Australia ends community rating for health insurance schemes

Australia has a "universal" health care programme that covers care in public hospitals and ambulatory care. Since 1953, private coverage has been allowed to cover care in private hospitals, choice of specialist, and "ancillary" services such as dental and physical therapy.

As recently as 1984 about 50 percent of the population had private coverage, but that dropped off to about 30 percent in 1999.

Alarmed by the added costs to the public system and a deteriorating private coverage pool, politicians have tried several initiatives to encourage more private coverage.

  • They allowed health plans to do selective contracting in 1995, and established a means-tested rebate in 1997.

  • Neither programme helped increase enrolment, so in January 1999 the income-based rebate was replaced with an across-the-board rebate of 30 percent of premium available to all Australians, and in July 2000, Australia got rid of pure community rating in favour of age-adjusted rates.

  • Health plans can add 2 percent for every year of age over age 30 at which a new member joins a private health plan.

  • Since then, enrolment has spiked back up to over 45 percent with a much younger population profile.

    Experts debate whether the rebate or the end of community rating contributed more to the increased enrolment, but conclude that the improved risk profile of the covered population will likely result in "significant reductions in health insurance premiums."

    Source: Greg Scandlen, Australia Ends Community Rating, NCPA's Health Policy Week #169, June 3, 2001; based on Sharon Willcox, Promoting Private Health Insurance In Australia, Market Watch, Health Affairs, May-June 2001.

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