Notes on the data: Private health insurance

People aged 20 years and over with private health insurance, 2020/21

Policy context: Having private health insurance (PHI) 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 [1]. 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 [2]. 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 [2]. 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.

References

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

Notes: The data are sourced from Table 6: Individuals, Taxation Statistics 2020–21 under the heading ‘People with PHI’. The data only relate to those submitting an individual tax return, and count the income unit and not dependants covered under the policy. Therefore, if an individual with PHI submitted an income tax return but didn’t complete the PHI section, they wouldn’t be counted. In addition, the data exclude people receiving the Age Pension, as they are not required to lodge a tax return as Centrelink is withholding tax from their pension.

Income units with a post box address are excluded from the analysis i.e. 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 services incurred by an individual.

Geography: Data available by Population Health Area, Local Government Area, Primary Health Network, Quintile of socioeconomic disadvantage of area and Quintiles within PHNs, and Remoteness Area

Numerator: People with private health insurance (hospital) cover

Denominator: Average of population aged 20 years and over in 2020 and 2021

Detail of analysis: Per cent

Source: Compiled by PHIDU based on data from the Australian Taxation Office and Estimated Resident Population (average of 2020 and 2021), Australian Bureau of Statistics.