Interviews and Transcripts

Well, look, this is part of the issue that the Federal Government and the health funds consider during the premium round process. So the private hospitals were invited to make submissions into that process about their own costs and the pressures that they were under during the pandemic, which we acknowledge. We acknowledge that the pandemic was tough on the private hospital sector. And then after the pandemic, they’ve had to contend with the inflationary pressures on wages, recruitment, power and food. And so that is acknowledged. There is a robust process by which health funds contract with hospitals to ensure that patients don’t have gaps on their hospitals

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 premium setting process that we undertake with the Federal Government is a very highly controlled process. There’s more than one regulator involved. So there’s APRA, the prudential regulator that goes through the figures with a fine tooth comb to ensure the funds can meet all their obligations under the law; and then the Department of Health that, as a regulator, also goes through the same process to ensure that the funds are behaving appropriately in terms of the health sector.

One of the things we’re grappling with, however is, as the Minister correctly identified, the cost of hospital care is going up. So not only are the number of procedures going up that we need to fund, the cost of those procedures is increasing and that’s because of inflation in the areas of recruitment, power and food that’s impacting hospitals. And so, fortunately, as a result of the process that we’ve been through we’ve been able to contain the cost of health insurance significantly below inflation and also below some of the really stratospheric rises we’ve seen in some other insurance types.

There’s calls to name and shame the doctors who are gouging their patients. Specialist doctors’ fees should be published on the Government’s Medical Costs Finder website according to Private Healthcare Australia. As the ACCC has found that out of pocket fees charged by specialists – such as surgeons and cardiologists – have increased by more than 50 per cent over the last decade.

But I think the system has evolved so that private health insurance and Medicare coexist actually as part of the same system, because what they’re doing is- what private health is doing at the moment is it’s funding the lion’s share of planned or elective surgery. That means that the public hospitals don’t have to put those people on waiting lists.

But when it comes to doctors, under Australian law, doctors can set their own fees and charge whatever they like, and health funds will pay a proportion of that to try and eliminate as much of the gap as possible. But what they can’t do is chase ever increasing or very rapidly increasing fees, because that means that it will put upward pressure on premiums for everyone.

There are a number of things around transparency. Doctors actually telling patients what they’re going to be up for is absolutely vital. The government has a website, Medical Cost Finder, where you can actually look up the common procedures to see what sort of out of pocket costs you’d expect

We have seen quite a marked increase in out-of-pocket costs for people attending hospital to have common procedures over the last few years, or over the last five years, and I think there’s some very clear reasons for that. One is the amount of money that was in the system in terms of government benefits through JobKeeper and so forth and savings during the pandemic, and the fact that doctors started to work fewer hours and charge higher out-of-pocket at that time to make up the difference.

So for planned surgery like a cataract, hip surgery or something like a mental health admission, it’s really important people have choice, and people are prepared to pay private health insurance to have their choice so they can get the care they need when they need it.