Notes on the data: Private health insurance hospital cover

Estimated population, aged 18 years and over, with private health insurance hospital cover, 2014-15


Policy context:  Having private health insurance increases access to a range of health services, both in-hospital services and services provided by private practitioners, including medical and dental practitioners, psychologists, physiotherapists, chiropractors and so on. From 1996, an increasing proportion of federal government expenditure was directed into Australia's health care system via private health insurance subsidies, in preference to Medicare and the direct funding of public health and hospital services. A central rationale for this policy shift was to increase the use of private hospital services and thereby reduce pressure on public inpatient facilities.

Private health insurance as a vehicle for mainstream federal health financing has potential structural failures that disadvantage regional Australians due to the limited availability of local private inpatient facilities (Lokuge, Denniss & Faunce 2005). Furthermore, as there is a positive association between private health insurance and income, it can also be argued that subsidising health fund contributions from government revenue means that many people on low incomes are being required to meet part of the costs of more affluent people using private hospitals (Palmer 2000). There is also a perceived inequity arising out of the payment by health fund members of substantial premiums, and of a proportion of their taxation to support public hospitals that they may never use (Palmer 2000). The public health system, however, also provides considerable opportunities for the training for health professionals and for clinical research which ultimately benefit the whole community.


  1. Lokuge, B, Denniss, R & Faunce, TA 2005. 'Private health insurance and regional Australia', Medical Journal of Australia, vol. 182, no. 6, pp. 290-293.
  2. Palmer, GR 2000. 'Government policymaking, private health insurance and hospital-efficiency issues', Medical Journal of Australia, vol. 172, no. 9, pp. 413-414.

Notes:  In the absence of private health insurance data from administrative data sets, estimates have been produced from the 2014–15 National Health Survey (NHS), conducted by the Australian Bureau of Statistics (ABS). These data are based on self-reported responses, reported to interviewers in the 2014–15 NHS.

Estimates at the Population Health Area (PHA) level are modelled estimates produced by the ABS, as described below (estimates at the Local Government Area (LGA) and Primary Health Network (PHN) level were derived from PHA estimates).

Estimates for Quintiles and Remoteness Areas are direct estimates, extracted using the ABS Survey TableBuilder.

Users of these modelled estimates should note that they do not represent data collected in administrative or other data sets. As such, they should be used with caution, and treated as indicative of the likely social dimensions present in an area with these demographic and socioeconomic characteristics.

The numbers are estimates for an area, not measured events as are, for example, death statistics. As such, they should be viewed as a tool that, when used in conjunction with local area knowledge and taking into consideration the prediction reliability, can provide useful information that can assist with decision making for small geographic regions. Of particular note is that the true value of the published estimates is also likely to vary within a range of values as shown by the upper and lower limits published in the data (xls) and viewable in the bar chart in the single map atlases.

What the modelled estimates do achieve, however, is to summarise the various demographic, socioeconomic and administrative information available for an area in a way that indicates the expected level of each health indicator for an area with those characteristics. In the absence of accurate, localised information about the health indicator, such predictions can usefully contribute to policy and program development, service planning and other decision-making processes that require an indication of the geographic distribution of the health indicator.

The survey response rate of around 85% provides a high level of coverage across the population; however, the response rate among some groups is lower than among other groups, e.g., those living in the most disadvantaged areas have a lower response rate than those living in less disadvantaged areas. Although the sample includes the majority of people living in households in private dwellings, it excludes those living in the most remote areas of Australia; whereas these areas comprise less than 3% of the total population, Aboriginal people comprise up to one third of the population in these areas. This and other limitations of the method mean that estimates have not been published for PHAs with populations under 1,000, or with a high proportion of their population in:

  1. non-private dwellings (hospitals, gaols, nursing homes - and also excludes members of the armed forces);
  2. in Very Remote areas;
  3. in discrete Aboriginal communities; and
  4. where the relative root mean square errors (RRMSEs) on the estimates was 1 or more (estimate replaced with ≠)


  1. Estimates with RRMSEs from 0.25 and to 0.50 have been marked (~) to indicate that they should be used with caution; and those greater than 0.50 but less than 1 are marked (~~) to indicate that the estimate is considered too unreliable for general use.
  2. For the Primary Health Network (PHN) data, differences between the PHN totals and the sum of LGAs within PHNs result from the use of different concordances.

Indicator detail

Private health insurance is additional health cover to that provided under Medicare, to reimburse all or part of the cost of hospital and/or ancillary services incurred by an individual. In the 2014–15 NHS, respondents were asked if they had private health insurance, and whether the insurance provided hospital cover (with or without ancillary cover); it is this population with hospital cover that is reflected in these data. Health cover provided or arranged through employers was included. Ambulance only cover, and cover arranged under Veterans’ Affairs or other government health benefits cards, were excluded.


Numerator:  Estimates of the population with private health insurance (hospital) cover


Denominator:  Total population


Detail of analysis:  Indirectly age-standardised rate per 100 (aged 18 years and over); and/or indirectly age-standardised ratio, based on the Australian standard



PHA, LGA & PHN: Compiled by PHIDU based on modelled estimates from the 2014-15 National Health Survey, ABS (unpublished).

Quintiles & Remoteness: Compiled by PHIDU based on direct estimates from the 2014-15 National Health Survey, ABS Survey TableBuilder.


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