The responses of physicians to a fall in demand for voluntary private health insurance

This paper examines the impact of a fall in demand for voluntary private health insurance on physician behaviour. We find that dual practice physicians who earned more revenue from working in private hospitals before the fall in demand for PHI were more likely to experience a fall in the volume of private hospital care and a less complex mix of in-hospital services provided. Risk-averse doctors drove this reduction in complexity. There was weak evidence suggesting that doctors compensated for the fall in volume by increasing their working hours in public hospitals and reducing fees for in-hospital services. We found no evidence of higher volumes of care in out-of-hospital visits to compensate for the lower in-hospital volumes, but some weak evidence of claiming for more complex and costly out-of-hospital services, which we interpret as upcoding. Compensatory behaviours were small and primarily observed among risk- averse male doctors with low conscientiousness, from non-surgical specialties, and located in areas with lower doctor density.