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NOTES


INTRODUCTION

This article presents a brief overview of the level and types of private health insurance cover of the Australian population by general population and health characteristics.


DATA SOURCES

This article uses data from the 2004-05 ABS National Health Survey (NHS), previous National Health Surveys from 1995 and 2001, and the 1998 Private Health Insurance Survey conducted by the ABS (as a supplement to the Monthly Population Survey). The article also draws on data from the Private Health Insurance Administration Council (PHIAC) which compiles the data from administrative membership records supplied by private health insurance providers.

Data about private health insurance shown in this article relate to persons aged 15 years and over. The National Health Surveys and the Private Health Insurance Survey are household surveys which exclude homeless and institutionalised people.

• In the 2004-05 NHS, 51% of Australians aged 15 years and over reported having private health insurance, 47% had hospital cover (with or without ancillary cover) and 41% had ancillary cover (with or without hospital cover).
• In 2004-05, of those aged 15 years and over without private health insurance 46% were covered by a government health concession or entitlement card (footnote 1). In total, 73% of persons aged 15 years and over had private insurance or were covered by a government health card.
• NHS results for 2004-05 were similar to PHIAC data which show 45% of the population aged 15 years and over had hospital cover at June 2005 (PHIAC 2006). Differences between NHS and PHIAC data are due to the different methodologies used to collect them (footnote 2).
• The proportion with private health insurance rose from 38% in 1998 to 51% in 2001 (after adjusting for age differences) (footnote 3). This reflects the introduction of the Australian Government's 30% rebate on private health insurance in 1999, and the Government's Lifetime Health Cover Policy in 2000 (footnote 4) (DoHA 2006).
• There was little change in the overall coverage of health insurance between 2001 (51%) and 2004-05 (50%) (after adjusting for age differences).

Private health insurance 1995 to 2004-05 (a) (b)

• The proportion of people covered by private health insurance differs by age group. The highest level of private health insurance coverage in 2004-05 was in the 45-54 and 55-64 years age groups (both around 61%), while the lowest (41%) was in the 25-34 and 75 years and over age groups.

Persons with private health insurance by age group (a)

• Coverage among older people is augmented by government concessions. Most (91%) people aged 65 years and over reported they had a government health concession card.
• People in the 25 to 34 years age group were least likely to be covered by private health insurance or a health concession card. NHS data shows that a larger proportion of males (46%) than females (35%) in this age group did not have private health insurance or a concession card.
• A comparison with 2001 data shows that the proportion of people aged 45-54 and 35-44 years with private health insurance has decreased by around four percentage points between 2001 and 2004-05, while the coverage of older age groups has increased by around four percentage points.
• The change over time in the proportion of people with private health insurance in middle age groups was higher for females than males. The proportion of males with private health insurance fell in the 35-44 and 45-54 years age groups by two and four percentage points respectively, with no change in the 55-64 years age group. However for females, coverage fell by five percentage points in the 35-44 and 45-54 years age groups and increased six percentage points in the 55-64 years age group.

Source: National Health Survey 2001, 2004-05

• In 2004-05 most people with private health insurance had both hospital and ancillary cover (75% of the insured population). Hospital and ancillary together was the most common form of cover across all insured age groups, from 57% in the 75 years and over age group, to 77% in the 25-34, 35-44 and 45-54 years age groups.
• Hospital only cover was more commonly reported by people in older age groups (40% in the 75 years and over age group and 24% in the 65-74 years age group), while ancillary only cover was most common in younger age groups (9% in both the 15-24 and 25-34 years age groups) for those with private health insurance.

Type of cover of insured population, 2004-05

• In the 2004-05 NHS the most commonly reported reasons for having private health insurance were security/protection or peace of mind (43% of those with private health insurance), shorter wait for treatment or concern over public hospital waiting lists (23%), and having always had it, parents pay for it, or as a condition of their job (23%).
• Almost two thirds (64%) of those without private health insurance reported not insuring because they could not afford it or it was too expensive (an increase of five percentage points from 2001). This was the most commonly reported reason for not having private health insurance across all age groups and income groups.

• The likelihood of having private health insurance increases with income. In 2004-05, 23% of persons in the lowest income quintile (footnote 5) had private health insurance in 2004-05 compared with 76% of those in the highest income quintile (after adjusting for age differences).
• Similarly, 28% of persons living in the most socioeconomically disadvantaged areas had private health insurance, compared with 72% of those living in the least socioeconomically disadvantaged areas (as measured by being in the lowest and highest quintiles of the index of disadvantage respectively) (footnote 6). (These data have been adjusted for age differences).
• The likelihood of having combined hospital and ancillary cover is strongly related to income whereas hospital only and ancillary only cover do not significantly differ by income group. Of those in the highest income quintile, 62% had both hospital and ancillary insurance, compared to 14% of those in the lowest income quintile (after adjusting for age differences).

