Working paper

The pasts and futures of private health insurance in Australia

Health Health insurance Australia

Using what has been labelled a 'carrot and stick' approach, the Howard government implemented the Private Health Insurance Incentives Scheme, the Private Health Insurance Incentives Act 1998 and the lifetime community rating. At various times prior to and since the implementation of these policies, there has been much and varied prediction of both their impact on demand for private health insurance and the likely result if they had not been implemented. This paper follows up these predictions to determine which if any were borne out, or were likely to be. It also adds to these predictions its own estimates of future membership of health funds now that lifetime community rating has been introduced by using a non-deterministic Autoregressive Integrated Moving Average process. Among the results of the study is the conclusion that, if the long-term decline in membership witnessed in the 1990s resumes, the government has most likely bought itself a decade of respite before demand for private health insurance falls once again to levels seen in 1997.

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