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The Effect of Health Insurance on the Substitution between Public and Private Hospital Care

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  • Denise Doiron
  • Nathan Kettlewell

Abstract

Researchers have long been interested in estimating the causal effect of health insurance on health†care utilisation. Less attention has been given to measuring the impact of insurance on the substitution between private and public sector care. We estimate this effect for hospital admissions in Australia. To identify causal effects we use household variables as instruments, namely, information on partner's health and family aspirations. We find that having private health insurance increases the probability of a hospital admission by 5–6 percentage points. This net effect is the result of a considerable substitution from public to private care, which has important policy implications.

Suggested Citation

  • Denise Doiron & Nathan Kettlewell, 2018. "The Effect of Health Insurance on the Substitution between Public and Private Hospital Care," The Economic Record, The Economic Society of Australia, vol. 94(305), pages 135-154, June.
    • Handle: RePEc:bla:ecorec:v:94:y:2018:i:305:p:135-154
    DOI: 10.1111/1475-4932.12394
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    3. Ha Trong Nguyen & Huong Thu Le & Luke Connelly & Francis Mitrou, 2023. "Accuracy of self‐reported private health insurance coverage," Health Economics, John Wiley & Sons, Ltd., vol. 32(12), pages 2709-2729, December.
    4. Kettlewell, Nathan, 2020. "Subjective Expectations for Health Service Use and Consequences for Health Insurance Behavior," IZA Discussion Papers 13445, Institute of Labor Economics (IZA).
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    6. Judith Liu & Yuting Zhang, 2023. "Elderly responses to private health insurance incentives: Evidence from Australia," Health Economics, John Wiley & Sons, Ltd., vol. 32(12), pages 2730-2744, December.
    7. Murphy, Aileen & Bourke, Jane & Turner, Brian, 2020. "A two-tiered public-private health system: Who stays in (private) hospitals in Ireland?," Health Policy, Elsevier, vol. 124(7), pages 765-771.

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