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The Australian Private Health Insurance Boom: Was It Subsidies Or Liberalised?

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  • Frech, Ted
  • Hopkins, Sandra
  • MacDonald, Gary

Abstract

Over the period 1997 to 2000, the Australian government introduced two waves of price subsidies, then liberalised regulation to encourage private health insurance. Most of the increase in coverage occurred after the liberalization. Thus, it appears that this policy change rather than the earlier subsidies, explains most of the increase. We explore the relative impact of the different policy changes using trend analysis and careful attention to timing. While much of the increase in coverage may be attributed to liberalised regulation, the price subsidy did increase coverage. The increase was commensurate with existing estimates of the price elasticity of demand for health insurance.

Suggested Citation

  • Frech, Ted & Hopkins, Sandra & MacDonald, Gary, 2002. "The Australian Private Health Insurance Boom: Was It Subsidies Or Liberalised?," University of California at Santa Barbara, Economics Working Paper Series qt6j47s8kq, Department of Economics, UC Santa Barbara.
    • Handle: RePEc:cdl:ucsbec:qt6j47s8kq
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    1. Jane Hall & Richard De Abreu Lourenco & Rosalie Viney, 1999. "Carrots and sticks—the fall and fall of private health insurance in Australia," Health Economics, John Wiley & Sons, Ltd., vol. 8(8), pages 653-660, December.
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    1. James Butler, 2003. "Adverse Selection, Genetic Testing and Life Insurance — Lessons from Health Insurance in Australia," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 10(1), pages 73-82.
    2. Marisol Rodríguez & Alexandrina Stoyanova, 2006. "Changes in the demand for private medical insurance following a shift in tax incentives," Working Papers CREAP2006-12, Xarxa de Referència en Economia Aplicada (XREAP), revised Dec 2006.

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