scholarly journals Community Rating, Entry-Age Rating and Adverse Selection in Private Health Insurance in Australia

2008 ◽  
Vol 33 (4) ◽  
pp. 588-609 ◽  
Author(s):  
Thomas Buchmueller
Keyword(s):  
Health Insurance ◽  
Adverse Selection ◽  
Private Health Insurance ◽  
Community Rating ◽  
Entry Age

scholarly journals Policy change and private health insurance: did the cheapest policy do the trick?

2002 ◽  
Vol 25 (6) ◽  
pp. 33 ◽  
Author(s):  
James R G Butler
Keyword(s):  
Health Insurance ◽  
Adverse Selection ◽  
Policy Change ◽  
Financial Incentives ◽  
Private Health Insurance ◽  
Insurance Industry ◽  
Government Expenditure ◽  
Policy Changes ◽  
Community Rating ◽  
Health Insurance Industry

From the introduction of Australia's national health insurance scheme (Medicare) in 1984 until recently, the proportion of the population covered by private health insurance declined steadily. Following an Industry Commission inquiry into the private health insurance industry in 1997,a number of policy changes were effected in an attempt to reverse this trend. The main policy changes were of two types: "carrots and sticks" financial incentives that provided subsidies for purchasing, or tax penalties for not purchasing, private health insurance; and lifetime community rating, which aimed to revise the community rating regulations governing private health insurance in Australia. This paper argues that the membership uptake that has occurred recently is largely attributable to the introduction of lifetime community rating which goes some way towards addressing the adverse selection associated with the previous community rating regulations. This policy change had virtually no cost to government. However, it was introduced after subsidies for private health insurance were already in place. The chronological sequencing of these policies has resulted in substantial increases in government expenditure on private health insurance subsidies, with such increases not being a cause but rather an effect of increased demand for private health insurance.The paper also considers whether the decline in membership that has occurred since the implementation of lifetime community rating presages the re-emergence of an adverse selection problem in private health insurance. Much of the decline to date may be attributable to failure on the part of some members to honour premium payments when they first fell due. However, the changing age composition of the insured pool since September 2000,resulting in an increasing average age of those insured, suggests the possible reappearance of an adverse selection dynamic. Thus the 'trick' delivered by lifetime community rating may not be maintained in the longer term.

scholarly journals The profiles of public and private patients in maternal healthcare: a longitudinal study to examine adverse selection

2019 ◽  
Vol 14 (1) ◽  
pp. 129-137
Author(s):  
Jananie William ◽  
Bronwyn Loong ◽  
Catherine Chojenta ◽  
Deborah Loxton
Keyword(s):  
Health Insurance ◽  
Adverse Selection ◽  
Financial Incentives ◽  
Private Health Insurance ◽  
Service Use ◽  
Subsequent Pregnancy ◽  
Two Phase ◽  
Related Factors ◽  
Private Patient ◽  
The Impact

AbstractIn this article, we investigate differences in the profiles of patients within the Australian mixed public-private maternal health system to examine the extent of adverse selection. There are conflicting influences on adverse selection within the private health sector in Australia due to government regulations that incentivise lower risk segments of the population to purchase community-rated private health insurance. We use a two-phase modelling methodology that incorporates statistical learning and logistic regression on a dataset that links administrative and longitudinal survey data for a large cohort of women. We find that the key predictor of private patient status is having private health insurance, which itself is largely driven by sociodemographic factors rather than health-or pregnancy-related factors. Additionally, transitioning between the public-private systems for a subsequent pregnancy is uncommon; however, it is primarily driven by changes in private health insurance when it occurs. Other significant factors when transitioning to the private system for a second pregnancy are hypertension, increased access to specialists and stress related to previous motherhood experiences. Consequently, there is limited evidence of adverse selection in this market, with targeted financial incentives likely outweighing the impact of community rating even during childbearing years where private health service use increases.

Community rating in the absence of risk equalisation: lessons from the Irish private health insurance market

2012 ◽  
Vol 8 (2) ◽  
pp. 209-224 ◽  
Author(s):  
Brian Turner ◽  
Edward Shinnick
Keyword(s):  
Health Insurance ◽  
High Risk ◽  
Supreme Court ◽  
Market Segmentation ◽  
Private Health Insurance ◽  
Low Risk ◽  
Insurance Market ◽  
Risk Profiles ◽  
Community Rating ◽  
Health Insurance Market

AbstractIreland's private health insurance market operates on the basis of community rating, alongside open enrolment and lifetime cover. A risk equalisation scheme was introduced in 2003 to bolster community rating. However, in July 2008 the Irish Supreme Court set aside this scheme, on the basis of the interpretation of community rating in Irish legislation. This decision has significant implications for the Irish private health insurance market. This paper reviews the development of the market, focusing in particular on community rating. The breakdown of community rating in a market with multiple insurers with differing risk profiles is discussed. Applying this to the Irish market, it can be seen that the Irish Supreme Court judgment has significant implications for the application of community rating. Specifically, while community rating operates within plans, it no longer operates across the market, leading to high-risk lives paying more, on average, than low-risk lives. It has also led to greater opportunities for insurers to engage in market segmentation. This may have relevance for the design and operation of other community rated markets.

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