Industry regulation, fund characteristics, and the efficiency of Australian private health insurers
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Worthington, Andrew C
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Abstract
We examine the technical and scale efficiency of 30 Australian private health insurers during the period 2010–2017 using data envelopment analysis (DEA). We calculate industry pure technical efficiency of 91.6 percent and scale efficiency of 95.1 percent. We also employ a two‐stage DEA truncated bootstrapped regression to model efficiency on fund and policy factors. The results show that premium restrictions and risk equalisation policies, and fund characteristics like size, but not for‐profit/not‐for‐profit status, market share and leverage, exert significant effects. The findings suggest substantial scope for regulatory reform and structural change in the Australian private health insurance industry as a means of improving its efficiency.
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Accounting and Finance
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© 2020 AFAANZ. This is the peer reviewed version of the following article: Industry regulation, fund characteristics, and the efficiency of Australian private health insurers, Accounting and Finance, 2020, which has been published in final form at https://doi.org/10.1111/acfi.12593. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving (hhttp://olabout.wiley.com/WileyCDA/Section/id-828039.html)
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Applied economics
Social Sciences
Business, Finance
Business & Economics
Private health insurance
Technical efficiency
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Lan, N; Worthington, AC, Industry regulation, fund characteristics, and the efficiency of Australian private health insurers, Accounting and Finance, 2020