Dr Rachel David discussed rising out of pocket costs and premiums with ABC Gold Coast Morning Show

Dr Rachel David is the CEO of Private Healthcare Australia, which represents the health funds, and I spoke to her a moment ago.

So look, it has been very thoroughly considered, and the public interest has been taken into account and including the cost of living crisis. But what- we are treading a bit of a fine line because a lot of the providers, so the hospitals and the medical practices that health insurance pays for, they’ve been hard hit by inflation as well. So a hospital has to pay for greatly increased costs of recruitment, power and food, and we have to be able to meet those costs to ensure that we can continue to offer quality services in the private sector. So that’s why premiums do need to go up by a bit this year.

The second thing is that the biggest part of expenditure for health funds is hospital care, and well over 90 per cent of hospital care is funded without a gap. Where the gaps come in is for the funding for what the doctor does. So the way that that works is that the health funds will pay everything for the hospital and, for the most part, everything for any medical implants or surgical supplies that are used in your treatment. But when it comes to what the doctor charges, they can pay so much. But if they doctor wants to charge more and more and more, they can’t keep chasing that. Otherwise, that will have an impact on inflation and they will never be able to cover the gap. And that again comes back to a legislative issue, and that is in Australia medical practitioners in private have a constitutional right to charge whatever they like. There’s no way that an institution like the Federal Government or health insurance can constrain that in our economy. All they can do is negotiate with doctors to be able to keep that gap as low as possible.

The issue around the medical gap is more difficult, again, because of the constitutional right for doctors to set their own fees. So there are a few things that we have proposed. And the first is that the government has a medical cost finder website that was supposed to allow consumers and their GP to better compare prices of medical specialists, and there are about 10 to 15 per cent of our members who will pick a specialist purely on price. We thought this was a going to be a great innovation. It was something that the previous government introduced. But as it turned out, it hasn’t been implemented properly and that doctors’ participation in this was left up to completely voluntary. And to date, even though a fortune has been spent on this, only ten doctors have signed up.

Now, that infrastructure is all there, it is completely plausible that far more doctors’ fees could be published if this was correctly implemented. So we’re asking the federal government to look at that. And the second thing is that what we’re- what we’d like to see is the consumer law strengthened in Australia so that if people are charged fees by their doctor and they weren’t provided with proper, informed financial consent before their medical treatment, that they’re not liable to pay those charges. And we’re still hearing far too many reports of people who get to the end of their surgical treatment or their treatment in hospital, and they’re slugged with costs that they knew nothing about. This has already been done in the US. The Biden administration has put through what they call surprise billing legislation, and it acts as a real deterrent for people in the community, including doctors, to levy charges against people which they were unaware of, and get away with it.

So, there’s a few things. Firstly, the federal government pays a rebate, which is about a quarter of the premium for people on lower incomes to support them to choose private health insurance. The second is, if you are a higher income earner, you will pay a penalty through your taxes if you don’t have health insurance. It’s called the Medicare levy surcharge. And the third thing is that if you’re aged over 31, and you take out private health insurance for the first time, then you’ll pay a higher premium for a period of ten years.

Now, the government is looking, reviewing all of these incentives right at the moment to make sure they’re properly targeted. But one of the problems, particularly with the premium penalty for people aged over 31, is that it’s a very hard thing to unravel once it’s in place. If you think about it, then what do you do with the people that are already paying it? There are all sorts of very difficult grandfathering arrangements that would need to be brought in, brought into play. So look, while the government is looking at it, I think they’re probably more likely to address any issues with the rebate and the penalty rather than changing the age. And I think- the age penalty and the issues with the age penalty, and the reason that was brought in is that prior to those incentives, an 85-year-old could take out a policy and a 25-year-old could take out the same policy, and the 85-year-old will pay exactly the same. And that’s just not fair. And that put a far bigger burden on younger people who had health insurance than it does today. So look, the government is looking at those incentives, but it’s going to be tricky to change that one.