Adverse selection in Australian private health insurance

18 Pages Posted: 13 Jul 2021

Date Written: July 12, 2021


We assess adverse selection in Australian private health insurance using the longitudinal data in the Household, Income, and Labour Dynamics in Australia (HILDA) Survey. Cross-sectional and balanced panel probit regressions specify the demand for health insurance as a function of self-assessed health condition, health risk factors, and socioeconomic controls including age, income, education, family structure, and welfare status. We find that while adverse selection is present, it has decreased over time, likely through a combination of deliberate government policy and changes in market conditions, combined with the impact of heterogeneous preferences and risk aversion. We also identify a tendency for advantageous selection in the insured pool.

Keywords: Private health insurance, adverse selection, advantageous selection, health risk factors, self-assessed health, Australia

JEL Classification: D24, G22, I13, I18

Suggested Citation

Nguyen, Lan and Worthington, Andrew C., Adverse selection in Australian private health insurance (July 12, 2021). Available at SSRN: or

Lan Nguyen

Griffith University ( email )

PMB 50
Gold Coast Queensland 9726

Andrew C. Worthington (Contact Author)

Griffith University ( email )

170 Kessels Road
Nathan, Queensland 4111
+61 (0)7 3735 4273 (Phone)
+61 (0)7 3735 3719 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics