Effects of increased private health insurance on hospital utilisation in Victoria

Abstract

The proportion of Victorians and Australians generally with private health insurance (PHI) increased from 31% in 1998 to 45% in 2001. We analysed a dataset containing all hospital separations throughout Victoria to determine whether changes in the level of private health insurance have had any impact on patterns of public and private hospital utilisation in Victoria. Total utilisation of private hospitals grew by 31% from 1998-99 to 2002-03, whereas utilisation of public hospitals increased by 18%. Total bed-days have increased in both private hospitals and public hospitals by 12%. The proportion of all separations at private hospitals has remained relatively stable between these 2 years, with 33% of all separations being private patients in private hospitals in 1998-99, increasing slightly to 35% by 2002-03. Analysis of a number of specific DRGs shows that patients with more severe disease are more likely to be seen at public hospitals; notably this trend has strengthened between 1998-99 and 2002-03. The number of patients treated in Victorian public hospitals has continued to grow, despite a rapid increase in the utilisation of private hospitals. Given the limited extent of the shift in caseload share between the two sectors, the effectiveness of the Commonwealth's subsidy of private health insurance as a mechanism to reduce pressure on the public sector needs to be carefully examined.

Demand for Hospital Care and Private Health Insurance in a Mixed Public-Private System: Empirical Evidence Using a Simultaneous Equation Modeling Approach

“…This is suggestive that systematic differences exist in the types of medical conditions that individuals choose to seek public or private hospital care. This finding is consistent with the evidence presented in Sundararajan et al (2004) and Hopkins and Frech (2001) We find some evidence of moral hazard effect of private hospital insurance amongst patients who sought hospital care as a private patient. This result is consistent with the findings of studies by Savage and Wright (2003) and Cameron et al (1988) who found significant moral hazard effects among specific sub-population groups.…”

Sharing the Burden: Understanding the Roles of Public and Private Insurance in Financing Aged Care

“…as well as examining 7 Of the 562,000 severely disabled Australians aged sixty-five and older in 2004, more than two-thirds were living at home most without formal services (author's calculations based on ABS, 2004). 10 For example, private health insurance in Australia has not produced the sort of savings in the Medicare system it was expected to produce, especially in consideration of the revenue losses from incentives to purchase (Sundararajan et al, 2004;Lu and Savage, 2006). Recent articles in National Underwriter magazine have indicated that premiums on some US long-term care policies are being raised significantly -18 to 40 per centbecause of lower interest rates and smaller lapse rates than were built into pricing models (Thomas, 2010a,b).…”

“…Recent articles in National Underwriter magazine have indicated that premiums on some US long-term care policies are being raised significantly -18 to 40 per centbecause of lower interest rates and smaller lapse rates than were built into pricing models (Thomas, 2010a,b). For example, private health insurance in Australia has not produced the sort of savings in the Medicare system it was expected to produce, especially in consideration of the revenue losses from incentives to purchase (Sundararajan et al, 2004;Lu and Savage, 2006). Similarly, Medicare supplemental insurance (''Medigap'') policies in the United States are used to pay for the legitimate cost-sharing requirements of Medicare services but with the unintended consequence of undermining the cost controlling functions of copayments and deductibles (Scanlon, 2002;Lemieux et al, 2008).…”

Health insurance reform and older Australians

“…There is a growing body of literature examining the effects of these reforms [6–14]. It is generally accepted that Life Time Health Cover was the major policy increasing insurance coverage in the Australia population [9,10].…”

“…Research has also shown that middle and higher income earners were more likely to take up the 30% rebate in PHIAA than lower income earners [7]. Vigorous debate also continues on the influence of private health insurance on the public health‐care system, particularly on waiting times and public hospital demand more generally [11–14].…”