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Run for Cover Now or Later? The impact of premiums, threats and deadlines on supplementary private health insurance in Australia

Author

Listed:
  • Randall P. Ellis

    () (Boston University, Department of Economics)

  • Elizabeth Savage

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

Abstract

Between 1997 and 2000 the Australian government introduced three policy reforms that aimed to increase private health insurance coverage and reduce public hospital demand. The first provided income-based tax incentives; the second gave an across-the-board 30% premium subsidy; and the third introduced selective age-based premium increases for those enrolling after a deadline. Together the reforms increased enrolment by 50% and reduced the average age of enrollees. The deadline appeared to induce consumers to enroll now rather than delay. We estimate a model of individual insurance decisions and examine the effects of the reforms on the age and income distribution of those with private cover. We interpret the major driver of the increased enrollment as a response to a deadline and an advertising blitz, rather than a pure price response.

Suggested Citation

  • Randall P. Ellis & Elizabeth Savage, 2008. "Run for Cover Now or Later? The impact of premiums, threats and deadlines on supplementary private health insurance in Australia," Boston University - Department of Economics - Working Papers Series wp2008-013, Boston University - Department of Economics.
  • Handle: RePEc:bos:wpaper:wp2008-013
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    References listed on IDEAS

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    1. Gabriel D. Carroll & James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2009. "Optimal Defaults and Active Decisions," The Quarterly Journal of Economics, Oxford University Press, vol. 124(4), pages 1639-1674.
    2. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
    3. Ettner, Susan L., 1997. "Adverse selection and the purchase of Medigap insurance by the elderly," Journal of Health Economics, Elsevier, vol. 16(5), pages 543-562, October.
    4. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
    5. 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.
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    Citations

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    Cited by:

    1. Jonas B. Pendzialek & Dusan Simic & Stephanie Stock, 2016. "Differences in price elasticities of demand for health insurance: a systematic review," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(1), pages 5-21, January.
    2. Frech, Ted E & Smith, Michael P, 2015. "Anatomy of a Slow-Motion Health Insurance Death Spiral," University of California at Santa Barbara, Economics Working Paper Series qt0w64d54d, Department of Economics, UC Santa Barbara.
    3. Buchmueller, Thomas C. & Fiebig, Denzil G. & Jones, Glenn & Savage, Elizabeth, 2013. "Preference heterogeneity and selection in private health insurance: The case of Australia," Journal of Health Economics, Elsevier, vol. 32(5), pages 757-767.
    4. Jonas Pendzialek & Dusan Simic & Stephanie Stock, 2016. "Differences in price elasticities of demand for health insurance: a systematic review," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(1), pages 5-21, January.
    5. Nathan Kettlewell, 2016. "Policy Choice and Product Bundling in a Complicated Health Insurance Market: Do People get it Right?," Discussion Papers 2016-16, School of Economics, The University of New South Wales.
    6. Pendzialek, Jonas B. & Danner, Marion & Simic, Dusan & Stock, Stephanie, 2015. "Price elasticities in the German Statutory Health Insurance market before and after the health care reform of 2009," Health Policy, Elsevier, vol. 119(5), pages 654-663.
    7. 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.
    8. Xiaodong Gong & Jiti Gao, 2015. "Nonparametric Kernel Estimation of the Impact of Tax Policy on the Demand for Private Health Insurance in Australia," Monash Econometrics and Business Statistics Working Papers 6/15, Monash University, Department of Econometrics and Business Statistics.
    9. Francesco Decarolis & Andrea Guglielmo & Calvin Luscombe, 2017. "Open Enrollment Periods and Plan Choices," NBER Working Papers 24156, National Bureau of Economic Research, Inc.
    10. Kiil, Astrid, 2012. "What characterises the privately insured in universal health care systems? A review of the empirical evidence," Health Policy, Elsevier, vol. 106(1), pages 60-75.
    11. Cheng, Terence Chai, 2014. "Measuring the effects of reducing subsidies for private insurance on public expenditure for health care," Journal of Health Economics, Elsevier, vol. 33(C), pages 159-179.
    12. Meliyanni Johar & Glenn Jones & Michael Keane & Elizabeth Savage & Olena Stavrunova, 2010. "Waiting times and the decision to buy private health insurance. CHERE Working Paper 2010/9," Working Papers 2010/9, CHERE, University of Technology, Sydney.

    More about this item

    Keywords

    private health insurance; financial incentives; behavioural decisionmaking;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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