Run for cover now or later? The impact of premiums, threats and deadlines on private health insurance in Australia

  • Randall P. Ellis
  • Elizabeth SavageEmail author


Between 1997 and 2000 the Australian government introduced three policy reforms that aimed to increase private health insurance coverage and reduce public hospital demand. The first provided income-based tax incentives; the second gave an across-the-board 30% premium subsidy; and the third introduced selective age-based premium increases for those enrolling after a deadline. Together the reforms increased enrolment by 50% and reduced the average age of enrollees. The deadline appeared to induce consumers to enroll now rather than delay. We estimate a model of individual insurance decisions and examine the effects of the reforms on the age and income distribution of those with private cover. We interpret the major driver of the increased enrollment as a response to a deadline and an advertising blitz, rather than a pure price response.


Private health insurance Financial incentives Behavioural decision-making 

JEL Classifications

D12 I11 I18 


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Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  1. 1.Department of EconomicsBoston UniversityBostonUSA
  2. 2.Centre for Health Economics Research and EvaluationUniversity of Technology SydneySydneyAustralia

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