Private health insurance (PHI) has been a significant social and policy issue that has received extensive coverage within the Australian media [4] primarily due to its cost [5] and complexity to comprehend [6]. Despite Australia’s publicly-funded universal healthcare scheme, Medicare, which all Australians have access to and most taxpayers contribute 2% of their taxable income to fund, PHI still remains an important component of healthcare funding [1]. According to official statistics released in March 2020, 43.80% of the Australian population was voluntarily enrolled in PHI [7]. However, there has been a downward trend. For example, between December 2019 and March 2020 there has been a 0.2% decrease in enrolment, with the largest net decrease (11,176 people) in the age group between 25 and 29 [7]. This presents a growing concern for both the Australian government and healthcare sector as young adults are critical to the PHI system because they improve the risk pool [8]. The departure of healthy young adults from the PHI system has the power to impact the wider Australian health system as it increases the premiums paid by older people for PHI and puts pressure back onto the public health system [9].
Existing research on PHI in Australia has been driven from an economic perspective, focusing on the effectiveness of government initiatives to incentivise and reduce barriers to enrolment in PHI [1, 10–13]. It is compulsory for most Australian taxpayers to pay an annual Medicare Levy to fund the public health system and single people earning above A$90,000 or families earning above A$180,000 have to pay an additional Medicare Levy Surcharge (MLS) if they do not have PHI. In addition to this MLS, individuals aged 31 or above have to pay a 2% Lifetime Health Cover loading on their health insurance premiums for every year they go without hospital cover [12]. Further incentive to enrol in PHI by the Australian government is offered through age-based rebates on PHI premiums (ranging from approximately 8–33%) to encourage early enrolment in PHI [11]. Despite these economic levers, the acceleration of dropouts in PHI (from 47.4% in 2015 to 43.8% in 2020) suggests that economics alone does not explain the full story of why individuals choose to enrol in PHI [7]. As such, there is a need to examine wider motivational factors and barriers to enrolling in and maintaining PHI [13].
With this backdrop, this study proposes to examine the factors that affect young adults’ attitudes and behavioural intentions toward PHI. The purpose of this study is three-fold: (1) to explore the attitudinal and motivational differences between young adults (aged 18–30 years) with and without PHI; (2) to identify the factors that motivate those without PHI to enrol in PHI; and (3) to examine the factors that motivate those with PHI to cancel PHI. Specifically, this study will compare the two groups (i.e., those with and those without PHI) in terms of their health consciousness, perceptual variables (e.g., problem recognition, constraint recognition, involvement recognition, past experiences), trust, perceived value, attitudes and intention to enrol/cancel. The examination of the dynamics of these factors will provide a more holistic framework that seeks to explain variations in attitudes and behavioural intentions toward PHI.
Factors affecting PHI choices in Australia
Research on PHI in Australia to date has focussed on two perspectives: (i) policy levers, and (ii) individual risk, and (iii) promotion of PHI. First, on the policy side, there has been a series of PHI policy reforms that sought to increase uptake in PHI as referenced above. A 2007 study found the Medicare Levy Surcharge, premium rebates and Lifetime Health Cover Loading all had a positive effect on the uptake of PHI, but the magnitude of the effects was not easily untangled [12]. Conversely, another study found that these reforms only benefited those who would have purchased PHI regardless of policy levers rather than encouraging those who did not intend to enrol [11].
Second, an individuals’ decision to purchase PHI has been examined from a risk perspective. Given that health insurers are prohibited from adjusting premiums based on consumer risk (e.g., pre-existing conditions), a positive correlation between insurance uptake and expected claims can be expected, however data has shown that those with PHI actually spent fewer nights in hospitals [14]. Even though it was expected that individuals with poor health were more likely to purchase PHI due to their anticipation of the need of medical care, they were outnumbered by healthier consumers who had higher risk aversion [14].
