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4815.0.55.001 - Private Health Insurance, 2001  
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Introduction
Data Sources
Results - Private Health Insurance Statistics


INTRODUCTION

A universal national health care system has been operating in Australia since 1984 in the form of Medicare. Medicare provides a tax-financed public system that is available to all Australians. When Medicare began in 1984, the Medicare levy was introduced as a supplement to other taxation revenue to enable the Government to meet the additional costs of this national health care system.

In addition to the universal public health system, there is also the option for all Australians to take out private health insurance with one of Australia's 42 registered operating health insurers. This enables private funding of their hospital and ancillary health treatment. Depending on the type of cover purchased, private health insurance contributes to hospital theatre and accommodation costs as a private patient in either a public or private hospital, and medical costs in hospital. It also subsidises costs associated with a range of services not covered under Medicare, including private dental services, optical, chiropractic, home nursing, and ambulance.

After the introduction of Medicare in 1984, when participation in private health insurance was at 50%, Australians' participation in private health insurance declined steadily decline until the late 1990's (see graph 1).

Graph 1 Private health insurance(a), 1984 to 2003, all persons
Graph 1 - Private health insurance(a), 1984 to 2003
a) Excludes 'ancillary only' cover.
Source: Private Health Insurance Administration Council (PHIAC).


Several new policies have been introduced in recent years by the Federal Government to encourage the uptake of private health insurance. These policies are listed below.

1. The Private Health Insurance Incentive Scheme (PHIIS), introduced on 1 July 1997, offering subsidies for insuring (to low income earners) or tax penalties for not insuring (for high income earners).

2. The Private Health Insurance Incentives Act 1998 (30% rebate), introduced on 1 Jan 1999, replacing the PHIIS subsidy for low income earners with a 30% rebate on premiums available to all, irrespective of income. The 1% Medicare levy surcharge from the PHIIS was retained.

3. The Lifetime Health Cover scheme was introduced on 15 July 2000 (extended from 1 July). This scheme provides incentives to people who purchase hospital cover. People who join before they are 30, and who maintain their membership, pay lower premiums throughout their lifetime relative to people who delay joining.

Levels of private health insurance increased significantly after the introduction of the 30% rebate and the Lifetime Health Cover policy in 2000. Figures reported by the Private Health Insurance Administration Council (PHIAC) show that participation rates increased from 31% in June 1999 to 45% in June 2001 (these figures exclude 'ancillary only' cover). Rates appear now to have decreased with a participation rate of 43% as at June 2003 (see graph 1).

This paper draws on comparisons between PHIAC data and data from the 2001 ABS National Health Survey (NHS) to provide an analysis of these and other ABS sources on private health insurance.

The discussions of data sources in this paper are followed by an analysis of selected data on private health insurance, primarily from the 2001 NHS, but including some time series from earlier ABS collections and PHIAC statistics. This includes national statistics about the types and levels of private health insurance cover held by Australians cross classified by age, hospital admissions, and income groups. State and ACT data on private health insurance coverage and a national time series based on ABS statistics is presented, and statistics on reasons for insuring or not insuring are also analysed.


2. DATA SOURCES

This section discusses the collections from which data, used in this paper, are drawn.

Table 1 Private health insurance collections

SourceCollection dateNo. of personsScopeSurvey Method
1995 NHSFeb 1995 to Jan 199620,000 Persons, 18 years and overPersonal interview
2001 NHSFeb - Nov 200119,000Persons, 15 years and overPersonal interview
Private Health Insurance
Survey 1998
June 199848,000Persons, 15 years and over; Contributor unitsInterview: Any Responsible Adult (ARA)
Private Health Insurance Administration Council (PHIAC)QuarterlyData collected on all persons with private health insurance
8,712,000 (June 2001)
All persons with private health insuranceData from health insurance funds

2.1 The ABS National Health Survey (NHS) - 1995 & 2001

Since 1977-78, the ABS has conducted a series of five National Health Surveys to collect data on various health related topics, including private health insurance. The last NHS was conducted in 2001 while previous surveys were conducted in 1977-78, 1983, 1989-90 and 1995. This paper uses data from the 1995 and 2001 NHS.


