Station: 6PR
Program: Perth Live
Date: 4/02/2020
Time: 5:13 PM
Compere: Oliver Peterson
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


OLIVER PETERSON: Rachel David is the Chief Executive of Private Health Australia, she joins us now. Gidday Rachel.
OLIVER PETERSON: Is the health, private health industry, is it too complacent? Is it in a death spiral?
RACHEL DAVID: Look, I think both of those words are pejorative in a way that’s, kind of, not helpful in this situation. We are very well aware of the challenges that are facing the industry, they have been well-documented over a period of years particularly the intergenerational issues that you’ve just discussed have been on the agenda for about 15 years.

I think the difficulty with the health funds doing more than they’re doing is a staggering amount of government regulation that compels health funds to pay claims in situations where other types of insurance wouldn’t need to pay claims at all. So we need, we’re paying top dollar for medical devices compared to the rest of the world and a whole range of medical equipment we wouldn’t otherwise pay for, if we only paid for the best available.

We are obliged to pay for a number of claims automatically, even if they’re of low value or even possibly fraudulent. And we are continually sent bills by public hospitals when people were presenting to emergency departments in public hospitals who have been unwittingly tolled for their health fund details and are not even aware they’ve been admitted as a private patient, but an invoice has been raised from the health fund.

OLIVER PETERSON: Alright. So there’s a lot of complex issues aren’t there there, Rachel? What about APRA’s claims today that only three private health insurers will have a sustainable business model by 2022? Is that accurate?
RACHEL DAVID: Look, I don’t think that’s going to happen. I think there will be some funds that will struggle because of the current economic conditions with flat wages growth and increasing health inflation due to ageing, that’s absolutely clear.

But we do have a work plan with the current Federal Government to address some of the issues, including the cost impost on younger people, and I don’t think the government will let it get to that stage. And I don’t think the funds will let it get to that stage because if participation hospital cover does fall to 30 per cent the Australia, the Federal Government will need to find close to $20 billion per year to make up the shortfall for public hospitals which is the equivalent of, basically, doubling the funding to public hospitals in Victoria and South Australia. So that would be a huge impost on the taxpayer.

OLIVER PETERSON: [Talks over] Sure, well it’s- Rachel, how do you get people under the age of 55 to either stay with their private health insurer or sign up?
RACHEL DAVID: Well look, I think the Government’s taken a step in the right direction with the youth discount. There are two ways in which we can- we’ll actually, there are three ways in which we can attempt to address the balance.

The first is what the government- there’s been a subsidy on premiums for low income earners which is considerably less than the government would have to spend on public hospital bed support for that same cohort. But it’s been frozen for some years and we’ve asked that the government unfreeze that subsidy.

Secondly, we need to take costs out of the system, as I mentioned. Where there are wasteful costs and the health funds are still obliged to pay claims.

And thirdly, we need to better reach and better educate younger people that this is insurance. You don’t necessarily get back everything that you pay in, the same as for car insurance or home insurance, you don’t pay for home insurance expecting that your house will burn down. But there are some pretty serious things that can happen to young people that aren’t fully [indistinct] – in double digits is admissions to hospital for mental health conditions.

OLIVER PETERSON: Yeah sure. Rachel, I think you and I understand all of that but I imagine most people just want health insurance to be cheaper. Because those stats don’t lie – 40 per cent of people aged 20 to 39, five years ago, had hospital cover. Now it’s only 34 per cent, it’s going to drop a further 1.6 per cent by 2025. Your business models under all sorts of pressure.
RACHEL DAVID: We’re taking steps in the right direction. The premium increases have been the lowest that they’ve been in the last 19 years. So, what I’m saying is…
OLIVER PETERSON: [Talks over] Sure. But it’s still an increase, isn’t it Rachel? But it’s still an increase, and people want it- they want to pay less to be able, to be able to afford health insurance? They don’t want to pay as much as they’re paying.
RACHEL DAVID: That’s right, and to actually address that issue we’ve asked for the government to look at the issue of the subsidy again and to help us take cost out by removing the toxic regulation that is forcing up premiums.

We do want to be able to offer people products that are much less costly, but to do that we need to be freed up so that we don’t have to cover everything in every product. And we can still offer some very good high quality care if those regulations are removed.

OLIVER PETERSON: Alright Rachel, I really appreciate you jumping here on the radio this afternoon. Thank you very much.
RACHEL DAVID: My pleasure.
OLIVER PETERSON: She’s the Chief Executive of Private Health Australia.
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