Financing and the use of health care services |
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Does the reason for buying private health insurance influence behaviour?Key Objectives There is considerable evidence of unexplained diversity among the privately insured population. Heterogeneity of preferences is likely to be important not just in determining the uptake of private health insurance, but also the impact of changes in private health insurance on the use of private treatment. This study uses the 2001 ABS National Health Survey to identify ‘types’ among the insured population using their stated reasons for purchasing private health insurance. It is found that insurance type (choice, financial, security and health) is significantly associated with hospital utilisation, particularly the probability of being admitted as a public or private patient. For example those with shorter durations of insurance cover are far more likely to have joined for financial reasons; and ‘financial types’ are less likely to choose the private system when admitted to hospital than ‘choice types’ who are more likely to have joined before the recent insurance incentives. The research shows the Government’s insurance incentives were more attractive to particular types of the insured population. This has implications for the effectiveness of the insurance incentives and for the design of policies that aim to reduce pressure on the public hospital system. A CHERE Working paper was prepared in 2006 and in 2007 a revised version of the working paper was submitted to a journal. Funding CHERE staff Collaborator 1. School of Economics, UNSW Family formation and the demand for private health insuranceKey Objectives Existing studies of private health insurance (PHI) in Australia are based on the general population or on older age groups. Also, studies to date have used cross-section data and hence been unable to model the dynamics of insurance demand. This study uses a nationally representative, panel of young women from the Australian Longitudinal Study on Women’s Health to look at demand for PHI. These data include information on actual and desired children, pregnancies, and other relevant variables for insurance such as income, health status and age. A dynamic discrete choice model of insurance choice with unobserved individual effects is estimated. The findings show evidence of differential demand for insurance by young women based on actual and desired numbers of children. Women with and without children, who desire more children, are more likely to purchase insurance. Effects are quantitatively important. The effect is stronger for those with children and for those who are currently pregnant. The different effects on joining and leaving cover show the importance of modelling dynamics in insurance. A CHERE Working Paper has been produced and the paper was presented at the 2007 iHEA World Congress in Copenhagen. Funding source CHERE staff Collaborators 1. School of Economics, UNSW General Practitioners knowledge, attitudes and practices regarding cervical cancer screening in AustraliaKey Objectives In Australia, the National Cervical Screening Program (NCSP) has been an important public health achievement. General practitioners (GPs) are the main providers and have been crucial to this success. This study assesses the views of GPs about the value of the Pap smear tests, their knowledge of the current screening policy, awareness of new technologies and concerns of litigation. Completed questionnaires were returned from 452 GPs. GPs are generally supportive of the NCSP guidelines; 88.5% agree with the 2 yearly screening interval. However, half believe the age range should be increased to include older and younger patients. Factors most important in recommending a Pap test were time since last test and false negative rate. Least important factors were; patient age, socio-economic status and cost. There are notable differences between male and female GPs. Female GPs were more likely to: support the 2 yearly screening interval; advocate expansion of the age range to include younger and older patients; be familiar with new technologies; offer opportunistic screening; and be at ease with patients from different cultural/religious backgrounds. Male GPs were more concerned about legal implications of over and under-screening. While the NCSP is generally well supported by GPs there are differences in the knowledge and views of male and female GPs. This information is essential if we are to optimise the effectiveness of GPs as providers of cervical screening, improve the rate of appropriate utilisation and successfully implement future changes to the NCSP. This work was presented at the HSRAANZ in Auckland 2007, and a paper has been submitted for peer-review. Funding source CHERE staff OECD PharmacogeneticsKey objectives Pharmacogenetics refers to the study of inherited differences in drug metabolism and response. Pharmacogenetics has the potential to make drug treatment more targeted and accurate – creating less variation in the drug’s effectiveness and/or fewer side-effects. Use of pharmacogenetics has the potential to improve patient outcomes and, through better targeting, save expenditure on pharmaceuticals. The draft OECD report suggests that the impacts of pharmacogenetics are being felt in the areas of basic research, drug discovery and development, and health care policy. It examines the challenges to the broader uptake of pharmacogenetics throughout the R&D innovation cycle and identifies potential