Regulation, Private Health Insurance, and the Australian Health System

Fiona McDonald & Stephen Duckett


In the 40 years since the introduction of universal public health insurance in Australia, there has been an ongoing political debate about the design of the Australian health care system, particularly about the appropriate role of the private sector in the funding and provision of health services. Australian governments have erected a regulatory framework that encourages Australians to purchase private health insurance (PHI). This framework is based on the belief that PHI is an essential element of a balanced two-tier health care system that is funded and provided by public and private actors. This article has three aims: (1) to critically examine the complex regulatory framework that has been created to encourage Australians to purchase PHI, (2) to critically examine some of the impacts of this regulatory framework, and (3) to provide information for other countries about the costs and consequences of government promoting PHI. Reviews have indicated concerns as to whether the framework achieves its stated ends, about acceptability to purchasers, and about whether the system as it currently stands is sustainable. This analysis indicates some of the issues in respect of the regulation of PHI that will have implications for countries contemplating intervening in PHI markets.

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