Third, studies have begun to explore how organisations promoted PHI. A study of insurers’ websites found that health insurers promoted choice and healthy lifestyles as the benefits of PHI, suggesting this positioning was an effective marketing strategy [15]. Furthermore, a study of Australian health consumers found that consumers’ choices are not grounded in their individual experiences of the system but their futuristic expectations of benefit and whom they trust to help them minimise risk [16]. In the United States, factors including perceived health status, perceived value, perceived need, socioeconomic status and ethnicity significantly affected whether U.S. young adults would enrol in PHI and that there was a combination of factors that affected their choices [17].
These few studies begin to suggest that decision-making for PHI is affected by a number of factors, and that those with and without PHI may not use the same decision-making models. As such, this study seeks to contribute to knowledge on this topic by reviewing motivational factors that may explain young adults’ attitudes and behavioural intentions toward PHI. This study will focus on young adults aged 18-30 in Australia because of their importance in balancing the risk pool [8].
Despite changes in policies that seek to encourage Australians into the PHI system and remove pressure on the public system and an expectation that due to risk aversion consumers would be motivated to maximise PHI utility [15], many Australians still choose to ‘ditch’ or refuse to enrol in PHI. One recent study has begun to uncover that Australians express a range of reasons for not having PHI such as a perception that healthcare is the responsibility of the government, having no or low trust in private healthcare, and seeing no difference between public and private healthcare services [1]. This environment surrounding the PHI system points to the need to explore a new question. Instead of focusing on the economic reasons for why people, especially young people, do not take out PHI, we need to examine the motivational factors and barriers that explain young adults’ attitudes and behavioural intentions toward PHI amongst those who have and who do not have PHI.
Health consciousness
Individuals who have high health consciousness have been found to take greater responsibility for protecting their own health by complying with health-related recommendations [18], and adopting healthy behaviours [19, 20] such as maintaining a healthy diet [21, 22] and getting regular exercise [23]. Existing literature in health communication has found that individuals with higher levels of health consciousness (i.e., the extent to which health concerns are integrated into a person’s daily activities) are more likely to display intentions to search for health-related information [24, 25]. These studies have also shown that these individuals actively seek out health information and use more information sources than those who are not health-oriented [19]. Given the focus of current and future-oriented health behaviours noted in studies around health consciousness, this study proposed the following hypothesis:
H1: Australian young adults with PHI have significantly higher health consciousness than those without PHI.
Perceptual factors
Existing research on PHI has examined individuals’ choices as being confined by policies, their individual evaluations of risk [16] and the maximisation of utility [26]. However these perspectives are based on decision-making theories that assume perfect and equal knowledge amongst individuals who maximise utility/satisfaction.
However, communication theories [26–28] criticise the assumption of perfect knowledge, arguing that knowledge and information is neither free nor given in decision situations. Instead these communication-based theories proport that when confronting a problem, individuals become engaged in communicative behaviours (e.g., information acquisition and transmission) that help them obtain the information and knowledge in order to make a decision. In the context of health, four variables in the Situational Theory of Problem Solving - problem recognition, constraint recognition, involvement recognition and referent criterion - have been used to predict individuals’ engagement in health-related communicative behaviours [29–33]. The theory presents the argument that when individuals perceive the presence of a problem (e.g., the need for PHI), feel connected to the problem, and see few obstacles in solving the problem, they will be engaged in behaviours to solve the problem. It has been previously used to guide understanding on motivations to act on health issues such as weight loss and organ donation [28, 34, 35].
Building on the Situational Theory of Problem Solving [28], this study proposes to examine four variables as possible perceptual factors that differentiate young adults with and without PHI. First, problem recognition is defined as an individual’s perceptions of a discrepancy between the expected state and the experiential state (e.g., perceptions of lack of PHI as a problem). Second, involvement recognition is defined as the connection between oneself and the problem (e.g., one’s being personally affected by not having PHI). Third, constraint recognition refers to the perceptions of obstacles that limit one’s ability to solve the problem (e.g., the lack of resources to solve the problem). Lastly, referent criterion, generally referred to as past experiences that guide one’s approaches to solving the problem, is operationalised as one’s past experiences with PHI. Accordingly, the following hypothesis is proposed:
H2: Australian young adults with and without PHI are statistically different in terms of their (a) problem recognition, (b) constraint recognition, (c) involvement recognition and (d) past experiences with PHI.
