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Where do you run after you run for cover? The impact on premium changes on the characteristics of the privately insured in Australia

  • Randall P. Ellis


    (Department of Economics, Boston University)

  • Elizabeth Savage

    (Centre for Health Economics Research and Evaluation, University of Technology Sydney)

We develop and estimate a model of individual decisions to enrol in private health insurance in Australia in order to understand the effect of three specific government programs that changed the structure of premiums facing consumers. The three reforms encompass incomebased subsidies to purchasing health insurance, an across-the-board 30% reduction in premiums, and a selective age-based increase in premiums for new entrants. Our model of the timing of the insurance choice enables us to understand how particular aspects of the reforms affected the age and income distribution of those with private cover. Together the reforms achieved significant increases in enrolment and a reduction in the average age of enrolees over a five year period. Despite expectations that the more favourable selection resulting from the public subsidies would cause insurance premiums to stabilize, or even to fall, they have continued to increase at a rate well in excess of the CPI. Understanding how changes in enrolment are related to family characteristics, and the impact of the insurance reforms on enrolment, is an important policy issue both in Australia and overseas.

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Paper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - Working Papers Series with number WP2005-020.

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Length: 25 pages
Date of creation: Jun 2005
Date of revision:
Handle: RePEc:bos:wpaper:wp2005-020
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  1. Colm Harmon & Brian Nolan, 2001. "Health insurance and health services utilization in Ireland," Health Economics, John Wiley & Sons, Ltd., vol. 10(2), pages 135-145.
  2. Propper, Carol, 2000. "The demand for private health care in the UK," Journal of Health Economics, Elsevier, vol. 19(6), pages 855-876, November.
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