The Income Distributive Implications of Recent Private Health Insurance Policies in Australia

Melbourne Institute Working Paper No. 02/06

Date: February 2006


J. Yong
A. Palangkaraya
E. Webster
P. Dawkins


The Australian government implemented a series of new private health insurance policies between 1997 and 2000. As a result, the proportion of the population with private health insurance coverage increased by more than 35%. However, this paper finds significant evidence that the policy reform disproportionately favours high income earners. In particular, the 30 per cent premium subsidy represents a windfall gain for households which would have purchased private health insurance even without the rebate. The amount of the gain is approximately $900 million per year, a large proportion of which would go to higher income households.

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