Abstract

http://ssrn.com/abstract=320084
 
 

References (71)



 
 

Citations (3)



 


 



Parallel Private Health Insurance in Australia: A Cautionary Tale and Lessons for Canada


Jeremiah Hurley


McMaster University - Department of Economics

Rhema Vaithianathan


University of Auckland

Thomas F. Crossley


McMaster University - Department of Economics; Institute for the Study of Labor (IZA)

Deborah A. Cobb-Clark


University of Melbourne - Melbourne Institute of Applied Economic and Social Research; Institute for the Study of Labor (IZA)

June 2002

IZA Discussion Paper No. 515

Abstract:     
Canada's restrictions on the role of private health insurance for publicly insured physician and hospital services are unique among countries with universal, publicly funded health care systems. Pressure is mounting in Canada, however, to loosen these restrictions and create a parallel system of private finance. Advocates argue that creation of a parallel system of private finance will ensure the sustainability of the public system (by reducing public cost pressures), improve access to the public system (e.g., by reducing wait times), and improve quality in the public system (through competition). Opponents of parallel private finance argue that it will create "two-tiered" medicine, increase costs, compromise equity and reduce quality and access to publicly financed health care as those with the financial means (and often the strongest voice) exit to private insurance. Australia provides a particularly promising case study for Canada regarding the dynamics of parallel systems of public and private finance. This paper examines Australia's experience with parallel finance for inpatient hospital services to provide insight regarding: (a) the effectiveness of a parallel system of private finance in reducing costs and wait times in the public system; (b) risk selection between the parallel public and private insurance sectors; (c) the financial redistribution associated with the introduction and maintenance of a parallel system of finance; and (d) the dynamics of the broader political economy associated with parallel systems of finance. Australia's experience provides a number of lessons for Canada, including: (1) the potential for cost savings through introduction or expansion of a parallel private sector is very limited; (2) the introduction or expansion of a parallel private finance is unlikely to reduce wait times in the publicly financed system; (3) there is no simple way to regulate private insurers to pursue public objectives; (4) it is impossible to create an independent, isolated parallel system of private finance - interactions between the public and private insurance sectors are complex and unavoidable; (5) quality plays a key role in driving the dynamics between the public and privately financed sectors; and (6) it is essential to articulate clear policy objectives for health care financing and to design public and private roles consistent with these objectives. Our overall conclusion is that the Australian experience provides a cautionary tale regarding the risks, costs and benefits of a parallel private system of health care finance.

Number of Pages in PDF File: 42

Keywords: Health Care Financing, Australian Health Policy

JEL Classification: I11, I18

working papers series


Download This Paper

Date posted: August 9, 2002  

Suggested Citation

Hurley, Jeremiah and Vaithianathan, Rhema and Crossley, Thomas F. and Cobb-Clark, Deborah A., Parallel Private Health Insurance in Australia: A Cautionary Tale and Lessons for Canada (June 2002). IZA Discussion Paper No. 515. Available at SSRN: http://ssrn.com/abstract=320084

Contact Information

Jeremiah Hurley (Contact Author)
McMaster University - Department of Economics ( email )
Hamilton, Ontario L8S 4M4
Canada
Rhema Vaithianathan
University of Auckland ( email )
Private Bag 92019
Com. A, Room: 107
Auckland
New Zealand
64-9-373-7599 ext. 7127 (Phone)
Thomas F. Crossley
McMaster University - Department of Economics ( email )
426 Kenneth Taylor Hall
1280 Main St.
Hamilton, Ontario L8S 4M4
Canada
905-525-9140 (Phone)
905-521-8232 (Fax)
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Deborah A. Cobb-Clark
University of Melbourne - Melbourne Institute of Applied Economic and Social Research ( email )
Level 5, 111 Barry Street
Parkville, Victoria 3010
Australia
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Feedback to SSRN


Paper statistics
Abstract Views: 4,120
Downloads: 590
Download Rank: 24,187
References:  71
Citations:  3

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.672 seconds