FRIDAY, 13 OCTOBER 2017
SUBJECT/S: Turnbull’s private health insurance fail.
RAFAEL EPSTEIN: You’ve got to give them points for trying don’t you – the exchange of some natural therapies for things like mental health services – worth a try isn’t it?
CATHERINE KING, SHADOW MINISTER FOR HEALTH AND MEDICARE: Look there’s definitely some things that are worth welcoming in the package that the Government has negotiated with the private health insurance industry and the medical devices industry. And of course anything that puts downwards pressure on premiums is a valuable thing to do. Obviously we welcome, for example, the Government has negotiated with the medical device industry that they’ll accept a lower rate of rebate on their prostheses from private health insurance, so they’ve accepted that. There’s some savings for private health insurers in that.
There’s a couple of worries with the Government doing that though. It’s relying on the medical devices industry saying, well we’re going to drop our prices, because otherwise patients will pay a higher gap. So we’re really going to have to keep a very very close eye on that.
EPSTEIN: Sure, but you’re always relying on the private health industry to set prices, I mean that’s private health isn’t it?
KING: And that’s the problem, there’s no guarantees in this package that they’re going to pass all of the savings on. It’s sort of a gentlemen’s agreement to some extent, and again that’s a bit of a worry in that space – what are the actual levers the Government’s using to drive prices down? Now the medical devices stuff may well do some of that, but it may also lead to greater out-of-pocket costs. So again you’ve got to look really carefully at the detail in this.
The mental health stuff’s welcome, but again, you’ve got to really look at the detail. So as I understand, you have to already have an existing product that’s got mental health covered in it. And one of the criticisms has been there shouldn’t be any products that exclude mental health at all – they should all be in there. But there are many products that don’t. A lot of people aren’t aware of that, and then obviously when they go to try and use it, find that they can’t actually access those services. So my understanding of the detail is that you have to already have a product that has mental health in it, then you can get a product –
EPSTEIN: By product you mean a private health insurance product that offers coverage for mental health?
KING: Yes, already, and then you can upgrade it if you need something extra in the mental health space without any penalties in relation to that, that’s how I understand it. So again, you’ve just got to be really careful of that – if you’ve already got private health insurance, you go in, you’re told you’re not covered, then suddenly be covered for it, that’s not within the –
EPSTEIN: So Catherine King, most of us are not especially au fait with something as intricate as private health insurance. But they’re giving a lot of things a try. They’re also going to allow insurers – the federal government will allow the insurers to say, listen, if you pay a greater excess – and this happens a lot of times with other insurance, pay a greater excess, you get a lower premium – so they’re pulling a lot of levers to see if they can encourage more people into private health insurance.
KING: That one worries me again. One of the things about that particularly that worries me is that people might be attracted to saying, look let’s get the lower premium to start with. And that’s the real danger with private health insurance – when you go to use it, and you’re often needing to use it in a crisis because you’ve got fairly sick, or something’s happened – sport, an injury, whatever – suddenly finding that the cost of that is prohibitive. So I think for families, increasing that to $1,500 – that’s a lot of money for people to find. So I’m worried that –
EPSTEIN: But we offer that with every other insurance product don’t we?
KING: Health is a really tricky thing though. You can make a decision with your car, for example, to say well I’m not going to get that part fixed. You can’t make that choice with your health, you’ve actually got to go and get it done. So of course people then will have to make a decision. We already know that people are choosing not to use their private health insurance and go into the public system because they don’t want to pay those excesses. So again we’ve got to be really careful about some of that.
EPSTEIN: You can’t change that unless you radically change the system. I mean the fact is we’ve got a fantastic – compared to other countries – a fantastic public health care system. It’s a struggle for private health to compete because the public system’s so good. You can’t change that dynamic can you?
KING: But the public system is under enormous pressure at the moment. You talk to anybody in the health sector, and the public health sector in particular, people are going in to public hospitals very, very sick, with higher needs as well. Waiting times are blowing out. And again we’ve seen the Government not put enough money back in public hospitals – not the money Labor would have done had we continued in Government. We’ve seen those cutbacks happen and you’ve got a lot of pressure.
EPSTEIN: Let’s not go too far down that rabbithole because then we’re going to have a discussion about who can run the budget better because that’s got to be funded.
Would you do anything drastically different, Catherine King?
KING: One of the things we’ve been critical of is that the Government had said it was going to get rid of junk policies. So you’ve got these policies out there that basically don’t offer any value at all –
EPSTEIN: But that’s not a radically different policy to the Government’s.
KING: The first thing is we don’t know why the Government’s kept those in the system. We have said already that we won’t pay the 30 per cent private health insurance rebate on those policies. We don’t think we offer value to people, so that needs to go. The Government said it was going to get rid of them, it hasn’t done that.
The other thing is obviously making sure people have a valuable choice. I think we do need to invest more in our public hospitals, we need to make sure that they are as strong as they possibly can be so people understand that there is a choice between public and private. And I think at the moment people are worried about that. So I often talk to people and I think – I wonder why they’ve taken the choice to have private health insurance when in fact they ended up in a public hospital, using the public system well and had a really terrific outcome. And they’ve made those decisions. So I think there’s issues there we have to look at. I think the private health insurance industry’s got some responsibility here too, about how does it look at reforming. Private hospitals, how do they look at what they’re doing to be far more efficient? And very profitable private health insurers – $450 million recently from Medibank Private –
EPSTEIN: Good luck with trying to get them to reduce their profits. Can I just follow up on one issue though. You say we’re essentially relying on the private health insurance companies to pass on savings. There are people like APRA, which is one of the regulators – they will make sure that those savings are passed on, so there is an independent body making sure the savings are passed on to people.
KING: They don’t have to if they don’t want to – they genuinely don’t have to. And what happens each year is that the private health insurance industry will put in their bids to the Government as to what their cost increases are and then the Government assesses those. Unfortunately what we saw in the last few years is the Government basically rubber-stamping those and that’s why we’ve seen a 23 per cent increase in private health insurance for most people. And so what they Government then has to do is assess those – it will be incumbent upon them to know and understand that those costs have actually been passed on. There’s no guarantee that the private health insurers will do that, it’ll be up to the Government next time around. There’s no sense so far – premiums will go up, they will go up in April, the issue will be by how much.