Home > For Consumers > Public and private healthcare > Private health insurance

Private health insurance

Private Health Insurance Reform Study

June 2012

Printable version of the Private Health Insurance Reform Study (PDF 374 KB)

Executive Summary

The Department of Health and Ageing commissioned Woolcott Research to evaluate the Private Health Insurance Reform Campaign. This report provides an overview of the findings of the research.

Background

Since 1999, the Australian Government has provided a 30 per cent rebate to encourage people to purchase or maintain private health insurance cover (with higher rebates for people aged over 65 years). The Medicare Levy Surcharge (MLS) was also introduced as an additional 1 per cent tax (in addition to the 1.5% Medicare Levy) on people who earned above an income threshold without private health insurance hospital cover.

Legislation was passed in March 2012 meaning that the rebate would be means tested as of 1 July 2012. The MLS for people earning above a certain income threshold who do not hold appropriate private hospital cover was also increased. The Government introduced three ‘Incentive Tiers’ to better balance the mix of incentives for people to take out and maintain private health insurance.

The ‘Incentive Tiers’ are as follows:
Tier 1: Singles with income $84,000-$97,000, families with income $168,001-$194,000.
Tier 2: Singles with income $97,001-$130,000, families with income $194,001-$260,000.
Tier 3: Singles with income greater than $130,001, families with income greater than $260,001.

The Private Health Insurance Reform campaign was devised to inform Australians about the changes to the Private Health Insurance rebate and Medicare Levy Surcharge, as well as to inform people of what action they would need to take. It is estimated that 2.5 million people will receive a reduced rebate and 130,000 people will pay an increased MLS in the first year of the new scheme.

Objectives

The underlying objectives of this evaluation research were to explore:

• Awareness: the extent to which the audiences have been informed about the changes to the rebate and MLS; - including unprompted and prompted awareness of the campaign, key information learned, communication take out and any new information learned;
• Attitudes and Knowledge: the level of understanding of the key messages, perceived relevance of the message, the impact of the campaign’s key message on attitudes and opinions of the changes, and the extent to which it was perceived to affect them;
• Behavioural Uptake: an assessment of likely actions taken after viewing the campaign – likelihood to contact their insurer, visit the website, seek further information etc.;
• Insurance Intentions: the likely impact on intention to maintain, take up or cancel private health insurance.

Methodology

The study was quantitative in nature and was undertaken in two phases; a pre-read conducted prior to the advertising, and a post-read carried out after the main elements of the advertising had taken place.

Each measure involved an initial random sample of 600 interviews; 500 of these were conducted via telephone (Computer Assisted Telephone Interviewing), and 100 conducted online amongst households without a landline. This mixed methodology approach was used to ensure the sample included the growing proportion of households without a fixed line phone.

Broad demographic quotas were set within each component (phone and online) to ensure the sample was representative of the Australian population.

Findings

The Private Health Insurance Rebate

The results show that there was a reasonably high awareness that the Private Health Insurance Rebate is in existence, with two thirds (66%) of all respondents in the Post read indicating awareness, and between 81% and 84% of those in the Tiers doing likewise. Awareness was also around 80% amongst those with Private Health Insurance (78% in the Post read).

However, awareness of the details of the rebate was somewhat more limited, as under half of all respondents (49% in the Post read) indicated that they were aware of the rebate details. Awareness of the details was higher (between 62% and 70%) amongst those in Tiers, as well as amongst those with Private Health Insurance (62%).

In terms of the rebate changes, awareness was also relatively low in overall terms, but it did increase significantly between the Pre and Post reads (up 12 percentage points overall, from 30% in the Pre read to 42% in the Post read). While starting at a higher base, awareness of changes to the rebate also increased amongst the Tiers (up between 5 percentage points in the case of Tier 1 and 37 percentage points in the case of Tier 3, and resulting in between 64% and 79% awareness in the Post read).

In terms of the cited sources for this awareness, TV was main source nominated by all respondents who were aware of the changes (67% in the Post read), though attribution to TV as the source was lower amongst those in the Tiers (between 47% and 58%). Newspapers were another common awareness source (36% overall for the Post read, though between 48% and 57% amongst the Tiers) as well as insurers themselves (18% overall in the Post read, and between 30% and 40% amongst the Tiers).

There was also a solid understanding of when the reform changes were to take place (84% indicated awareness of this in the Post read), and that the rebate would now be income tested (77% overall, and between 89% and 93% amongst those in the Tiers).

The Medicare Levy Surcharge

Overall there was quite a high level of awareness of the Medicare Levy itself, with almost three quarters of all respondents (73% in the Post read) indicating that they knew of it. Awareness was over 80% amongst those in the Tiers, and increased significantly between the Pre and Post reads for Tier 1 (from 83% to 89%) and Tier 3 respondents (from 76% to 84%).