government actions to create the right enabling environment. CHERE provided a commentary on the report to the OECD, focusing on the potential impact of pharmacogenetics on health care policy and health economics. The OECD is scheduled to publish the report in 2008. Funding Source CHERE staff Collaborators 1. OECD Risk selection and the demand for private health insurance in AustraliaKey Objectives 1. An examination of the relationship between ex ante risk and private health insurance in Australia (Doiron, Jones, Savage) Both adverse selection and moral hazard models predict a positive relationship between risk and insurance; yet the most common empirical finding is that of a negative correlation. This research investigates the relationship between ex ante risk and private health insurance using data from the 2001 National Health Survey. The findings show a strong positive association between self-assessed-health and private health cover. The study identifies the factors responsible for this result and recovers the conventional negative relationship predicted by adverse selection when using more objective indicators of health. The findings suggest that those persons who engage in risk-taking behaviour are simultaneously less likely to be in good health and less likely to buy insurance. A paper from this research has been published in Health Economics - 2008; 17: 317-334. 2. Risk selection and the demand for private health insurance in Australia (Buchmueller, Fiebig, Jones, Savage) We investigate possible explanations for the favourable selection often found in empirical studies of insurance. Using 2004-05 National Health Survey data on hospital utilisation and individual characteristics we investigate the nature of risk selection in the Australian market for private health insurance. Using semi-parametric techniques, we find no evidence of adverse selection in the Australian private health insurance market. We then explore the extent to which underlying risk preferences rather than risk might drive the decision to purchase health insurance using Household Expenditure Survey data. We find large and significant positive correlations between unobservables related to different insurance purchases even when risks are uncorrelated. We also find positive correlations between tobacco and gambling and negative correlations between tobacco and insurance. Our results provide new evidence for the hypothesis that risk preferences drive the empirical observation of favourable selection in health insurance markets. Funding source CHERE staff Collaborators 1. University of Michigan The distributional impact of out-of-pocket health expenditures in AustraliaKey Objectives Out-of-pocket health expenditure in Australia is high by international standards and has been growing at a faster rate than most other health costs. Most out-of-pocket expenditure is spent on over-the-counter pharmaceuticals and dental services. It is well established that poorer sections of the community have a greater demand for healthcare than those on high incomes. Health systems that rely heavily on out-of-pocket payments expose low income individuals to higher levels of financial risk when they fall ill. The researchers model the relationship between specific health expenditures and total expenditure using semi-parametric estimation of Engel curves using data from the ABS Household Expenditure Survey 2003. Research has focused on estimating the protective effect of concession cards on out-of-pocket costs. Results suggest health concession cards do provide out-of-pocket protection for general practitioners but not for specialists services or pharmaceuticals. The research was presented at the 2007 Australian Conference of Economists in Hobart. A paper is currently under review for journal publication. Funding source CHERE staff Collaborator 1. School of Economics and Financial Studies, Macquarie University The economic burden of asthma: a longitudinal cohort study investigating costs and utilisationKey Objectives This longitudinal study examines the cost of asthma to the individual and the health system. Researchers are investigating the relationship between different factors (such as health status and residential area) and the use and cost of health care for people with asthma. The study also examines health related quality of life in people with asthma and investigates how this is related to asthma control. The study uses administrative data from the Federal and State governments and participants complete six-monthly surveys covering their use of health services, out-of-pocket costs and quality of life. The data collection phase of the study was completed in 2006. Analysis of the quality of life data found that individual changes in quality of life over time were mainly associated with sleep disturbance and the use of reliever medication, while differences in quality of life between individuals were mainly associated with activity limitations. The analysis of the cost data found that costs varied substantially between individuals. After adjusting for asthma related health measures, both the health system and patient out-of-pocket costs were highest in the highest income group; health system costs were lowest in the middle income group and patient costs were lowest in the lowest income group. Adults had higher costs than children and those with private health insurance had higher patient costs and lower health system costs than those without insurance. Funding source CHERE staff Collaborator 1. Woolcock Institute of Medical Research The demand for private health insurance and the impact of insurance status on healthcare utilisationKey Objectives 1. Demand for private health insurance (Ellis and Savage) This research develops a model of individual insurance decisions and examines the effects of a set of insurance incentives, introduced between 1997 and 2000, on the age and income distribution of those with private cover. The analysis indicates that the major driver of the increased enrollment was a response to the deadline and advertising blitz associated with the Lifetime Health Cover policy, rather than a pure price response to the premium subsidy. A paper from this research was submitted in 2007 and is under review. 