Promoting Private Health Insurance in Australia

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The Issue

Australia's federal health insurance program, Medicare, provides universal access to free public hospital care and subsidized ambulatory and pharmaceutical benefits. Some Australians purchase supplemental private insurance to gain access to private hospitals, choice of specialists, and ancillary services such as physical therapy. In this article, Sharon Willcox, a 1999–2000 Harkness Fellow in Health Care Policy and Practice, reviews the rationale for three government policies enacted in the late 1990s or 2000 that were intended to promote private coverage, which had been experiencing declining participation: enabling health plans to selectively contract with providers, introducing a 30 percent federal subsidy, and ending pure community rating. 


What the Study Found

The study found that both private hospitals and medical specialists were able to gain concessions with health plans over time, so that selective contracting may not have had the intended effect of reducing consumer copayments. The introduction of "lifetime community rating," under which the price of private health insurance varies according to the age of purchaser, seems to have spurred people to purchase private coverage, and may have had a greater effect than the federal subsidy.


Conclusions

Early evidence indicates that these policies have helped private insurance escape the "death spiral" of decreasing membership and increasingly higher-risk profiles, though their longer-term impacts are uncertain. Willcox warns that "policy making on private health insurance has been characterized by insufficient attention to research that might provide a stronger evidence basis for policy reforms."

Publication Details

Publication Date:
June 28, 2011
Authors:
Sharon Willcox, Dr.P.H.
Summary Writer:
Martha Hostetter
Citation:
S. Willcox, "Promoting Private Health Insurance in Australia," Health Affairs, May/June 2001 20(3):152–61.

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