Dr Rachel David, the CEO of Private Healthcare Australia.
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