P Marcin Sowa1,2, Sam Kault3, Joshua Byrnes4, Shu-Kay Ng4, Tracy Comans4, Paul A Scuffham4. 1. Centre for Business and Economics of Health, University of Queensland, Brisbane, QLD, Australia. m.sowa@uq.edu.au. 2. NHMRC Chronic Kidney Disease Centre of Research Excellence, Faculty of Medicine, University of Queensland, Brisbane, QLD, Australia. m.sowa@uq.edu.au. 3. Department of Mathematics, University of Queensland, Brisbane, QLD, Australia. 4. Centre for Applied Health Economics, Menzies Health Institute Queensland, Griffith University, Brisbane, QLD, Australia.
Abstract
BACKGROUND: The appropriate structure, scope and cost of government incentives in the private health insurance (PHI) market is a matter of ongoing debate. OBJECTIVE: In order to inform policy decisions we designed a two-stage study to (1) model the uptake of PHI covering hospital treatment in Australia, and (2) identify the costs of various policy scenarios to the government. METHODS: Using a microsimulation with a cost-benefit component, we modelled the insurance decisions made by individuals who collectively represented the Australian insurance population in the financial year 2014-15. RESULTS: We found that the mean willingness to pay (WTP) for PHI ranged from A$446 to A$1237 per year depending on age and income. Our policy scenarios showed a considerable range of impacts on the government budget (from A$4 billion savings to A$6 billion expense) and PHI uptake (from 3.4 million fewer to 2.5 million more individuals insured), with cost-effectiveness ranging from -A$305 to A$22,624 per additional person insured, relative to the status quo. CONCLUSIONS: Based on the scenario results we recommend policy adjustments that either increase the PHI uptake at a small per-person cost to the public budget or substantially reduce government subsidisation of PHI at a relatively small loss in terms of persons insured.
BACKGROUND: The appropriate structure, scope and cost of government incentives in the private health insurance (PHI) market is a matter of ongoing debate. OBJECTIVE: In order to inform policy decisions we designed a two-stage study to (1) model the uptake of PHI covering hospital treatment in Australia, and (2) identify the costs of various policy scenarios to the government. METHODS: Using a microsimulation with a cost-benefit component, we modelled the insurance decisions made by individuals who collectively represented the Australian insurance population in the financial year 2014-15. RESULTS: We found that the mean willingness to pay (WTP) for PHI ranged from A$446 to A$1237 per year depending on age and income. Our policy scenarios showed a considerable range of impacts on the government budget (from A$4 billion savings to A$6 billion expense) and PHI uptake (from 3.4 million fewer to 2.5 million more individuals insured), with cost-effectiveness ranging from -A$305 to A$22,624 per additional person insured, relative to the status quo. CONCLUSIONS: Based on the scenario results we recommend policy adjustments that either increase the PHI uptake at a small per-person cost to the public budget or substantially reduce government subsidisation of PHI at a relatively small loss in terms of persons insured.