TRANSCRIPT Interview on 2GB with Ray Hadley – 29 March 2016 Ray Hadley: As I mentioned earlier, inundated with calls after my comments about the need for people, if they could afford it, to remain in private health cover, in light of a story yesterday that 500,000 more Australians will opt out of it after the increase comes into effect on 1 April. Now I know from my own experience my ATF premiums have gone up to cover myself and my two daughters, who are not yet 23, by under what ATF said it should go up by, and that’s 5.42 per cent. Other people have contacted me saying that theirs have gone up between, in some cases, 3 per cent to 6 per cent, others are saying up to 11 per cent. Now premiums are going up on average by 5.59 per cent, but each insurer’s increase is entirely different, which makes it very hard for people to follow. It seems to vary as well for different people within those insurers, so in others words I’ve had a lot this morning come in from Bupa, I’ve had a lot come in from others, NIB, who’ve gone up by the approved premium increase of 5.55 per cent, others have gone up by 8, 9, and 10 per cent. There are a number of theories as to why this is the case, why there is so much of a variance, including the level of cover, the number of extras included, where you live, age, and other factors. I wanted to speak to the Federal Health Minister Sussan Ley to find out what’s going on, and she’s very kindly made herself available at very short notice. Minister good morning.
Sussan Ley: Good morning Ray.
Ray Hadley: Now why is there such a variance in terms of the increase from 3 per cent up to 11 per cent?
Sussan Ley: ; Because there are thousands of policies. So the 5.59 per cent is an industry average across the board, across all policies, across all funds. So you’re right; some go up rather unfairly in my view by 8 to 10 per cent, and some have held the line at about 4. So…
Ray Hadley: [Interrupts] Now just stop there; you say unfairly, why do you say unfairly?
Sussan Ley: Because it’s just not good enough for consumers. I’m dismayed by the numbers you’ve talked about, and I understand it completely. And we had a…
Ray Hadley: Is there gouging here?
Sussan Ley: Look I wouldn’t say there’s gouging, but there’s capacity to do more. The industry carries excess capital of $5.6 billion. That’s why I went back to them when they first submitted their premium increases to me, and I said please do better. They did by $125 million across the board, but we’ve got to embark on this wholesale package of reform. It’s not just fiddling with premiums, it’s everything; prostheses, which are the devices that go into you during an operation, it’s transparency so consumers can actually see what they’re getting, clinical transparency, single billing where possible, and just the ability for the funds to get away from some of the regulatory burden that they’re under. All of this to bring consumer prices down.
Ray Hadley: So this list I get that says approved premium increase, and I go down the board; Bupa 5.69, HCF 5.42. Now the other one that’s been heavily criticised Medibank Private; 5.64 and people are saying no it’s gone up by 10 or 11 per cent. When it says approved premium increases obviously it’s not mandatory to stick to those approved premium increases.
Sussan Ley: Well the approved refers to the approval that the Minister for Health gives, and I’m not happy that I can’t dig a little bit deeper. So all the Minister applies is a public interest test after the premium increase goes through AHPRA. And effectively they say have they got enough money to pay the cost of their claims; yes they have, so that’s a minimum rather than a maximum. Then we often see higher increases then we would like to. But I mean I’m not taking a stick to private health insurers. Across the board we have to do better, and it isn’t just one part of the system; it’s all of the system.
Ray Hadley: But aren’t you terrified like we all should be that if we, as reported in News Limited yesterday, lose 500,000 people out of the private health system, and I mean I’ve been in it all my life, my mum and dad were working class people who, the first thing they did was instil in me you’ve got to be in the MBF as it was then, and now- then Manchester Unity, now HCF. You know, you’ve got to be saving for that rainy day when things will go wrong. Aren’t you scared that if people opt out because of these significant increases, double what they expected, that you’re going to put further pressure on the public system?
Sussan Ley: I’m concerned because you’re right; the weaker the private system is, the weaker the public system is, because overall, you know we need people who are willing to put in on their own, which is of course what you do with private health insurance, to get some value out of the system. And we know that we want the public system to look after the most vulnerable. So this is not a happy state of affairs, but I am determined to improve it, and the process that we’re embarking on, which is reform across the whole of the private health system, will deliver lower premium increases next year Ray; I am convinced of that.
Ray Hadley: Okay, now how does the private health insurance rebate impact- I had a lady phone me, without going into the details, and she admitted she was seventy, and a self-funded retiree. She said her increase came out at 7.12 per cent, but she took into account that 2 per cent of that could be attributable to the rebate- the reduction in rebate. Could that also be part of the increase?
Sussan Ley: Well the rebate is increasing at the inflation level, but the cost of health inflation is higher, which effectively does see the value of the person’s rebate not as strong over time. We want to restore the rebate, but what we know is… well what Labor did was fiddle around with the rebate. I’m talking about whole of system reform, and this is actually why the Government is at the table, because it’s- over $6 billion of taxpayers’ money is invested in the privat e health insurance rebate every year to deliver this support to people who want to take out private health insurance. But we want to get good value for taxpayer dollars, and that’s why I’m driving the reforms that I am.