Type of cover by income, 2004-05 (a)

• Rates of private health insurance were highest among couples with children (55%) and couple only (54%) household types (after adjusting for age differences). Single parent family households were least likely to have private health insurance (30%). They were the most likely to have a health concession card (60%) (after adjusting for age differences).
• Employed persons aged 15-64 years, were much more likely to have private health insurance (56%) than those who were unemployed (22%) (after adjusting for age differences). In contrast, 59% of unemployed persons in this age group reported having a government health concession or entitlement card, compared with just 11% of employed persons.

Insurance status by household structure, 2004-05 (a)

• In 2004-05, 62% of those with private health insurance reported they were in excellent or very good health. An estimated 35% of those who reported their health was fair or poor had private health insurance.
• Of those people aged 18 years or more categorised as having high/very high levels of psychological distress (footnote 7), 35% had private health insurance compared to 53% of adults classified to moderate or low levels of distress (after adjusting for age differences).
• People aged 15 years and over reporting long term conditions (footnote 8) such as ischaemic heart disease (footnote 9), mental or behavioural problems, diabetes mellitus or arthritis were less likely to have private health insurance in 2004-05 than those who did not have the condition.
• For example, whereas 61% of all people in the 45-64 years age group had private health insurance, 42% of those with ischaemic heart disease, 49% of those with long-term mental and behavioural problems and 55% of those with arthritis or diabetes were privately insured. In contrast, those aged 45 to 64 years with sinusitis or hayfever were more likely to have private health insurance (63% and 65% respectively). Taking into account those with a government health concession or entitlement card, over 80% of those in this age group with the conditions shown were covered by insurance and/or a card.

Persons aged 45-64 years with selected long-term conditions, 2004-05

• In most age groups, adults who smoke and those who drink alcohol at a high risk level (footnote 10) were less likely to have private health insurance than other people in the same age groups.
• Of the estimated 3.2 million Australians aged 18 years and over who smoked daily (footnote 11) in 2004-05, 32% had private health insurance. In all age groups, the proportion of daily smokers with private health insurance was at least 20 percentage points lower than that of non-smokers. The largest difference was in the 45 to 54 year age group, where 39% of daily smokers had private health insurance compared with 68% of non-smokers.
• In all age groups less than 65 years people classified as high risk alcohol consumers were less likely to have private health insurance than those who consumed at lower risk levels or who did not drink alcohol. The largest difference was in the 35 to 44 and 45 to 54 year age groups, where the proportion of high risk drinkers with private health insurance was 13 percentage points lower than the proportion of other people in the age group. For the 65 years and over age group the insurance levels of high risk drinkers were similar to others in the age group.
• An estimated 47% of the population aged 15 years and over were classified as overweight or obese (footnote 12). Just under half (49%) of these people had private health insurance, compared with 53% of persons who were an acceptable weight or underweight (after adjusting for age differences).

• In 2004-05 20% of people with private hospital insurance who were admitted to hospital in the previous 12 months reported their most recent admission had been as a public (Medicare) patient.
• The main reasons reported by insured people for admission to hospital as a public patient were that the choice had been made by others (26%) or the choice was made on doctor's advice or their doctor had booked (23%).

• By taking out ancillary cover, Australians can insure to reclaim (some) costs of dental care and services provided by health professionals other than doctors (e.g. optical).
• Results from the 2004-05 NHS show that 24% of those with ancillary cover had consulted a dentist or other health professional (footnote 13) in the previous two weeks, compared with 16% of those who did not have ancillary cover (after adjusting for age differences).

• Private health insurance funds provided 21% of the total non-government health sector funding in 2004-05. Just under half (48%) of this was spent on private hospitals, along with dental services (12%), administration (10%), and medical services (10%). Benefits paid by the funds in 2004-05 were up 7% from 2003-04.
• An estimated $626 per insured person, was spent by private health insurance funds in 2004-05 (AIHW 2006).

• any cards from the Department of Veterans' Affairs (DVA);
• Health Care Card (including the low income health care card);
• Pensioner Concession Card;
• Commonwealth Seniors Health Card.

• The Private Health Insurance Incentive Scheme (PHIIS), introduced on 1 July 1997, offering subsidies for insuring (to low income earners) or tax penalties for not insuring (for high income earners).
• The Private Health Insurance Incentives Act 1998 (30% rebate), introduced on 1 Jan 1999, replacing the PHIIS subsidy for low income earners. From April 2005, the rebate for persons aged 65 -69 years increased to 35% and for persons aged 70 years and over it increased to 40%. The 1% Medicare levy surcharge from the PHIIS increased to 1.5% of taxable income and since October 1997 a further surcharge of 1% has been levied on higher income earners (single people with incomes over $50,000 and couples earning over $100,000) without private health insurance.
• The Lifetime Health Cover scheme was introduced on 15 July 2000. This scheme provides incentives to people who purchase hospital cover before they turn 30 years old, and by maintaining their membership, will pay lower premiums throughout their lifetime relative to people who delay joining. Back