Station: ABC Radio Sydney
Program: Mornings
Date: 23/3/2022
Time: 10:05 AM
Compere: Cassie McCullagh
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


CASSIE MCCULLAGH: But let’s also talk with Rachel David, Chief Executive of Private Healthcare Australia. Good morning to you, Rachel.
RACHEL DAVID: Morning, Cassie.
CASSIE MCCULLAGH: Now, this is a little tricky to understand, you know, for the general person like myself. Why some prostheses are more expensive than others if you have private health cover? Why is that?
RACHEL DAVID: Sure. Well, as you know, health funds have been campaigning for years on this issue because we’re super concerned about the cost of living and premium increases for our members. Now, this list applies to private patients. It’s run and enforced by the Commonwealth Government and it contains commonly used medical implants.

So, everything from the artificial hips and knees that people get implanted to plates and screws that get used in surgery. And some other bits and pieces, pacemakers for hearts and lenses for cataracts. And for years, the prices that have been set by the Commonwealth Government have been far too high – not just compared to the public hospitals in Australia, but compared to almost every other country with a similar economy like Australia. So, through their premiums, Australians have been paying 30 to 100 per cent more than people in other countries or in the public sector. And in some cases, we’ve even found some commonly used screws and bolts and so forth that- where people have been paying ten times more through their premiums as a consequence of this regulation than in other countries.

Now, with cost of living at an all-time high as a concern with Australians, this just can’t go on. So, we’ve been lobbying and working with the Federal Government to actually bring some of these outrageous prices down.

CASSIE MCCULLAGH: I’ve got to say, I still don’t understand it. Why does the Government set this price?
RACHEL DAVID: Look, it’s a historical thing. In an ideal world, this wouldn’t happen and the private sector and health would be able to procure- use tenders to procure these devices on the open market. But it’s something that we have been stuck with, and obviously the types of things that we’re talking about are absolutely essential for use in surgery.

But- so we want the same range of medical devices and equipment to be provided, but the prices that have been set have been far too high in a market where there really is constraint on supply. So, these are things that are very cheap to manufacture and there are multiple supplies in the market at multiple price points. So, there’s no reason why Australians need to be paying 100 per cent more than in some other countries like Germany, Sweden, the UK, New Zealand and so forth.

CASSIE MCCULLAGH: Okay. So, 11,000 medical devices, and what are the most common ones?
RACHEL DAVID: Well, some of the things we’re talking about are hip replacements, knee replacements, the artificial lenses that go into your eyes if you’ve had cataract surgery, and then a whole lot of other things that are used in surgery like plates and screws to set bones. So, that’s the type of thing that we’re talking about.
CASSIE MCCULLAGH: Okay. Look, a couple of messages on our text line; 0467-922-702. You might have some thoughts- you might like to share your thoughts. Margaret says: I have a hip replacement which allows me freedom of movement since 2017. But I also required urgent heart surgery following- the following year which resulted in me having a little plastic ring and mesh in my aorta to keep it functioning. I’m very grateful for the wonderful surgeon who saved my life. But as I have private health insurance, the cost of the prosthetics was covered. So Margaret’s saying that she wasn’t out of pocket there.
RACHEL DAVID: No, you’re not allowed to charge out of pockets attached to medical devices in Australia because the health funds would view that very badly. That’s not health fund- health fund members pay a lot through their premiums and that’s how prostheses or these medical devices are covered, it’s through the premiums. But as we’ve seen, we’ve had premium increases that health insurance has been going up as the cost of this technology has increased. And with cost of living, as a concern- at an all-time high as a concern, we need to do everything we can to keep unnecessary costs down for our members. And the inflated price of this medical technology, like for like compared with the public system and overseas is a major driver of higher premiums.
CASSIE MCCULLAGH: So this is why Private Health Care Australia, of which you’re the chief executive, is keen to get these prices driven down.
CASSIE MCCULLAGH: I mean, just to be completely cynical for a moment, is there a huge lobby group within the medical device industry that is pressuring different parts of the system to maintain these big prices? Is that why it’s happened?
RACHEL DAVID: Well, look, of course there is. I mean, these are enormous companies we’re talking about, with market caps in the hundreds of hundreds of billions of dollars, US dollars, that are- so compared to Australian doctors, hospital companies and private health companies, they’re absolutely dwarfed by the market power of these organisations and the lobbying power that they have in Australia. So of course they’ve been – you know, witnessing the Federal Government being overrun by lobbyists and meetings from these companies to try and keep the prices high. In fact, it was even reported that globally they used to refer to Australia as Treasure Island because of the huge returns they were able to get out of private health insurance in Australia. Now we’ve worked very hard to be able to counter this, and to- because cost of living is such a concern and premiums are such a concern for our members, we had some encouraging signs in the Federal Budget of last year, the 2021 federal budget, that the Commonwealth would be taking action and helping us deliver savings for our members. And we hope that will continue in future.
CASSIE MCCULLAGH: I see. I see. So this because of the real pressure on the private health care system caused by a range of factors, including the cost of living, this has become more urgent for you. Because this is an inflated price, we’re being ripped off, we’re Treasure Island, everyone wants a piece of the Australian action and this means that there’s a real threat to private health insurance and the private health care industry because it’s just not functioning well.
RACHEL DAVID: Yeah, well, that’s exactly right. We don’t want to see premiums go up by $1. We’ve been able to keep a lid on premium increases in recent years for a number of reasons, not the least of which is that demand for elective surgery has slowed down a bit as a consequence of COVID. But look, that’s going to come roaring back. The need for surgery doesn’t go away and we’re very concerned that when that happens, people are going to start scrutinising their premiums again, particularly in the light of what’s happening in the economy with house prices and the cost of a range of other things like fuel. So we really can’t let a dollar of waste go on in this area.
CASSIE MCCULLAGH: Okay. Alright. Well, this is being looked at and you’re going to be discussing this issue in even more detail tomorrow at a conference called The Future of Health. What are you going to be involved in there? What’s the session you’re involved in?
RACHEL DAVID: Look, it is about prostheses costs. We were made aware that since the budget decision of last year, the Minister for Health had undertaken a unilateral discussion with some of the big medical device companies in Australia, and come to an understanding with them about what would happen with prices that didn’t involve health insurers, it didn’t involve the other stakeholders. So we are a bit worried about it. It does appear to be walking back on some of the savings that were promised in last year’s budget, and it will mean that private patients will continue to pay more for the same devices in the public hospital system. So we’re looking at that in a lot of detail, again, to make sure that people with private health insurance are not being ripped off and that their concerns about cost of living are being addressed.
CASSIE MCCULLAGH: Okay. Alright. Well, Rachel David, thank you very much for explaining that to us.
RACHEL DAVID: Thanks, Cassie.
CASSIE MCCULLAGH: Dr Rachel David, Chief Executive of Private Health Care Australia, raising this issue, which has obviously been bubbling away for quite some time.
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