Waiting times and the decision to buy private health insurance. CHERE Working Paper 2010/9
AbstractOver 45% of Australians buy health insurance for private treatment in hospital. This is despite having access to universal and free public hospital treatment. Anecdotal evidence suggests that one possible explanation for the high rate of insurance coverage is to avoid long waiting times for public hospital treatment. In this study, we investigate the effect of expected waiting time on individual decisions to buy private health insurance. Individuals are assumed to form an expectation of their own waiting time as a function of their demographics and health status. We estimate models of expected waiting time using administrative data on the population hospitalised for elective procedures in public hospitals in 2004-05 and use the parameter estimates to impute expected waiting times for individuals in a representative sample of the population. We model the impact of expected waiting time on the decision to purchase private health insurance. In the insurance demand model, cross-sample predictions are adjusted by the individuals? probability of hospital admission. We find that expected waiting time does not increase the probability of buying insurance but a high probability of experiencing a long wait does. Overall we find there is no significant impact of waiting time on insurance purchase. In addition, we find that the inclusion of individual waiting time variables removes the evidence for favourable selection into private insurance, as measured by self-assessed health. This result suggests that a source of the favourable selection by reported health status may be aversion to long waits among healthier people.
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Bibliographic InfoPaper provided by CHERE, University of Technology, Sydney in its series Working Papers with number 2010/9.
Date of creation: May 2010
Date of revision:
Private health insurance; Australia;
Find related papers by JEL classification:
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- J7 - Labor and Demographic Economics - - Labor Discrimination
- H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-24 (All new papers)
- NEP-HEA-2010-07-24 (Health Economics)
- NEP-IAS-2010-07-24 (Insurance Economics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Why do Australians Buy Private Health Insurance?
by Ariel Goldring in Free Market Mojo on 2010-08-02 12:00:06
- Meliyanni Johar & Glenn Jones & Michael P. Keane & Elizabeth Savage & Olena Stavrunova, 2013. "The Demand for Private Health Insurance: Do Waiting Lists Matter?” – Revisited," Economics Papers 2013-W09, Economics Group, Nuffield College, University of Oxford.
- Meliyanni Johar & Glenn Jones & Michael Keane & Elizabeth Savage & Olena Stavrunova, 2010. "The demand for private health insurance: do waiting lists or waiting times matter? CHERE Working Paper 2010/8," Working Papers 2010/8, CHERE, University of Technology, Sydney.
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