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Anti‐insurance: Analysing the Health Insurance System in Australia
Author(s) -
Gans Joshua S.,
King Stephen P.
Publication year - 2003
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.2003.00146.x
Subject(s) - group insurance , casualty insurance , actuarial science , key person insurance , self insurance , health insurance , welfare , general insurance , business , insurance policy , income protection insurance , social insurance , auto insurance risk selection , public economics , health risk , risk pool , private insurance , economics , environmental health , health care , economic growth , medicine , market economy
This paper develops a model to analyse the Australian health insurance system when individuals differ in their health risk and this risk is private information. In Australia private insurance both duplicates and supplements public insurance. We show that, absent any other interventions, this results in implicit transfers of wealth from those most at risk of adverse health to those least at risk. At the social level, these transfers represent a mean preserving spread of income, creating social risk and lowering welfare – what we call anti‐insurance. The recently introduced rebate on private health insurance can improve welfare by alleviating anti‐insurance.