Ray Hadley: Could the increase in premiums be about age, that people, as they get older, may spend more time in hospital so the health insurers look for them to pay a larger premium because they’re a bigger impost on the health fund?
Sussan Ley: No, in fact we have something called community rating which means that can’t happen and I’m very supportive of that because I never want to blame people for getting unwell and some people are in hospital more than others, it’s not their fault, it’s not necessarily the case that they should have to pay more, surely, so, you know, we do need that strong support across the board but we also want young pe ople to see the value and induce that earlier, joining early when the parents usually stop paying for them when they turn 25, joining at that age and staying there all their lives but they have to see value in it, Ray, otherwise they’re not going to do it. Ray Hadley: Well, you see, it’s a battle- and I’m a father of four, two of them are in the category where they have to pay their own health insurance, the other two are still on my policy because they haven’t reached that level even though they’re living, in one case, independently and the other’s at university. But it’s a real battle, Minister, to convince young people that- you know, as my parents tried to convince me, you know, 40 years ago, about the need for me to have private health insurance. It’s a battle for parents to insist upon their children to think about it because when you’re 25 or 26 you’re 10 foot tall and bulletp roof whether you’re male or female.
Sussan Ley: And this is a challenge Ray, for the private health insurers, instead of delivering the same product that they have year after year for people of our age, look at what they need to attract young people and how to get them in the door and how to make- deliver them some value through the premiums they pay and that’s my challenge to the sector. I spoke to the chair of Medibank this morning, the new CEO starts today I believe, and I said I’m optimistic about the future of this industry but I’m dismayed about the state right here right now with people furious, dropping out and demanding that we do something.
Ray Hadley: So you’re aware- there’s one other point, I had a caller because we broadcast into Queensland from Dalby out past- in the Darling Downs past Toowoomba and she phoned and was offered this by explanation- I don’t know, whether the health insurer would be happy about a staff member saying oh well, it’s more for you because you’re in Queensland and all the people from Victoria and New South Wales, as they get older, they go up there and we’ll have to charge you more because you retired up there. That doesn’t seem to make sense to me …
Sussan Ley: [Interrupts] It doesn’t make sense at all, no [laughs], it doesn’t make sense …
Ray Hadley: It sounds like someone’s just thought that, that’s a thought bubble that someone’s thought up.
Sussan Ley: Yes, but look, we’ve got a website, privatehealth.gov.au, that’s the Government website that allows you to compare your policy. So, the key thing that we need to bring to the table- the thing we need to do is transparency so p eople can see what they get, what the gaps they have to pay are and the fine print is just not so fine that you don’t understand at all.
Ray Hadley: Okay, what was that website again you just said, private …
Sussan Ley: Privatehealth.gov.au, that’s the Government website.
Ray Hadley: Oh, that’s easy. Okay, you see …
Sussan Ley: And it allows you to compare and you know, actually see what other premiums might be better for you because you can switch.
Ray Hadley: Well yeah, this is the most important thing now for instance, they spend a lot of money advertising on TV, radio and then the print to get people to join them and if you go there, privatehealth.gov.au, it’s a bit like the green slips in New South Wales, where they have a similar placed website, and if all of a sudden you’re paying 11 per cent for a certain health fund, there’s nothing to stop you transferring it to another where the increase is not as significant and it’ll cost you in real terms probably the same you’re paying now. So, I mean, that’s one way for consumers to take a big stick to them, isn’t it?
Sussan Ley: Yes and that’s my key message while we build a better system is that you can move. It’s not- you won’t pay a penalty and you can actually find a product that meets your needs perhaps much better than the one you’re paying too much for now. But overall Ray, I know everyone is paying too much and I want, as I said, the system to improve and there’s lots of things we’re doing in the next month to do exactly that.
Ray Hadley: By the way, you’re not as old as me so don’t put yourself in …
Sussan Ley: Oh, okay.
Ray Hadley: Don’t put yourself in my generation, aright, you’re only a youngster.
Sussan Ley: Thank you.
Ray Hadley: Okay, thanks Minister, I appreciate your time.
Sussan Ley: Cheers, my pleasure.
Ray Hadley: All the best, Federal Health Minister Sussan Ley. It was refreshing to talk to a minister that actually said what she really thought and you are paying too much. Now, I would encourage everyone and I do mean everyone who’s not happy with the deal they’ve just been offered by their current provider and that’s not everyone, I mean, probably half the emails have said well, I’m happy with what I’m getting and others aren’t happy, that’s privatehealth.gov.au, no matter where you’re listening, privatehealth.gov.au. To the young lady from Dalby who got told that oh, it’s because you’re in Queensland, all the old people move from Victoria, New South Wales, that’s a nonsense so check at privatehealth.gov.au and get yourself a better deal if you possibly can.