However, there was lower awareness of the Medicare Levy Surcharge, with only around half of all respondents (48% in the Post read) indicating that they knew of the Surcharge. Awareness of the Surcharge was again higher amongst those in the Tiers (between 65% and 76%, and increasing significantly for all tier levels between the Pre and Post reads).

There was also a relatively low awareness of the fact that the Medicare Levy Surcharge will be means tested, with only around one quarter of all respondents indicating that they were aware of this (23% in the Post read), and between 37% and 45% of those in the Tiers aware.

There was also evidence of an increased understanding of the income levels at which the Medicare Levy Surcharge will apply.

Advertising Awareness

Overall there was a reasonable level of awareness of advertising relating to the Private Health Insurance reforms (which were only measured in the Post read). In total, 42% of all respondents indicated that they had seen or heard advertising to do with the reforms, and this form of unprompted advertising awareness was higher amongst those in the Tiers (between 55% to 62%). A large proportion of this unprompted advertising awareness was attributed to TV (67%, though lower at between 47% and 58% amongst the Tiers). There was also a reasonably high proportion attributed to Newspapers (29% overall, and between 41% and 46% amongst the Tiers), direct mail from insurers (19% overall, and between 32% and 35% amongst the Tiers), letters from the ATO (3% overall, though between 11% and 13% amongst the Tiers) and the Internet (6% overall, and between 10% and 12% amongst the Tiers).

Prompted awareness of the individual aspects of the Department’s advertising was relatively low overall (though quite good for the mediums used), with 5% indicating awareness of the internet ads (between 6% and 8% amongst the Tiers), and 11% indicating awareness of the Newspaper advertising (between 18% and 23% amongst the Tiers). This resulted in 15% of all respondents indicating that they were aware at least one of the Department’s ads (between 22% and 24% amongst the Tiers).

However, relatively few of those aware of the advertising indicated that they took action as a result of seeing it. Those in the Tiers were more likely to have contacted their insurer (between 10% and 26%, compared to 8% of all aware of the ads) and to pre-pay their premium (between 3% and 14%, compared to 2% of all aware of the ads).

Attitudes Toward the Reform

More than a third of all respondents (36% in the Post read) felt that they would be impacted by the reform changes (between 71% and 72% amongst those in the Tiers). However, a relatively large proportion of respondents indicated that they would be ‘somewhat impacted’ (as opposed to ‘extremely’ or ‘very’ impacted).

There were mixed reactions to the reform changes overall, with 28% of all respondents indicated that they felt positively in relation to the changes, and the same proportion (28%) indicating that they felt negatively. Respondents in the Tiers were more negative in overall terms (between 46% and 50%), however, there was an increase in positive perceptions amongst this group (up between 8 percentage points and 12 percentage points from the Pre to Post read).

Intentions Relating to Maintaining or Taking up Private Health Insurance

Without necessarily knowing the details of the change, intentions to continue with existing Private Health Insurance coverage was quite high, with only 4% indicating that they were unlikely to keep their Private Health Insurance coverage at this stage, and 76% of those that had it indicating that they were likely to keep it (in the Post read). The remainder indicated that they were neither likely nor unlikely to continue with their coverage (10%), or were unsure what they would do (11%).

After informing respondents of the details of the changes relevant to their household situation, relatively few existing Private Health Insurance holders indicated that they were less likely to continue with it (5%). However, this intention not to continue was higher amongst those in the Tiers (12% for Tier 1; 27% for Tier 2; 24% for Tier 3).

Those without Private Health Insurance coverage generally indicated that the changes were unlikely to have much impact on their decision on whether or not to take it up. Without necessarily knowing the details specific to their circumstances only 8% indicated that they were more likely to take out insurance, and 12% indicated that they were less likely to do so (the remainder indicated that their decision was unchanged (or they were unsure). After being informed of the changes specific to their household situation there was virtually no change in the proportion more likely to take up insurance and there was an increase in the proportion less likely to do so (to 21% of all respondents without Private Health Insurance coverage). However, the majority still indicated that their decision was unchanged.

Overall Conclusions

Given that television advertising was not part of the communication mix used to inform the general public of the changes to the Private Health Insurance Rebate and Medicare Levy Surcharge the communication does appear to have had been successful in reaching the target audiences and informing them of the reforms.

However, the Department’s advertising was clearly acting in the context of, and in support of, other modes of communication – as there was evidence of communication from private health insurance companies, the ATO, as well as general talk/debate/discussion on TV and the media generally.

While it cannot be directly attributed to the advertising, there was also evidence that knowledge of the details of the changes improved between the Pre and Post reads.

While the bulk of those with existing Private Health Insurance indicated an intention to retain their insurance, a reasonable proportion of those in the Tier groups may at least consider their options (though it is likely that this intention was somewhat overstated).

In addition, there were also indications that the changes may result in some (though potentially only a small proportion overall) taking up Private Health Insurance when they did not have it previously.
Top of page