Research Project

Private Health Insurance (PHI) Market Analysis & Policy Evaluation

Stabilising Australia’s PHI market by boosting participation and easing premium pressure.

Overview

  • Analysed APRA and ABS data to understand PHI participation, premiums and affordability.
  • Designed and assessed three policy options to prevent a market “death spiral” and support long-term sustainability.

Problem Statement

  • Participation dipped—especially among ages 25–39—while premiums outpaced wages, weakening the risk pool.
  • Goal: Raise youth participation, stabilise premiums, and strengthen system resilience.

Methodology

  • Data: APRA membership/premiums; ABS CPI & wage indices.
  • Approach: Demand/supply analysis, elasticity by age, equilibrium and related-market impacts.
  • Policy simulation: Demand shifts (subsidies/MLS) and supply shifts (equipment reforms).

Key Insights

  • Membership: Fell during COVID, recovering but youth still below prior highs.
  • Affordability gap: Premiums ↑ faster than wages; inflation spike magnified pressure.
  • Risk pool: Lower youth uptake → higher average claims cost → further premium pressure.

Policy Options

  • Age-based subsidies: Lower net price for 18–39 → right-shift demand, healthier pool.
  • Lower MLS thresholds: More people face surcharge without PHI → right-shift demand.
  • Medical equipment supply reforms: Input costs ↓ → right-shift supply, premium relief.

Market Effects (at a glance)

  • Subsidies: Largest youth uptake (high price elasticity) → premiums moderate.
  • MLS thresholds: Broad participation bump; price impact depends on competition.
  • Supply reforms: Clear premium relief; smaller immediate enrolment effect.

Winners & Losers

  • Winners: Young consumers, insurers (healthier risk pool), private hospitals, public system (less pressure).
  • Trade-offs: Budget cost (subsidies), higher-income non-holders (MLS), possible device-maker margin pressure.

Recommendation

  • Lead with Age-Based Subsidies for the biggest risk-pool improvement, paired with targeted supply-side reforms to lock in premium relief.
  • Consider selective MLS tuning as a secondary nudge once affordability improves.

Deliverables

  • Data workbook & charts (membership, premiums vs wages/CPI).
  • Policy brief with demand/supply diagrams and sensitivity scenarios.
  • One-page executive summary for stakeholders.

Project Impact

  • Stabilises premiums via better risk mix and cost relief.
  • Boosts participation among youth cohorts; reduces death-spiral risk.
  • Eases public hospital load and improves access/choice.

View Full Report (PDF)