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

  • Alfons Palangkaraya

    ()

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Jongsay Yong

    ()

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

The Australian government implemented a sequence of new policy initiatives during 1997{2000 with a stated aim of raising the take-up rate of private health insurance (PHI). Taken together, it is quite clear that these new policy initiatives were effective. The overall proportion of Australian population with private health insurance cover increased by more than 35%. However, much less clear is the effctiveness of different components of the policies. This lacks of clarity results from the sequential implementation those policies. Because of the potentially large cost differences in their implementation, a better understanding of the each policy's effects can be valuable for future policymaking. This paper attempts to isolate the effects of those different policies using the 1995 and 2001 National Health Survey data. These two datasets allow the estimation of private health insurance demands before and after the policy changes. Consequently, they also allow for a counterfactual analysis of what would have happened had there been no new policies. Combined with the age-specific aspect Lifetime Health Cover (LHC), the counterfactual analysis indicates that the effects of LHC fall between 42% and 75% of the overall increase in PHI membership.

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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2004n20.

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Length: 21 pages
Date of creation: Aug 2004
Date of revision:
Handle: RePEc:iae:iaewps:wp2004n20
Contact details of provider: Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
Phone: +61 3 8344 2100
Fax: +61 3 8344 2111
Web page: http://www.melbourneinstitute.com/
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  1. 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.
  2. Alfons Palangkaraya & Jongsay Yong, 2004. "How Effective is Lifetime Health Cover in Raising Private Health Insurance Coverage in Australia? An Assessment Using Regression Discontinuity," Melbourne Institute Working Paper Series wp2004n33, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  3. �ngel 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.
  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, 03.
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