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The Australian Health Policy Changes of 1999 and 2000: An Evaluation


Author Info

  • Sandra Hopkins

    (School of Economics and Finance, Curtin University of Technology, Perth, Western Australia, Australia)

  • Peter Zweifel

    (Socioeconomic Institute, University of Zurich, Zurich, Switzerland)


This article evaluates three measures introduced by the Australian Federal Government in 1999 and 2000 that were designed to encourage private health insurance and relieve financial pressure on the public healthcare sector. These policy changes were (i) a 30% premium rebate, (ii) health insurers offering lifetime enrolment on existing terms and the future relaxation of premium regulation by permitting premiums to increase with age, and (iii) a mandate for insurers to offer complementary coverage for bridging the gap between actual hospital billings and benefits paid. These measures were first evaluated in terms of expected benefits and costs at the individual level. In terms of the first criteria, the policy changes as a whole may have been efficiency-increasing. The Australian Government mandate to launch gap policies may well have created a spillover moral hazard effect to the extent that full insurance coverage encouraged policy holders to also use more public hospital services, thus undermining the government's stated objective to relieve public hospitals from demand pressure. Without this spillover moral hazard effect, there might have been a reduction in waiting times in the public sector. Secondly, the measures were evaluated in terms of additional benchmarks of the cost to the public purse, access and equity, and dynamic efficiency. Although public policy changes were found to be largely justifiable on the first set of criteria, they do not appear to be justifiable based on the second set. Uncertainties and doubts remain about the effect of the policy changes in terms of overall cost, access and equity, and dynamic efficiency. This is a common experience in countries that have considered shifts of their healthcare systems between the private and public sectors.

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Bibliographic Info

Article provided by Springer Healthcare | Adis in its journal Applied Health Economics and Health Policy.

Volume (Year): 4 (2005)
Issue (Month): 4 ()
Pages: 229-238

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Handle: RePEc:wkh:aheahp:v:4:y:2005:i:4:p:229-238

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Keywords: Health-insurance; Health-policy;

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Cited by:
  1. Neil J. Buckley & Katherine Cuff & Jeremiah Hurley & Logan McLeod & Stuart Mestelman & David Cameron, 2012. "An Experimental Investigation of Mixed Systems of Public and Private Health Care Finance," Department of Economics Working Papers 2012-02, McMaster University.
  2. 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 Care Finance and Economics, Springer, vol. 8(4), pages 257-277, December.


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