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Effects of Recent Carrot-and-Stick Policy Initiatives on Private Health Insurance Coverage in Australia

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  • Alfons Palangkaraya

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Jongsay Yong

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

The Australian government implemented a sequence of new policy initiatives during 1997{2000 with a stated aim of raising the take-up rate of private health insurance (PHI). Taken together, it is quite clear that these new policy initiatives were effective. The overall proportion of Australian population with private health insurance cover increased by more than 35%. However, much less clear is the effctiveness of different components of the policies. This lacks of clarity results from the sequential implementation those policies. Because of the potentially large cost differences in their implementation, a better understanding of the each policy's effects can be valuable for future policymaking. This paper attempts to isolate the effects of those different policies using the 1995 and 2001 National Health Survey data. These two datasets allow the estimation of private health insurance demands before and after the policy changes. Consequently, they also allow for a counterfactual analysis of what would have happened had there been no new policies. Combined with the age-specific aspect Lifetime Health Cover (LHC), the counterfactual analysis indicates that the effects of LHC fall between 42% and 75% of the overall increase in PHI membership.

Suggested Citation

  • Alfons Palangkaraya & Jongsay Yong, 2004. "Effects of Recent Carrot-and-Stick Policy Initiatives on Private Health Insurance Coverage in Australia," Melbourne Institute Working Paper Series wp2004n20, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2004n20
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    References listed on IDEAS

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    Cited by:

    1. Stephanie Knox & Elizabeth Savage & Denzil Fiebig & Vineta Salale, 2007. "Joiners, leavers, stayers and abstainers: Private health insurance choices in Australia, CHERE Working Paper 2007/8," Working Papers 2007/8, CHERE, University of Technology, Sydney.
    2. Vijaya Sundararajan & Ou Yang & Jongsay Yong, 2023. "Socioeconomic status and access to care in a universal healthcare system: The case of acute myocardial infarction in Australia," Melbourne Institute Working Paper Series wp2023n10, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    3. Nathan Kettlewell, 2019. "Utilization and Selection in an Ancillaries Health Insurance Market," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 86(4), pages 989-1017, December.
    4. Jongsay Yong & Alfons Palangkaraya & Elizabeth Webster & Peter Dawkins, 2006. "The Income Distributive Implications of Recent Private Health Insurance Policies in Australia," Melbourne Institute Working Paper Series wp2006n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    5. Denise Doiron & Nathan Kettlewell, 2020. "Family formation and the demand for health insurance," Health Economics, John Wiley & Sons, Ltd., vol. 29(4), pages 523-533, April.
    6. Ha Trong Nguyen & Huong Thu Le & Luke Connelly & Francis Mitrou, 2023. "Accuracy of self‐reported private health insurance coverage," Health Economics, John Wiley & Sons, Ltd., vol. 32(12), pages 2709-2729, December.
    7. Kettlewell, Nathan & Zhang, Yuting, 2024. "Financial incentives and private health insurance demand on the extensive and intensive margins," Journal of Health Economics, Elsevier, vol. 94(C).
    8. Alfons Palangkaraya & Jongsay Yong & Elizabeth Webster & Peter Dawkins, 2009. "The income distributive implications of recent private health insurance policy reforms in Australia," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 10(2), pages 135-148, May.
    9. Randall Ellis & Elizabeth Savage, 2008. "Run for cover now or later? The impact of premiums, threats and deadlines on private health insurance in Australia," International Journal of Health Economics and Management, Springer, vol. 8(4), pages 257-277, December.
    10. Kettlewell, Nathan & Zhang, Yuting, 2023. "Financial Incentives and Private Health Insurance Demand on the Extensive and Intensive Margins," IZA Discussion Papers 16248, Institute of Labor Economics (IZA).
    11. Denise Doiron & Nathan Kettlewell, 2018. "The Effect of Health Insurance on the Substitution between Public and Private Hospital Care," The Economic Record, The Economic Society of Australia, vol. 94(305), pages 135-154, June.
    12. Moorin, Rachael Elizabeth & Holman, Cashel D'Arcy James, 2007. "Modelling changes in the determinants of PHI utilisation in Western Australia across five health care policy eras between 1981 and 2001," Health Policy, Elsevier, vol. 81(2-3), pages 183-194, May.
    13. Gong, Xiaodong & Gao, Jiti, 2015. "Nonparametric Kernel Estimation of the Impact of Tax Policy on the Demand for Private Health Insurance in Australia," IZA Discussion Papers 9265, Institute of Labor Economics (IZA).
    14. Nathan Kettlewell & Yuting Zhang, 2024. "Age penalties and take‐up of private health insurance," Health Economics, John Wiley & Sons, Ltd., vol. 33(4), pages 636-651, April.
    15. Moorin, Rachael Elizabeth & Holman, Cashel D'Arcy James, 2008. "The cost of in-patient care in Western Australia in the last years of life: A population-based data linkage study," Health Policy, Elsevier, vol. 85(3), pages 380-390, March.
    16. Sundararajan, Vijaya & Yang, Ou & Yong, Jongsay, 2023. "Socioeconomic status and access to care in a universal health care system: The case of acute myocardial infarction in Australia," Journal of Economic Behavior & Organization, Elsevier, vol. 215(C), pages 1-25.
    17. Judith Liu & Yuting Zhang, 2023. "Elderly responses to private health insurance incentives: Evidence from Australia," Health Economics, John Wiley & Sons, Ltd., vol. 32(12), pages 2730-2744, December.
    18. Roger Carrington & Tim Coelli & D.S. Prasada Rao, 2011. "Australian Private Health Insurance Productivity Growth: Is there Scope to Limit Premium Increases?," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 125-139, March.
    19. Ou Yang & Jongsay Yong & Yuting Zhang, 2024. "Effects of private health insurance on waiting time in public hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 33(6), pages 1192-1210, June.
    20. Yicheng Kang & Xiaodong Gong & Jiti Gao & Peihua Qiu, 2016. "Error-in-Variables Jump Regression Using Local Clustering," Monash Econometrics and Business Statistics Working Papers 13/16, Monash University, Department of Econometrics and Business Statistics.
    21. Alex Robson & Henry Ergas & Francesco Paolucci, 2011. "The Analytics of the Australian Private Health Insurance Rebate and the Medicare Levy Surcharge," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 18(2), pages 27-48.
    22. Keegan, Conor, 2020. "The introduction of lifetime community rating in the Irish private health insurance market: Effects on coverage and plan choice," Social Science & Medicine, Elsevier, vol. 255(C).
    23. Buchmueller, Thomas C. & Cheng, Terence C. & Pham, Ngoc T.A. & Staub, Kevin E., 2021. "The effect of income-based mandates on the demand for private hospital insurance and its dynamics," Journal of Health Economics, Elsevier, vol. 75(C).
    24. Thomas Buchmueller, 2008. "Community Rating, Entry-Age Rating and Adverse Selection in Private Health Insurance in Australia*," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 33(4), pages 588-609, October.

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