How effective is “lifetime health cover” in raising private health insurance coverage in Australia? An assessment using regression discontinuity
AbstractThe Australian government introduced three major private health insurance policy initiatives in recent years. These are, in chronological order, (i) the Private Health Insurance Incentives Scheme (PHIIS), which imposes a tax levy on high-income earners who do not have private health insurance and provides a means-tested subsidy schedule for low-income earners who purchase PHI; (ii) a 30% premium rebate for all private health insurance policies to replace the means-tested component under PHIIS; and (iii) lifetime health cover, which permits a limited form of age-related risk rating by insurance funds. Together, these policy changes have been effective in encouraging the uptake of PHI; the percentage of the population covered by PHI rose from 31% in 1999 to 45% at the end of 2001. The difficult issue, however, is in disentangling the effects of the three policy changes, given that they were introduced in quick succession. This article attempts to evaluate the effect of lifetime health cover using a regression discontinuity design, an approach that makes use of cross-section data that allows the effect of lifetime health cover to be isolated via local regression. The results suggest that the importance of lifetime health cover appears to be grossly over-rated in previous studies. Our estimates indicate that it accounts for roughly 22-32% of the combined effects of all the policy initiatives introduced in the late 1990s. While these figures suggest that its effect is clearly significant, it is nonetheless nowhere near the effect often associated with lifetime health cover.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics.
Volume (Year): 39 (2007)
Issue (Month): 11 ()
Contact details of provider:
Web page: http://www.tandfonline.com/RAEC20
Other versions of this item:
- Alfons Palangkaraya & Jongsay Yong, 2004. "How Effective is Lifetime Health Cover in Raising Private Health Insurance Coverage in Australia? An Assessment Using Regression Discontinuity," Melbourne Institute Working Paper Series wp2004n33, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Wilbert van der Klaauw, 2002. "Estimating the Effect of Financial Aid Offers on College Enrollment: A Regression-Discontinuity Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1249-1287, November.
- H.E. Frech Iii & Sandra Hopkins & Garry Macdonald, 2003. "The Australian Private Health Insurance Boom: Was It Subsidies Or Liberalised Regulation?," Economic Papers, The Economic Society of Australia, vol. 22(1), pages 58-64, 03.
- Edwin Leuven & Hessel Oosterbeek, 2002.
"Evaluating the effect of tax deductions on training,"
Labor and Demography
- Edwin Leuven & Hessel Oosterbeek, 2004. "Evaluating the Effect of Tax Deductions on Training," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 461-488, April.
- Jongsay Yong & Alfons Palangkaraya, 2004. "Discerning the Effects of Recent Private Health Insurance Policy Changes in Australia," Econometric Society 2004 Australasian Meetings 183, Econometric Society.
- Cleveland, William S. & Devlin, Susan J. & Grosse, Eric, 1988. "Regression by local fitting : Methods, properties, and computational algorithms," Journal of Econometrics, Elsevier, vol. 37(1), pages 87-114, January.
- 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.
- Alfons Palangkaraya & Jongsay Yong, 2005. "Effects of Recent Carrot-and-Stick Policy Initiatives on Private Health Insurance Coverage in Australia," The Economic Record, The Economic Society of Australia, vol. 81(254), pages 262-272, 09.
- 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, vol. 10(2), pages 135-148, May.
- Jeff Borland & Yi-Ping Tseng & Roger Wilkins, 2005. "Experimental and Quasi-Experimental Methods of Microeconomic Program and Policy Evaluation," Melbourne Institute Working Paper Series wp2005n08, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
- 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, vol. 33(4), pages 588-609, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.