The long-term interaction of private health insurance predictors with Commonwealth private health sector policy

Abstract

Background. This thesis examines the long-term interaction effects of Commonwealth private health sector initiatives introduced between 1997 and 2000 (Initiatives), with traditional determinants of private health insurance (PHI). Aims. The research meets three aims. The first is to determine the magnitude and direction of PHI predictors by household type. Second is to analyse the change in strength of predictors between 2001 and 2007-08, taking into account interaction with the Initiatives-targeted variables of age and income. The final aim is to evaluate results in the context of current private sector health policies, with implications for various stakeholders highlighted. Method. Analysis of cross-sectional data at three points in time allows comment on the magnitude and direction of predictors as well as changes that result from interaction with the Initiatives. A theoretical and empirical review of both PHI and the Initiatives impact provides the context from which the results are understood. Reflecting and expanding the work of Dawkins, Webster et al. (2004), this thesis uses a two-stage Probit analysis to remove the effects of population changes. Results. Results show that PHI probability continues to increase with rising income and age. However, not all variables remain significant predictors of PHI for both single and family households. Results are discussed in light of A Fairer Private Health Insurance Incentive Act 2012 (FPHII). Contribution and Conclusion. This research produced various outcomes including original evidence of the long-term changes in the magnitude of the predictive strength of income and age on PHI purchase stemming from interaction with Commonwealth private sector policies. The evidence provided by this research allows several inferences. There is support for the long-term motivational effects of the Medicare Levy Surcharge (MLS) and the Rebate for wealthier persons. However, the initial ability of the Rebate to encourage PHI amongst lower income persons was not sustained across the period studied, nor did the motivational effect of Lifetime Health Cover (LHC) continue to promote uptake amongst younger members. Areas of future research are presented including a focus on the impact of FPHII, a policy that fails to address population cohorts reporting a reduction in insurance likelihood.