Analysis of Government Failure

The results of the Analysis of Government failure within this comparative institutional assessment are shown in the table below:



Area of policy interest, and objectives of Government action
  • PHIIS established by Australian government in response to concerns about the long-term viability of the private health insurance system, and the added strain this may place on public system
Information and Co-ordination problems PHIIS was to address
  • Declining rates of coverage
  • Problems with adverse selection
  • Rising insurance premiums
Undue political interference and provider capture
  • Widespread public support in Australia for PHIIS, means that it is politically difficult to retreat 30% subsidy
  • NZ: potential for lobbying power of industry and public support to prevent retrenchment of a potentially ineffective policy
Perverse incentives and unintended outcomes
  • Extreme proliferation of different policies in Australia to get around certain regulations
  • NZ: potential for increased uptake of publicly-subsidised services, where out-of-pocket expenditures are covered by insurance policy
On-going government involvement
  • 30% rebate not as effective as policy makers had hoped
  • Other tools have added greater value
  • Potential for industry to self-regulate to reduce government involvement