2.2 The 1998 Private Health Insurance Survey (PHIS)

The Private Health Insurance Survey was an irregular survey supplement to the ABS Monthly Population Survey (MPS) (see Labour Force, Australia, ABS Cat.no. 6203.0), run in 1998. The aim of the survey was to provide statistics on health insurance levels by selected demographic and socioeconomic characteristics, reasons for having or not having insurance, and hospital admission by insurance cover.

Comparison of results between the PHIS and the NHS should be made with care because of differences in:
  • types and levels of health insurance available for purchase at the time of the survey; and
  • sampling and survey methodologies between the collections.

Direct comparison of the level and type of private health insurance for the three ABS data sources is only possible for adults aged 18 and over, as data from the 1995 NHS is only available for this age group. However, comparison between two sources, the 1998 Private Health Insurance Survey and the 2001 NHS is possible for persons aged 15 years and over.


2.3 The Private Health Insurance Administration Council (PHIAC)

The Private Health Insurance Administration Council (PHIAC) (www.phiac.gov.au) statistics are compiled from membership data provided by insurance funds rather than from a survey. PHIAC statistics provide 'hospital insurance tables' (which include 'hospital and ancillary' and 'hospital only' cover), and 'ancillary tables' (which include 'ancillary and hospital' and 'ancillary only' cover).

Standard ABS output disaggregates private health insurance cover into mutually exclusive 'hospital and ancillary', 'hospital only' and 'ancillary only' categories. These categories can be regrouped in order to compare them with PHIAC data. For example, ABS 'hospital and ancillary' and 'hospital only' categories were combined in order to compare the ABS survey statistics with PHIAC statistics.

In addition, ABS data, because it is collected in a survey, allows for more extensive investigation into factors that may be associated with private health insurance coverage. This includes data on 'reasons for insuring', health care card recipients, and demographic details.

Comparisons between the ABS 2001 NHS data and 2001 PHIAC focus on persons aged 15 years and over. However, data for persons aged 0-14 years can be imputed from the 2001 NHS and provided on request (see explanatory notes for more detail on this and other aspects of data sources).


3. RESULTS - PRIVATE HEALTH INSURANCE STATISTICS

3.1 Level of private health insurance cover - ABS and PHIAC results

The latest ABS figures on private health insurance coverage are available from the 2001 National Health Survey (NHS). Graph 2 compares 2001 ABS figures on private health insurance with June 2001 data from PHIAC ('ancillary only' cover is excluded from both data sets). Comparisons reveal a similar trend in health insurance coverage across the age groups, peaking for the 45-54 age group and declining among older age groups. In general, ABS figures are slightly higher across most age categories (graph 2). The largest difference was for the 25-34 year age group, with PHIAC indicating 35% coverage, compared to 40% using NHS data. For persons 15 and over, PHIAC showed cover at 45% for June 2001, while ABS 2001 figures showed coverage at 48% (both figures exclude 'ancillary only' cover).

At June 2001, PHIAC data showed that 41% of all Australians were covered by ancillary insurance (i.e. had 'hospital and ancillary' or 'ancillary only' cover). In 2001, ABS data showed that for all Australians, 40% were covered by ancillary insurance.

Graph 2 Private health insurance(a) by age
Graph 2 - Private health insurance(a), by age

a) Includes 'hospital only' and 'hospital and ancillary' cover. 'Ancillary only' cover is excluded.
Source: Private Health Insurance Administration Council (PHIAC); National Health Survey 2001.

3.2 Level and type of private health cover

Results from the NHS showed that 51% of Australians aged 15 years or over (7.7 million people), had some private health insurance cover in 2001. Levels of health insurance varied among States and the ACT, ranging from a low of 48% in Queensland to a high of 59% in the ACT (graph 3).
Graph 3 Levels of private health insurance(a) for States and ACT(b), persons aged 15 years and over(c)
Graph 3 - Levels of private health insurance(a) for States and ACT(b), persons aged 15 years and over(c)
a) Includes 'ancillary only' cover.
b) Separate estimates for the NT are not available for this survey, but the NT sample contributes to the national estimates.
c) Age standardised percentage
Source: National Health Survey 2001.