2. The impact of financial incentives for private health insurance on use of the public hospital system (Lu and Savage) Using the ABS 2001 National Health Survey, we examine how supplementary insurance affects public and private hospital admissions and lengths of stay for new enrollees and for those insured prior to the insurance incentives. We find that public and private hospital lengths of stay differ significantly depending on insurance duration. Those who enrolled in response to the incentives behave more like the uninsured than the long-term insured. While the insurance incentives substantially increased insurance coverage, our results suggest that using financial incentives were not a cost-effective way of reducing pressure on the public hospital system. This research was presented at the 2007 iHEA Wolrd Congress in Copenhagen. A paper from this research was submitted in 2007 and is under review. 3. The impact of policy changes on the utilisation of dental services in Australia (Gablinger, Jones, Savage) Using the National Health Surveys of 1995 and 2001 we examine differences in utilisation of dental services between the upper and lower halves of the income distribution in the periods before and after the discontinuation of the Commonwealth Dental Health Program and the introduction of the private health insurance incentive schemes. Despite higher overall utilisation of dental services, the results suggest that the policy changes increased the inequity of dental utilisation. The increase in use of dental services was large and significant amongst high income earners and small and insignificant among low income earners. Papers were presented at The Australasian Meeting of the Econometric Society, Alice Springs, in July, and The Australian Conference of Health Economists, Perth, in September 2006. 4. An examination of the causal relationship between insurance and utilisation (Doiron, Salale) This research takes the novel approach of using information on the partner’s health as an instrument for one’s own insurance coverage on the assumption that a partner’s health will affect one’s insurance purchase but not directly influence one’s own health care utilisation. Data from the Household, Income and Labour Dynamics in Australia (HILDA) survey are used. Results indicate the importance of correcting for endogeneity. We find that insurance cover does not reduce the usage of public facilities but it raises usage of private treatment substantially. This research was presented at a number of seminars in North America in 2007. Funding source CHERE staff Collaborators 1. School of Economics, University of NSW The Medicare Safety NetKey Objectives The Medicare Safety Net was introduced in 2004 to provide financial relief for those Australians who face high out-of-pocket costs incurred through out-of-hospital medical services. This study examines variation in Safety Net benefits by Federal electorate and by type of medical service. The findings show significantly higher Safety Net benefits in electorates with relatively high median family income and lower health care needs. The study also shows that patients who use private obstetricians and assisted reproductive services are the greatest beneficiaries of the policy. The analysis has shown that low income areas are not being aided by the policy compared to well-off areas. Furthermore, whilst the Safety Net was introduced to help reduce out-of-pocket medical costs, there has been significant leakage towards higher medical fees. Two papers have been submitted to peer-reviewed journals and are currently under review. Funding source CHERE staff Collaborator 1. Peninsula Medical School, Universities of Exeter and Plymouth Turnover in private health insurance membershipKey Objectives Between 1997 and 2000 the Australian Government introduced a series of incentives to encourage private health insurance (PHI) membership including Lifetime Health Insurance Cover (LHC), an age related premium loading for those purchasing insurance after a certain deadline. Panel data from the Household Income and Labour Dynamics (HILDA) survey was used. The researchers estimated a multinomial probit model for six insurance choices including those who joined before the Government insurance incentives, those who joined because of LHC, and those who have never joined PHI. The findings suggest that Government incentives are not effective in maintaining higher PHI coverage especially among the younger population. While the LHC deadline attracted younger members in 2000, the subsequent effect of the age penalty deters new joiners. A working paper has been prepared and an article has been submitted for review to Social Science and Medicine. Funding source CHERE staff Collaborator 1. School of Economics, UNSW |
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