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Private health insurance (PHI) is an important part of the Australian health system. During the introduction of the recent PHI reforms it was argued that, without the reforms, the public hospital system would undoubtedly collapse under the increased demand for public health services. The increase in PHI coverage might also have been expected to result in an increase in the revenue earned by public hospitals as a result of treating privately insured patients. However, the decline in numbers of privately insured patients using their PHI in public hospitals has continued, with adverse impacts on public hospital budgets in some states. This article addresses the complex interactions between various policy instruments and their impact on public hospitals, and reports the results of a study conducted at the Austin &amp; Repatriation Medical Centre (A&amp;RMC) which examined the reasons for privately insured patients electing not to use their insurance in public hospitals, and methods by which they might be overcome.

Public hospitals: who's looking after you? The difficulties in encouraging patients to use their private health insurance in public hospitals