Station: ABC News
Program: Breakfast
Date: 31/10/2019
Time: 8:16 AM
Compere: Sandy Aloisi
Interviewees: Dr Rachel David, CEO, Private Healthcare Australia; Tony Bartone, President, Australian Medical Association [Excerpt]


SANDY ALOISI: The Australian private health insurance sector is on the precipice, that’s according to a report released today by the Australian Medical Association. It argues recent reforms haven’t addressed the key issues of affordability and value for money. President of the AMA, Dr Tony Bartone, says urgent action is needed to combat a threatened death spiral for the industry.

TONY BARTONE: After many, many years, the last four years in particular of continuing falling market penetration, you might say. So consumers, customers are making a decision not to renew their private health insurance. That fall in penetration means that more and more people are opting out.

[End of excerpt]
SANDY ALOISI: Let’s get some reaction now from Dr Rachel David, she is the CEO of Private Health Care Australia. Doctor, good morning to you.
RACHEL DAVID: Morning, Sandy.
SANDY ALOISI: Strong words there from the head of the AMA. How do you respond?
RACHEL DAVID: Yes, well I certainly understand the concerns of the AMA and yes there are some challenges. But their language is a bit alarmist. We have no difficulty whatsoever in selling health insurance and maintaining health insurance for people aged over 55 who are at an age where they need it. But I think the nub of the issue is that under our current regulatory system – which is community rating – this means that everyone pays the same premium regardless of their health status. So a very ill person will pay the same premium as someone who is in good health and has maintained their good health.
SANDY ALOISI: [Interrupts] But is that premium affordable? I’m just going to Dr Bartone’s issue there, where he says affordability is something he questions.
RACHEL DAVID: Well for people aged 50 and over it could be very …
SANDY ALOISI: [Interrupts] What about 50 and under?
RACHEL DAVID: Yes. Well, I’m just getting to that, because for people aged 50 and over, it’s very good value, but there is a net cost subsidy of $900 from younger people to older people. And so quite rightly, some younger people perceive that they’re paying more and getting less. So that is the issue that together with the AMA and other groups in the private health community like hospitals, we’re advocating for Federal Government reform to address.
SANDY ALOISI: But the AMA says tens of thousands in the 30 to 39-year-old age bracket are abandoning health insurance. And baby boomers – the people you’ve just mentioned – are utilizing it more than ever. So isn’t this a ticking time bomb?
RACHEL DAVID: It’s an issue that needs to be addressed at some point soon by the Federal Government. And I think there’s broad awareness of what the problem is. We’ve known for some years that the baby boom population – which is larger – has very high expectations of working longer and using more health care would create this effect. We’ve put a number of proposals to the Federal Government about improving participation in younger people that are under active consideration. The current- the first wave of reform that the current government did was very useful in improving the information to consumers, to help them choose and use their health insurance. But now what we need to address is that very real financial barrier for young people when they’re considering taking it out.
SANDY ALOISI: Let me put to you also Dr Bartone’s issue about value for money. You say people 50 and over are continuing to take out private health insurance, but surely, you hear anecdotally that they take it out because of concerns of their own health, but ultimately if they have surgery of some sort, they are out of pocket despite paying full medical insurance for many years. Out of pocket many hundreds, if not thousands, of dollars.
RACHEL DAVID: Well look, fortunately, very high out of pockets, while they are a problem in the system, are rare, and that …
SANDY ALOISI: [Interrupts] I don’t know that it’s so rare. Anyone who’s had surgery would argue that that’s not the case, Doctor. I’m sorry to dispute that.
RACHEL DAVID: Well look, about 56 per cent of hospital admissions that are covered by private insurance are provided with no gap whatsoever, and of the remaining 44 per cent, roughly – and we’ve gone- we’ve surveyed about 10,000 consumers and looked at the data to come up with this, it’s not a thought bubble – of the remaining 44 per cent, about one third of those people have – or about roughly 15 per cent – have a gap that they weren’t told about and that they’re unhappy about. And most often, the reason that they’re upset is because they were completely blindsided by the out-of-pocket expense. And we would all agree, including the AMA, that that is completely unacceptable.
SANDY ALOISI: So do you not think that people now perceive private health insurance to offer no value for money?
RACHEL DAVID: There are very few circumstances in which we can say it genuinely offers no value for money.
SANDY ALOISI: Is that really the case? I’m sorry to press this point, but for those of us who’ve had surgery in a major hospital who have top cover, we find ourselves still out of pocket quite substantially. So I don’t know that it’s so rare, Doctor.
RACHEL DAVID: Look, I think we’re talking about an issue of perception versus reality. Even a very short hospital admission for an uncomplicated procedure, say, for example like a stock standard hip replacement which is a very common procedure that is performed all over Australia with no complications. The cost of that treatment without health insurance is $28,000. That’s just the hospital, that’s not the doctor or anything. That’s just the hospital.
SANDY ALOISI: [Interrupts] So when Dr Bartone says affordability is a key issue, value for money is a key issue, he’s representing doctors throughout Australia. What do you say to him? I mean surely he has got his finger on the pulse.
RACHEL DAVID: Look, I think he does, in the sense that doctors have a vested interest in keeping this system going, as we all do. The report is very much written from the perspective of the AMA, and its remit is to ensure the ongoing incomes and practice circumstances of doctors. From a consumer perspective – which is where our research that we’ve done with the Department of Health on out of pockets comes from – there is a perception that the system is expensive and it’s getting less affordable, but that does not extend to a concern that the system is no value for money and therefore should be thrown out.
SANDY ALOISI: All right Doctor.
RACHEL DAVID: The system is providing access to hospital care that is extremely expensive without health insurance. But we all agree the issue of high and unknown gaps needs to be addressed.
SANDY ALOISI: All right, Doctor, I’ll leave it there and I thank you for your time this morning.
RACHEL DAVID: Thank you.
SANDY ALOISI: Dr Rachel David there, the CEO of Private Healthcare Australia.
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