Abstract
BackgroundPrivate health insurance has been a major focus of Commonwealth Government health policy for the last decade. Over this period, the Howard government introduced a number of policy changes which impacted on the take up of private health insurance. The most expensive of these was the introduction of the private health insurance rebate in 1997, which had an estimated cost of $3 billion per annum.MethodsThis article uses information on the geographic distribution of the population with private health insurance cover to identify associations between rates of private health insurance cover and socioeconomic status. The geographic analysis is repeated with survey data on expenditure on private health insurance, to provide an estimate of the rebate flowing to different socioeconomic groups.ResultsThe analysis highlights the strong association between high rates of private health insurance cover and high socioeconomic status and shows the substantial transfer of funds, under the private health insurance rebate, to those living in areas of highest socioeconomic status, compared with those in areas of lower socioeconomic status, and in particular those in the most disadvantaged areas. The article also provides estimates of private health insurance cover by federal electorate, emphasising the substantial gaps in cover between Liberal Party and Australian Labor Party seats.ConclusionThe article concludes by discussing implications of the uneven distribution of private health insurance cover across Australia for policy formation. In particular, the study shows that the prevalence of private health insurance is unevenly distributed across Australia, with marked differences in prevalence in rural and urban areas, and substantial differences by socioeconomic status. Policy formation needs to take this into account. Evaluating the potential impact of changes in private health insurance requires more nuanced consideration than has been implied in the rhetoric about private health insurance over the last decade.
Highlights
Private health insurance has been a major focus of Commonwealth Government health policy for the last decade
The government's focus on private health insurance was probably stimulated by the sustained decline in the most commonly used measure of private health insurance – the proportion of the population covered for private accommodation in public hospitals – that had fallen from around 50% to around 30% over the previous 10 years [1]
Confirming previous studies of prevalence of health insurance in Australia, there is a statistically significant [7] socioeconomic gradient for prevalence, with postcodes in the highest socioeconomic status decile having, on average, almost 70% of residents covered by health insurance compared to residents of the most disadvantaged decile, with a take-up of less than 30%
Summary
Private health insurance has been a major focus of Commonwealth Government health policy for the last decade. The government's focus on private health insurance was probably stimulated by the sustained decline in the most commonly used measure of private health insurance – the proportion of the population covered for private accommodation in public hospitals – that had fallen from around 50% to around 30% over the previous 10 years [1]. This decline in the headline rate contrasts with the more variable pattern of coverage for accommodation in private hospitals that increased in the late 1980s to a peak of 39% in 1990 followed by a decline to around 33% in 1995 when the series was discontinued [2]. This policy, which encouraged take-up of insurance at or before age 30, led to an increase in health insurance prevalence, with the increase being principally among people who took out policies with front-end deductibles – policies that required them to pay the 'front end' of costs (e.g. the first $500, or $1,000), with insurance covering the tail
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