Policy or Pandemic? Explaining the Rise in Young Adults' Private Health Insurance Take-Up in Australia

This study uses administrative data to estimate how an age-based discount policy introduced in 2019 affected the take-up of private health insurance in Australia before and during the COVID-19 pandemic. The policy provided a perpetual premium discount of 2%-10% for people who purchased insurance before age 30. Applying a synthetic difference-in-differences model, we find that the policy had only a small and positive effect on take-up prior to the pandemic, which was a period of declining insurance membership. However, there was a significant increase in take-up in the treatment group in the period during the COVID-19 pandemic, when the overall demand for private health insurance was increasing. We explore the extent to which the larger treatment effect post-COVID is likely to be due to the discount policy, rather than other age-specific demand factors relevant to the pandemic. We conclude that the relative increase in demand among the young is predominantly driven by factors other than the discount policy.