Impact on Public Hospitals If Private Health Insurance Rates in Victoria Declined

By Hanning, Brian W. T. | Australian Health Review, December 13, 2004 | Go to article overview

Impact on Public Hospitals If Private Health Insurance Rates in Victoria Declined


Hanning, Brian W. T., Australian Health Review


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.

Aust Health Rev 2004: 28(3): 330-339

PRIVATE HEALTH INSURANCE (PHI) uptake declined through the 1990s. For example, the Victorian rate was 38.9% in December 1993 and 29.5% in December 1998 (PHlAC 2004a). A number of policy initiatives intended to stop and reverse the decline were introduced. A 30% tax rebate on PHI premiums and a 1% Medicare surcharge on high income earners without PHI was applied from 1 January 1999. These measures arrested the decline in PHI uptake and led to a modest increase of 30.4% for Victoria in December 1999. Lifetime Health Cover (LHC) was introduced from 1 July 2000. This increased the premiums of those who first took up PHI after the age of 30 years by 2% for each year over 30, up to a maximum of 70%. The introduction of LHC was accompanied by an intensive media campaign to encourage people to take up PHI. The overall effect was that uptake increased to 45.1% for Victoria by December 2000.

It was anticipated that increased PHI uptake would reduce some of the pressure on public hospitals because more people would be able to access treatment in private facilities. Public hospital revenue would also increase if the hospitals treated more privately insured patients.

It has been suggested that the cost of the 30% tax rebate is greater than the cost of treating, as public cases, the additional private cases arising from higher PHI uptake (Deeble 2002). The purpose of this article is to investigate whether this was the case in Victoria. The fiscal year 2001-02 was the first year in which pre-existing ailment (PEA) rules restricting the use of PHI fully expired, and, therefore, analyses based on earlier years would not show the full effect of the measures that increased PHI uptake.

Data used

Victorian PHI coverage data were obtained from the Private Health Insurance Administration Council (PHIAC) website. PHIAC data were also the basis of calculating the cost of the 30% rebate. Australian Bureau of Statistics (ABS) data were the source of Victorian population projections (ABS 2000).

Details of the Victorian Weighted Inlier Equivalent Separation (WIES) payment system and its payment rates are at www.casemix.health.vic.gov.au. In 2001-02 the ninth WlES version, W1ES9, was used and is the basis of WlES calculations in this article. The WlES model and its payment rates provide the most appropriate method of calculating the financial effect of cases shifting between private and public status as it uses the actual Victorian public sector funding model. Using public sector payment rates removes the need to consider the relative financial efficiency of the public and private sectors in this analysis (Duckett & Jackson 2000). Calculating public sector savings on the basis of bed-days rather than cases does not reflect the existing Victorian funding model.

Victorian public and private hospital unit record (UR) data were obtained from the Department of Human Services Victoria (DHS-Vic). …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Impact on Public Hospitals If Private Health Insurance Rates in Victoria Declined
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.