To study the effectiveness of recent private health insurance (PHI) reforms, in particular the 30% rebate and Lifetime Health Cover, in terms of their stated aim of reducing the load on public hospitals.

Combines the use of two new projection models — “Private Health Insurance” (PHI) and “New South Wales Hospitals” that use public and private hospital inpatient data from 1996–97 to 1999–2000, and NSW population and private health insurance coverage statistics.

With the PHI reforms 15% fewer individuals would use public hospitals in 2010 than without these reforms (around 18% fewer among the 40% most affluent Australians and 9% among the 40% least affluent). Lower public hospital usage would mainly be due to Lifetime Health Cover.

If the PHI reforms remain in place, in 2010 a significant proportion of hospital use would be redirected away from the public sector and towards the private sector, with the shift being greatest among better-off Australians.