Effects of increased private health insurance on hospital utilisation in Victoria

The proportion of Victorians and Australians generally with private health insurance (PHI) increased from 31% in 1998 to 45% in 2001. We analysed a dataset containing all hospital separations throughout Victoria to determine whether changes in the level of private health insurance have had any impact on patterns of public and private hospital utilisation in Victoria. Total utilisation of private hospitals grew by 31% from 1998-99 to 2002-03, whereas utilisation of public hospitals increased by 18%. Total bed-days have increased in both private hospitals and public hospitals by 12%. The proportion of all separations at private hospitals has remained relatively stable between these 2 years, with 33% of all separations being private patients in private hospitals in 1998-99, increasing slightly to 35% by 2002-03. Analysis of a number of specific DRGs shows that patients with more severe disease are more likely to be seen at public hospitals; notably this trend has strengthened between 1998-99 and 2002-03. The number of patients treated in Victorian public hospitals has continued to grow, despite a rapid increase in the utilisation of private hospitals. Given the limited extent of the shift in caseload share between the two sectors, the effectiveness of the Commonwealth's subsidy of private health insurance as a mechanism to reduce pressure on the public sector needs to be carefully examined.