Perceived value
Previous literature indicates that people are more likely to invest in health insurance if they perceive the benefits exceed the out-of-pocket costs [17]. A U.S. study found that the rising cost of insurance premiums is a major reason why so many young adults do not purchase PHI [17]. This sentiment can be reflected within Australia, with significant rises in premium costs [36]. While cost is not an element that communicators are able to change, the concept of perceived value is worth addressing. Currently it can be argued that many young adults’ perceived value of PHI does not outweigh its cost. In support of this, the U.S. study found that while individuals’ perception of health insurance's value (worth or not worth the cost) was not significantly correlated with the likelihood of having health insurance in their 2005 sample, perceived value was a statistically significant variable in 2008 [17]. Thus, the following hypothesis is proposed:
H3: Australian young adults with PHI report higher perceived value of PHI than those without PHI.
Trust
Trust has been the subject of many empirical studies and has been found to be an important factor in cultivating long-term, positive relationships between an organisation and its strategic stakeholders [37], enhancing customer loyalty [38], gaining positive word-of-mouth recommendations [39] and increasing purchase intention [40]. In the PHI context, an exploratory, qualitative study investigated the motivations for the uptake of PHI in young Australians [16]. It noted that reasons for health insurance decision-making did not reflect a “rational or calculative” approach (p. 399). The authors found that young adults rely less on evidence (such as their PHI contract or previous experience) than they do on trust in the system [16]. As a result the paper suggests people do not calculate the possibilities of ill health, or weigh up the costs and benefits of private and public provision of health care [16], instead they rely on more of an emotive response to purchasing PHI. Building on the findings of this study, we intend to incorporate trust in PHI providers as a key element of this study to determine its potential impact on PHI decision making with the following hypothesis:
H4: Australian young adults with PHI have higher trust in insurance companies than those without PHI.
Attitude
While the perceptual factors (i.e., problem recognition, constraint recognition, involvement recognition, past experiences), perceived value and trust have been identified as possible factors that characterise the differences between those with and without PHI in previous research, this study follows other behaviour-related literature in positing the dynamics amongst perceptions, attitudes and behavioural intentions/behaviours [41]. The Theory of Planned Behaviour suggests that there are relations among beliefs, attitudes, intentions, and behaviours [42]. Attitude is defined as “the degree to which a person has a favourable or unfavourable evaluation or appraisal of the behaviour in question” (p. 188), and the formation of attitude is dependent upon perceptual variables and beliefs which are associated with the intentions of performing the behaviours [43]. Thus, this study proposes that those with and without PHI would differ in terms of their attitudes and that the identified variables would affect individuals’ attitudes toward PHI.
H5: Australian young adults with PHI have more positive attitude toward PHI than those without.
H6: (a) Problem recognition, (b) constraint recognition, (c) involvement recognition, (d) perceived value, and (e) trust have statistically significant relationships with attitudes toward PHI.
Intention to enrol/cancel PHI
Following the models which explain the dynamics amongst perceptions, attitudes and behavioural intentions, this study posits that there are relationships between past experiences and behavioural intentions to cancel (for those with PHI) and to enrol (for those without PHI). This proposition is based on theory that suggests positive attitudes toward a behaviour strengthens an individual’s intention to perform the behaviour under consideration [42]. Accordingly this study proposes that attitude will have a positive effect on intention to enrol (for those without PHI) and a negative effect on intention to cancel (for those with PHI). The following hypotheses are proposed.
H7: Past experiences are (a) positively related to intention to enrol (for those without PHI) and (b) negatively related to intention to cancel (for those with PHI).
H8: Attitude is (a) positively related to intention to enrol (for those without PHI) and (b) negatively related to intention to cancel (for those with PHI).
Figure A shows a proposed model with Hypotheses 6-8.