Private health care in Australia.

Abstract

Letters Health AffairsVol. 21, No. 1: The Business Of Health Private Health Care In AustraliaGraham Wright AffiliationsManagement Consultant, Turramurra, New South Wales, AustraliaPUBLISHED:January/February 2002No Accesshttps://doi.org/10.1377/hlthaff.21.1.277AboutSectionsView articleView Full TextView PDFPermissions ShareShare onFacebookTwitterLinked InRedditEmail ToolsAdd to favoritesDownload CitationsTrack CitationsPermissions View articleTOPICSHospital carePaymenthealthaffHealth Aff (Millwood)Health AffairsHealth Aff0278-27151544-5208Project HOPE - The People-to-People Health Foundation, Inc.Willcox SharonDepartment of Human Services, Melbourne, Victoria Australia12002The Business Of HealthThe author responds: Graham Wright raises a legitimate question concerning the potential change in recording of private health insurance benefits in Australia in 1995–1996. Like Wright, I was initially skeptical of the finding of a 40 percent increase in private hospital benefits in 1995–1996 and sought independent confirmation from PHIAC, the legislatively established body that regulates and maintains national data on private health insurance. PHIAC initially confirmed the analysis and provided potentially supporting evidence in the form of the shift to a US$44 million operating loss for health plans in 1995–1996. 1 However, there was only a 10.6 percent increase in total hospital benefits (including both public and private hospitals) per insured person in 1995–1996. 2 Given this aggregate result, Wright has provided a plausible explanation, implying that there has essentially been a previously unobserved discontinuity in the PHIAC time-series data. Contrary to Wright’s arguments, a strong private health insurance and private hospital sector has not resulted in government savings. Instead, the 30 percent subsidy for private health insurance cost the federal government US$868 million in 1999–2000, estimated to increase to US$1.25 billion in 2001–2002. 3 Moreover, the share of nongovernment health spending contributed by private health plans has fallen from 32.7 percent in 1995–1996 to 24.7 percent in 1999–2000. 4 The outcome is that Australia now has the oxymoron of a “growing publicly funded” (but “shrinking privately funded”) private health sector. A new study has confirmed the highly regressive nature of the government health insurance subsidy, with half the subsidy flowing to the highest 20 percent of income taxpayers. 5 In summary, government expenditure on private health insurance is actively reducing its capacity to maintain a strong public health care system and is of questionable benefit on both equity and efficiency grounds. My conclusion on the need for critical analysis of major private health insurance policy reforms remains unchanged. NOTES1. All dollar amounts are cited as U.S. dollars with a conversion rate (as of January 2001) equivalent to A$1 = $0.5427). Data are from Private Health Insurance Administration Council, Annual Report 1995–1996 (Canberra: Commonwealth of Australia, 1996 ), iii. Google Scholar2. PHIAC, Annual Report 1997.1998 (Canberra: Commonwealth of Australia, 1998 ), 32. Google Scholar3. J. Smith , How Fair IsHealth Spending? The Distribution of Tax Subsidies for Health in Australia (Canberra: Australia Institute, 2001 ), 20. Google Scholar4. Australian Institute of Health and Welfare, “Australia’s Health Services Expenditure to 1999–00,” Health Expenditure Bulletin no. 17 (Canberra: AIHW, 2001 ): 20. Google Scholar5. Smith , How Fair Is Health Spending? 15 . Google Scholar Loading Comments... Please enable JavaScript to view the comments powered by Disqus. DetailsExhibitsReferencesRelated Article MetricsCitations: Crossref 1 History Published online 1 January 2002 InformationCopyright 2002 by Project HOPE - The People-to-People Health Foundation, Inc.PDF downloadCited byTHE VALUE OF CONSUMER CHOICE AND THE DECLINE IN HMO ENROLLMENTS19 January 2012 | Economic Inquiry, Vol. 51, No. 1