    The most common type of private health insurance cover was 'both hospital and ancillary cover'. Three quarters of all adults (73%) with private health insurance had this type of cover. People aged 45-54 years had the highest levels of 'hospital and ancillary' private health insurance. Levels of 'ancillary only' coverage decreased slightly with age, while levels of 'hospital only' cover increased with age (graph 4).

    Graph 4 Type of private health insurance by age, 2001
    Graph 4 - Type of private health insurance by age, 2001
    Source: National Health Survey 2001.


    3.3 Private health insurance cover 1995, 1998, and 2001

    The 2001 NHS indicates an overall rise in levels of combined health cover ('hospital and ancillary') and 'hospital only' cover when compared with 1995 and 1998 (graph 5). Coverage for combined health cover were at their lowest levels in 1998. PHIAC statistics show a similar pattern, where private health insurance continued to fall after 1995 but increased sharply in 2000 (graph 1). In contrast, levels of 'ancillary only' coverage decreased from 1995 to 2001, and were highest in 1998.
    Graph 5 Type of private health cover, 1995(a), 1998(a) and 2001, persons aged 18 years and over
    Graph 5 - Type of private health cover, 1995(a), 1998(b) and 2001, persons aged 18 years and over
    a) For 1995 and 1998, 'hospital only' includes 'hospital but ancillary unknown', and 'ancillary only' includes 'hospital unknown but has ancillary'.
    Source: National Health Survey 1995, 2001; Health Insurance Survey 1998.

    Graph 6 reveals similar patterns in coverage levels for all age groups across the three survey years 1995, 1998 and 2001. The level of insurance was higher in 2001 across all age groups except for the 75 years and over group. The peak age group with insurance coverage for each year were the 45-54 year olds (from a low of 50% in 1998 to 65% in 2001). The lowest level of coverage for each year were the 18-24 year olds (between 29% for 1995 and 1998, to 36% in 2001). Private health insurance coverage was highest across most age groups in 2001 and lowest in 1998. The levels of coverage for those aged 75 years and over were similar for each survey year, at between 37-39%.
    Graph 6 Private health cover(a) by age, 1995, 1998, and 2001

    Graph 6 - Private health cover(a) by age, 1995, 1998 and 2001
    a) Includes 'ancillary only' cover.
    Source: National Health Survey 1995, 2001; Health Insurance Survey 1998.


    3.4 Private health insurance and health cards

    Government health concession cards include Health Care Cards, Pensioner Concession Cards, Commonwealth Seniors Health Card, and treatment entitlement cards issued by the Department of Veterans' Affairs (DVA). These cards offer varying types of benefits in relation to the access of health care. The 2001 NHS can supply data for all health concession cards combined, or for DVA treatment entitlement cards separately.

    Graph 7 shows that the proportion of people with health cards and no private health insurance, generally increased with age. This may indicate that the benefits from health concession cards for those aged over 65 years offset the need for private health insurance. However, there were still a significant proportion (38%) of people aged 65-74 with health concession cards, who also had private health insurance. Private health insurance coverage was highest for those without any type of health concession card, particularly for those aged 45-54 years (graph 8).

    Graph 7 Private health insurance by health card and age

    Graph 7 - Private health insurance by health card and age
    Source: National Health Survey 2001.

    Graph 8 Private health insurance by no health card and age

    Graph 8 - Private health insurance by no health card and age
    Source: National Health Survey 2001.


    3.5 Reasons for insuring/not insuring
    'Security/protection peace of mind' was the main reason given by respondents in the 2001 NHS and the 1998 PHIS for insuring. In 2001, 41% of people 15 and over with private health insurance reported this as a reason for insuring, while in 1998, 47% of respondents gave this as a reason for insuring. No data is available from the 1995 NHS on reasons for taking out private health insurance.

