THE HON CATHERINE KING MP
SHADOW MINISTER FOR HEALTH AND MEDICARE
FEDERAL MEMBER FOR BALLARAT
RADIO INTERVIEW WITH LEON BYNER
FRIDAY, 18 MAY 2018
SUBJECT/S: Private health insurance
LEON BYNER, RADIO 5AA: Catherine King, what’s your response to what Dr Rachel David has said?
CATHERINE KING, SHADOW MINISTER FOR HEALTH AND MEDICARE: Well look of course there’s a lot that the health insurance sector and the government have been working on that we agree with. We’ve said very clearly it was good to see that the Government managed to take some costs out of the private health insurance system but we agree basically with the AMA today that this industry is in a death spiral and if we don’t have some significant intervention you’re going to continue to see people drop cover entirely or drop the level of cover and it’s not sustainable.
BYNER: What sort of intervention would you suggest would be good?
KING: So we’ve announced we will cap private health insurance premiums at 2 per cent for the next two years. But we also think the Productivity Commission needs to have a good root and branch look at what’s actually happening in this industry across the board. That will be the first look at this sector seriously for 20 years, and if you remember the previous Industrial Commission when they looked at private health insurance introduced many of the modern incentives we know that exist today. So that’s what we’ve said in terms of the policy. Now that doesn’t mean there isn’t some continuing work to be done in the meantime to try and get costs out of the system. But our view is people are voting with their feet, they are leaving private health insurance. We have got our lowest level of hospital cover we’ve had since 2011 and we need to intervene in this sector.
BYNER: Stay on the line. I know you don’t want to have a debate and I understand this but Rachel David how would you feel about a couple per cent cap for a couple of years on your fees?
RACHEL DAVID, PRIVATE HEALTHCARE AUSTRALIA: Naturally, we’re worried about it. We are doing everything we can to keep premium increases down and there’s some more things that the government and sector can do to help out with that as I’ve mentioned. But an arbitrary cap could put some of our regional and employee-based funds at risk of becoming insolvent. And what it will do in terms of flow-on effects is some even of the larger funds, to retain their prudential reserves, will need to freeze the payments they’re making for hospitals and for doctors, which could lead to a cap on nursing wages and a cap on the income of the people who work in hospitals. I know it’s only for two years but expenditure in the health sector is very large, we’re paying out record amounts in claims, and the effects will be felt very quickly.
BYNER: Alright, so Catherine King from your point of view what do you say to what Dr Rachel David has said.
KING: Well I think as Rachel would know I think the profits of the private health insurance – in the APRA figures that have come out again yesterday – showing that those profits are up yet again, they’re up to $1.3 billion. We also know a lot of the smaller not-for-profits are holding substantial capital above their prudential requirements. And that’s money that is in fact private health insurance policyholders are paying into the profit – some $300 per private health insured person going into the profits of private health insurers. Our view is this sector is pretty profitable – that we do need to intervene because people are basically saying they can’t afford it and the value for money that they’re getting. We’re with the consumers on this, not with the private health insurers.
BYNER: Alright, Catherine King and also Rachel David, thank you.