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Effects of Recent Carrot-and-Stick Policy Initiatives on Private Health Insurance Coverage in Australia

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  • ALFONS PALANGKARAYA
  • JONGSAY YONG

Abstract

The Australian government implemented a sequence of new policies during 1997-2000 and raised the take-up rate of private health insurance (PHI) by 35 per cent. Because they were implemented sequentially, their individual effectiveness is not quite clear. We isolate the effects of Lifetime Health Cover (LHC) introduced at the last stage of the sequence using a counterfactual analysis of PHI demand with and without the new policies. Unlike earlier studies which attributed the bulk of the increase in PHI coverage to LHC, we find LHC may only account for as low as 42 per cent and no more than 75 per cent of the increase. Copyright 2005 The Economic Society Of Australia.

Suggested Citation

  • 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, September.
  • Handle: RePEc:bla:ecorec:v:81:y:2005:i:254:p:262-272
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    References listed on IDEAS

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    1. Ángel Marcos Vera-Hernández, 1999. "Duplicate coverage and demand for health care. The case of Catalonia," Health Economics, John Wiley & Sons, Ltd., vol. 8(7), pages 579-598.
    2. Alfons Palangkaraya & Jongsay Yong, 2007. "How effective is “lifetime health cover” in raising private health insurance coverage in Australia? An assessment using regression discontinuity," Applied Economics, Taylor & Francis Journals, vol. 39(11), pages 1361-1374.
    3. Cameron, A. Colin & Trivedi, Pravin K., 1991. "The role of income and health risk in the choice of health insurance : Evidence from Australia," Journal of Public Economics, Elsevier, vol. 45(1), pages 1-28, June.
    4. 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, March.
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    Cited by:

    1. Yicheng Kang & Xiaodong Gong & Jiti Gao & Peihua Qiu, 2016. "Error-in-Variables Jump Regression Using Local Clustering," Monash Econometrics and Business Statistics Working Papers 13/16, Monash University, Department of Econometrics and Business Statistics.
    2. Stephanie Knox & Elizabeth Savage & Denzil Fiebig & Vineta Salale, 2007. "Joiners, leavers, stayers and abstainers: Private health insurance choices in Australia, CHERE Working Paper 2007/8," Working Papers 2007/8, CHERE, University of Technology, Sydney.
    3. 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;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 10(2), pages 135-148, May.
    4. Gong, Xiaodong & Gao, Jiti, 2015. "Nonparametric Kernel Estimation of the Impact of Tax Policy on the Demand for Private Health Insurance in Australia," IZA Discussion Papers 9265, Institute for the Study of Labor (IZA).
    5. Alex Robson & Henry Ergas & Francesco Paolucci, 2011. "The Analytics of the Australian Private Health Insurance Rebate and the Medicare Levy Surcharge," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 18(2), pages 27-48.
    6. Moorin, Rachael Elizabeth & Holman, Cashel D'Arcy James, 2008. "The cost of in-patient care in Western Australia in the last years of life: A population-based data linkage study," Health Policy, Elsevier, vol. 85(3), pages 380-390, March.
    7. Jongsay Yong & Alfons Palangkaraya & Elizabeth Webster & Peter Dawkins, 2006. "The Income Distributive Implications of Recent Private Health Insurance Policies in Australia," Melbourne Institute Working Paper Series wp2006n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    8. 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 Economics and Management, Springer, vol. 8(4), pages 257-277, December.
    9. Doiron, Denise & Kettlewell, Nathan, 2018. "Family formation and demand for health insurance," Working Papers 2018-08, University of Sydney, School of Economics.
    10. 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;The Geneva Association, vol. 33(4), pages 588-609, October.
    11. Moorin, Rachael Elizabeth & Holman, Cashel D'Arcy James, 2007. "Modelling changes in the determinants of PHI utilisation in Western Australia across five health care policy eras between 1981 and 2001," Health Policy, Elsevier, vol. 81(2-3), pages 183-194, May.
    12. Nathan Kettlewell, 2016. "Utilisation and Selection in an Ancillaries Health Insurance Market," Discussion Papers 2016-17, School of Economics, The University of New South Wales.
    13. Roger Carrington & Tim Coelli & D.S. Prasada Rao, 2011. "Australian Private Health Insurance Productivity Growth: Is there Scope to Limit Premium Increases?," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 125-139, March.

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