    Noting that more than one reason could be reported, in 2001 the next three most common reasons for taking out private health insurance included 'choice of doctor' (22%), 'allow treatment as a private patient in hospital' (22%) and 'always had it/parent pays it/condition of job' (21%).

    For older persons (aged over 54 years), the 'shorter wait for treatment/concern over public hospital waiting lists' was a more common reason for taking out private health insurance than 'provides benefits for ancillary services/extras'. In contrast, for younger persons (aged under 45 years) 'provides benefits for ancillary services/extras' was a more common reason for taking out private health insurance than 'shorter wait for treatment/concern over public hospital waiting lists' (graph 9).

    In the 2001 NHS, 'Lifetime cover' (introduced in 2000) and 'gain government benefits/avoid extra Medicare levy' were reported as a reasons for insuring in 10% of cases. In the 1998 PHIS, the 'gain government benefits/avoid extra Medicare levy' was given as a reason for insuring in 1.1% of cases.

    Graph 9 Selected reasons for insuring by age, 2001 NHS

    Graph 9 - Selected reasons for insuring by age, 2001 NHS



    The 2001 NHS indicated that the main reason for not insuring was 'can't afford it/too expensive'. An estimated 59% of respondents without private health insurance gave this reason for not insuring. This response varied across age groups, from a low of 44% for people aged 75 years and over, to a high of 68% for those aged 65-74 years. Of respondents aged 15-24 years and 25-34 years, 55% in each age group reported this as a reason for not insuring.

    The proportion of respondents with no private health insurance cover was highest for those on lower incomes (graph 10). The proportion of respondents indicating they hadn't insured because of the costs was also highest among people on lower incomes (graph 10). This suggests that the cost of private health insurance was a significant disincentive for people on lower incomes in 2001.

    Graph 10 People without private health insurance, and people who gave cost as a reason for not insuring, by equivalised income(a)-2001

    Graph 10 - People without private health insurance, and people who gave cost as a reason for not insuring, by equivalised income(a), 2001
    (a) For equivalised income, the first decile represents the lowest income, while the tenth decile is the highest. The modified OECD method was used to derive equivalised income (see explanatory notes for more detail).
    (b) The denominator used was all people 15 and over, from that income decile.
    Source: National Health Survey 2001.

    The next most common reason for not insuring was 'Medicare cover sufficient' (16%). This reason was also more common in the lower income decile groups (graph 11). Of respondents in the first three decile groups, between 9% -11% gave 'Medicare cover sufficient' as a reason for not insuring. In contrast, 6% of those in the ninth decile and 3% of those with incomes in the tenth decile gave this as a reason for not insuring (graph 11).
    Graph 11 Reason for not insuring- 'Medicare cover sufficient' by equivalised income(a), persons aged 15 years and over-2001

    Graph 11 - Reason for not insuring - 'Medicare cover sufficient' by equivalised income(a), persons aged 15 years and over, 2001
    a) For equivalised income, the first decile represents the lowest income, while the tenth decile is the highest. The modified OECD method was used to derive equivalised income (see explanatory notes for more detail).
    Source: National Health Survey 2001.

    3.6 Private health insurance cover and hospital admission status

    In 2001, 43% of patients (at most recent hospital admission) were admitted as public patients without private hospital insurance. An estimated 11% of patients were admitted as public patients with private health insurance. Around 38% of patients admitted to hospital were admitted as private patients with private health insurance, while only 5% were admitted as private patients without private health insurance (graph 12).

    Graph 12 Insurance cover by patient type at most recent admission(a), persons aged 15 years and over-2001

    Graph 12 - Insurance cover by patient type at most recent admission(a), persons aged 15 years and over-2001
    (a) 'Insured but type of cover not known' and 'Not known if have private health insurance' were not included in these insurance cover estimates.
    b) Excludes 'ancillary only' cover.
    Source: National Health Survey 2001.



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