Waiting times for elective surgery and the decision to buy private health insurance

Meliyanni Johar, Glenn Jones, Michael Keane, Elizabeth Savage*, Olena Stavrunova

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

17 Citations (Scopus)

Abstract

More than 45% of Australians buy health insurance for private treatment in hospital. This is despite having access to universal and free public hospital treatment. Anecdotal evidence suggests that avoidance of long waits for public treatment is one possible explanation for the high rate of insurance coverage. In this study, we investigate the effect of waiting on individual decisions to buy private health insurance. Individuals are assumed to form an expectation of their own waiting time as a function of their demographics and health status. We model waiting times using administrative data on the population hospitalised for elective procedures in public hospitals and use the parameter estimates to impute the expected waiting time and the probability of a long wait for a representative sample of the population. We find that expected waiting time does not increase the probability of buying insurance but a high probability of experiencing a long wait does. On average, waiting time has no significant impact on insurance. In addition, we find that favourable selection into private insurance, measured by self-assessed health, is no longer significant once waiting time variables are included. This result suggests that a source of favourable selection may be aversion to waiting among healthier people.

Original languageEnglish
Pages (from-to)68-86
Number of pages19
JournalHealth Economics
Volume20
Issue numberSUPPL. 1
DOIs
Publication statusPublished - Sep 2011

Keywords

  • data augmentation
  • private health insurance
  • waiting times

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