Modelling dynamic choice: Private health insurance in Australia, CHERE Research Report 24
This study investigates the role of dynamic, discrete choice modelling in the context of private hospital insurance in Australia. This is achieved with the use of a unique panel data set of young Australian women ? The Australian Longitudinal Study on Women?s Health (or ALSWH). Very few (if any) private health insurance studies in Australia have used panel data due to the limited availability of longitudinal data sets. Yet panel data allows two important innovations ? it allows a researcher to control for unobserved heterogeneity across individuals and facilitates dynamic modelling that would otherwise require long time series data. Both these innovations are a feature of the dynamic, random effects probit model I propose here. Using the ALSWH data set I find that the choice to purchase private hospital insurance is strongly determined by income, access to hospitals and inertia in choice. I also find family formation, pregnancy, education, exercise levels and country of birth to be significant drivers of choice. Interestingly, I find little evidence of adverse selection in this sample of young women, as those more likely to be insured have higher self-reported health and few chronic conditions. Overall, I find the dynamic specification with state dependence effects provides an important insight into consumer behaviour, with young women exhibiting statistically and economically large amounts of inertia in choice. Women who were in cover in 1996 or 2000 were more likely to be covered in 2003. Conversely, women without cover were unlikely to move into cover despite a wide range of Australian Government incentives. As policy makers consider the future of private health care, researchers must consider dynamic studies as way to fully gauge consumer behaviour.
Can we design a market for competitive health insurance? CHERE Discussion Paper No 53
The topic of this paper is whether it is possible, given the current state of knowledge and technology, to design the appropriate market structure for managed competition. The next section reviews market failure in the private health insurance market. The subsequent two sections describe the principles of managed competition and its development and application in other countries. Then, the paper outlines recent developments in private health insurance policy in Australia, and proposals to apply managed competition in this country. The required design of the managed competition market place is described, and four major issues, risk adjustment, budget holding, consumer behaviour, and insurer behaviour, are identified. The final sections of the paper review the evidence on these four issues to determine if managed competition can be implemented, given current knowledge.
The Role of Democratic Politics in Transforming Moral Convictions into Law
Professor Michael Perry's new book, Morality, Politics, and Law, is an ambitious attempt to address the extent to which moral and religious beliefs in a pluralistic society, such as ours, can legitimately influence law. He departs from the common opinion in legal circles that moral beliefs are a matter of taste or "values," and defends an older conception that it is possible to attain moral "knowledge." ' He also departs from the "liberal political-philosophical project," 2 which claims that it is possible (and desirable) for governments to steer a neutral course between competing moral understandings of the good. This, he suggests, is an illusion, and a disguise for the imposition of a particular moral structure without opportunity for open deliberation and reflection. Professor Perry brings some refreshing common sense to these riddles of moral philosophy. His "naturalist" approach has obvious roots in Aristotle-not a bad place to begin thinking about ethics. His dismissal of