Impact on public hospitals if private health insurance rates in Victoria declined

Abstract

The additional cost of treating acute care type Victorian private patients as public patients in Victorian public hospitals based on the current public sector payment model and rates was calculated, as was the loss of health fund income to public hospitals. If all private cases became public the net recurrent cost would be $1.05 billion assuming all patients were still treated. If private health insurance (PHI) uptake had declined to 23.3% as was projected without Lifetime Health Cover and the 30% rebate, the additional operating cost and income loss would be $385 million. This compares to the Victorian cost of the 30% rebate for acute hospital cases of $383 million. This takes no account of capital costs and possible public sector access problems. The analysis suggests that 31 extra operating theatres would be needed in the public sector (had the transfer of surgical patients from the public sector to the private sector not occurred). This analysis suggests that without the PHI rebate the current stresses on Victorian public hospitals would be increased, not decreased.

Private hospital insurance status among a state-wide injured population

“…10 This increased premiums for those initially taking up private hospital insurance after the age of 30 by 2% for each year over 30, up to a maximum of 70%. 12,13 These three measures brought about an increase in insurance levels from around 32% at the start of 2000 to a high of around 45% at the end of 2000, although levels have since dropped slightly 7 (Box 1).…”

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].…”