Radio Interview - AMA President, Dr Bill Glasson, discusses private health

Medicare Private has announced a tough new approach to striking deals with hospital operators that could lead the patient with a sizable gap fee to pay. Medibank Private insists it's a cost saving measure aimed at improving services. And all this comes on the day that shows more Australians are taking up private health care cover than ever before.

First to Dr Bill Glasson, the President of the AMA, who joins me on the line this afternoon. Dr Glasson, good afternoon.

DR BILL GLASSON: Good afternoon, John, and all your listeners.

MORRISON: Good to have you with us again. Now this news about the private health fund, or Medibank Private specifically, raising both premiums and perhaps gap fee payments. Is that a concern to the AMA?

DR BILL GLASSON: Look very much, obviously at a time you say when I suppose the government has been encouraging more people to join private health insurance through its increased rebate for those over 65 and over 70. It's, I suppose, it's the wrong signal at the wrong time.

I think we've got to make sure that premiums remain affordable and that private health insurance remains attractive. And it's been one of the, I suppose, government platforms to try and encourage people in this sector to get patients to join private health.

And I just think we've to be very careful that these price hikes, both from the point of view of the health funds and gaps that patients have to pay, really are affordable and don't send the wrong signal and have people actually leave the system.

MORRISON: Well, in many ways, if you have an income over $50,000 a year, you'll have to be - or perhaps encouraged in the strongest possible terms to be a member of a private health insurance fund, simply because you're slugged the extra Medicare levy if you're not.

DR GLASSON: Well that's exactly right, John. There's various carrots and sticks in the system and between, you know that particular one you describe, along with the lifetime community rating is the other one, obviously if you don't join a health fund by the age of 30, then you get sort of penalised as you join later.

But, when you combine that with the rebate the government gives, that 30% across the board increasing to I think it's 40% for those over 70, I mean there's a lot of, I suppose, incentives to be in the system.

MORRISON: There are incentives to be in the system but then you're being pushed, if this continues, that we're seeing Medibank Private raise premiums by 9% last year. They're about to do, well raise premiums yet again and people insured in private funds are being faced with more and more charges. Now they're going to cop a charge on the gap difference. This is, well, it's a no win situation as far as private health insurance goes.

DR GLASSON: I know, that's exactly right. And I think the first point to make is that we've got to really justify those rises since it's taxpayers' - a large part of taxpayers' money going into the system. If private health - if private funds are putting premiums up, I'd like to think it's going into patients and not going into sort of more administration. So I think we need to justify that first and foremost.

And obviously if they're going to put gaps in the system, those gaps have to be affordable and I think the reality of people going into a private hospital is that they don't mind so much what they pay but they do need to know what they pay before they go in.

There's nothing worse than going to a hospital with a feeling, golly, if I'm going to be in here an extra week because I have complications, I'm going to be an extra whatever, a thousand dollars, out of pocket. It's the unknown that frightens people rather than the known. That's basically…

MORRISON: I think that's very true. Dr Glasson, why is it that Medicare Private is making these changes? They say it's part of a cost saving and in an effort to provide better services. And in fact they're re-evaluating the hospitals who are part of their system, aren't they?

DR GLASSON: They are, John, and I mean I don't understand. If you're contracted with, say, 20 hospitals and you decide you're going to get a contract with 10, how that's actually going to save you money in the sense you've still got to put the same number of patients through the system that you're insuring.

So I think there's a bit of a fallacy in a lot of the arguments they use. If they say to all the hospitals, you know this is what we are going to pay for an orthopaedic hip operation or whatever, you either live with that or don't live with that. Then certain hospitals say, listen, we can't live with that; we're going to move on. Then so be it.

But I think that all that's going to happen is you're going to end up with a waiting list, I suppose, to get into the private hospital because the health fund is contracting with so few. A pretty short-sighted move and also you, as a patient privilege, get not only a doctor, but have your choice of hospital and you'd like a hospital that's reasonably close to where you live. Otherwise if you find yourself contracted to a hospital that's on the other side of town or in another city altogether, then obviously as a private patient, you don't feel that's appropriate.

MORRISON: Yes, and with your payment of the fees, the health insurance premiums and the agreement to sign up with a private health fund, you should be able to have that choice, shouldn't you?

DR GLASSON: Absolutely, I mean the whole idea of this system is choice. The reason we take out private health insurance is to have choice.

Choice of our doctor, choice of the hospital, choice of when we have the procedure, and obviously choice of what procedure to have.

And so if the health funds start to restrict choice, then you'll ask yourself, well golly, why am I paying this money? Why don't I just fall back on the public system? The reality is that choice and independence, I suppose, are the two key words along with quality. And again if the health funds drive these private hospitals any harder, I tell you what will happen - the quality of the product that they can deliver will suffer. And so the patients at the end of the day are the ones that suffer because the hospitals will not be able to provide the quality that you and I expect when we go into the private system.

MORRISON: Now, Medicare Private direction?

DR GLASSON: I think what will happen is Medicare Private is testing the water. I think the other big guys out there are watching to see what response they get. And I think that, if the response is acceptable, they'll probably move in the same direction.

But I think it's very important that we, the public, stand up on behalf of all the patients of Australia and say this is why we take out private health insurance; we're not going to be undermined in the sense of restricting choice of hospitals, doctors or whatever.

And I think as we're speaking here today, each and every Australian should say we are, as taxpayers, we are funding this system to the tune of a couple of billion dollars a year. We need to get value for money out of this system. And we've got to make sure that our health funds that really are the insurance companies deliver that value. And so I think that they need to listen to that message very clearly.

MORRISON: Dr Glasson, you have a very strong relationship, working relationship with the Federal Health Minister, Tony Abbott. Would you be raising this with him at this particular point?

DR GLASSON: Well, look, very much so. I'm meeting up with Mr Abbott in fact on Thursday afternoon and this will be one issue that we'll be talking about.

Obviously we are a great believer in the private system as well we are in the public system. We need a balance between the two and certainly the Minister himself understands that and really cherishes the public system as well as the private.

But the reality is the government is committed to this private health insurance rebate. They're committed to making sure that the private system actually delivers. And the fact that something like 50% of all surgery in this country now is being done under the private system, I suppose is credence to the fact that, you know, that we all are committed to making this work.

And so I certainly will be discussing the issue with the Minister to make sure that a) he's getting value for money out of the taxpayers' dollar and b) what we need to put into the system to make sure it is affordable and sustainable in the long term.

MORRISON: Well Dr Glasson, we'll look forward to hearing the outcome of that meeting. Thank you very much for your time this afternoon.

DR GLASSON: Thanks very much indeed. Good afternoon.