The impacts of changes to private health insurance (PHI) policies introduced since 1999 — in particular the 30% PHI rebate and the Lifetime Health Cover — have been much debated. We present historical analyses of the impacts in terms of the proportion of Australians having hospital insurance cover under different PHI policies, by age, gender and socioeconomic status, and project these to 2010 using a new Private Health Insurance coverage model.

The combined effect of the 30% rebate and Lifetime Health Cover was to increase PHI membership from just over 30% in 1998 to just under 50% by the end of 2000, due mainly to more people taking out PHI cover from among the richest 20% of the population. Among the poorest 40% the impact was minimal. Model projections suggested that, had the new PHI policies not been introduced, then the proportion of Australians with PHI would have declined to around 20% by 2010, compared with 40% if the current arrangements remained in place. Also, analysis of 2001 survey data regarding choices to use a public or a private hospital indicated that higher income groups with or without PHI were the more likely to have used a private hospital than lower income groups. Among those with PHI, older people were more likely to have used a private hospital than younger ones.