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The Income Distributive Implications of Recent Private Health Insurance Policies in Australia

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Author Info

  • Jongsay Yong

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Alfons Palangkaraya

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Elizabeth Webster

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Peter Dawkins

    (Victorian Department of Treasury and Finance)

Abstract

The Australian government implemented a series of new private health insurance policies between 1997 and 2000. As a result, the proportion of the population with private health insurance coverage increased by more than 35%. However, this paper finds significant evidence that the policy reform disproportionately favours high income earners. In particular, the 30 per cent premium subsidy represents a windfall gain for households which would have purchased private health insurance even without the rebate. The amount of the gain is approximately $900 million per year, a large proportion of which would go to higher income households.

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Bibliographic Info

Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2006n02.

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Length: 25 pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:iae:iaewps:wp2006n02

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Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
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  1. 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.
  2. 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.
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