Health Sciences

School of Public Health

Higher Degree Research Students/Alumni Profiles

Dr Sharon Willcox

Doctor of Public Health, Thesis completed in 2005

Effectiveness of Australian Private Health Insurance Regulation

Private health insurance plays a significant role in the Australian health care system. Although it contributes only 7.3% of total health financing, about 43% of the population are privately insured and the private health insurance sector receives government subsidies of between $2.3 to $3.9 billion annually.Before governments entered into the delivery and financing of health services, private health insurance originated in the 1830s and performed a quasi-public role, providing an alternative to private practice medicine. Increasingly, over the twentieth century, private health insurance companies became co-opted as agents of government policy. The manner in which government chooses to regulate private health insurance is critically important as it establishes the legitimate scope and operation of public and private health services.The objective of this research was to assess the effectiveness of private health insurance regulation by the Australian government. Four studies were conducted to examine facets of regulation including: the policy objectives and case law; the impact of major regulatory changes; interest group politics on selective contracting; and the health services purchasing decisions made by private insurers.

This study found that private health insurance regulation is characterized by multiple, potentially conflicting policy objectives, with the social policy objectives seemingly redundant given the existence of the public insurance program, Medicare. Private health insurance regulation does not meet key criteria on effectiveness. Instead, it is overly prescriptive and coercive, with a lack of transparency and accountability in regulatory reform, and poor communication between regulatory agencies and private health insurers.There should be a major review of private health insurance that clearly delineates the agreed policy objectives and roles of private and public health insurance, together with measurable performance goals to a promote a more effective, performance-based approach to private health insurance regulation.