5. Conclusions
Around half of the sample had private hospital cover in 2004, compared with 45% in
the Australian population as whole. At least thirty-nine percent of the sample held
private health insurance prior to 2000, compared with an actual insurance rate of 30%
in the Australian population at that time. The higher insurance rate in the HILDA
sample may indicate that initial and ongoing participation in the study is associated
with a higher probability of purchasing private health insurance.
As expected, age was found to be a very strong predictor of health insurance decisions
related to the introduction of the Lifetime Health Cover policy. In the HILDA sample
those who took up private hospital cover in 2000 as a response to Lifetime Health
Cover had higher mean household wages than other insured groups. However in the
multinomial probit model this effect disappeared after controlling for other factors.
Instead it appeared that those who took up insurance in response to LHC were in fact
somewhat less well-off than those who had already taken up insurance prior to the
policy. This could be explained in part by the younger age of those who took
insurance in response to LHC, who were mostly working age adults. This group may
be at a stage where they have greater incomes on average, which are accompanied by
greater financial demands than older respondents who were already insured. The
multivariable analysis indicates that when comparing age peers in similar
circumstances, those who were better off financially had already taken up insurance
prior to the introduction of the policy. This could explain why those who took up PHI
in response to the LHC policy deadline perceived they as less prosperous compared
with those who had already purchased insurance. There is therefore some evidence
that the LHC policy deadline succeeded in attracting more middle income earners
among working age adults into PHI than previously. In many respects however, those
who joined because of LHC were very similar to those who joined prior. The group
who joined because of LHC may have planned to purchase PHI at a later stage, and
so were particularly motivated by the deadline to bring their decision forward and
avoid a future penalty.
The three major factors that affected the probability of joining after 2000 were age,
number of children and country of birth. Young childless couples and those from a
non-English speaking background represent a new demographic that was not inclined
to purchase hospital cover prior to the introduction of the LHC policy. Like the LHC
deadline group, those who purchased hospital cover after 2000 had fewer financial
assets or financial commitments than those who had joined prior to the introduction of
LHC.
The characteristics of the group who have purchased hospital cover after 2000
however, indicates that the ongoing effect of the policy has been to attract a larger
share of younger childless couples or singles to purchase hospital cover, at least over
the short-term. If the impact of LHC were a response to the deadline and advertising
rather than the premium penalty (Ellis & Savage, 2005) then the rate of young people
joining around age 30 should drop over time, as the memory of the 2000 campaign
fades and the LHC premium penalty comes to be seen as the normal state of affairs.
We found that declining financial circumstances were the major reason for dropping
hospital cover since the introduction of the LHC policy. It has been suggested that
disillusionment with the value of hospital cover is a major reason for dropping PHI
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