The purpose of this study is to analyse the impact of changes in Australian private health insurance coverage as seen in NSW public and private hospital birth profies, and identify trends in obstetric outcomes from 1997-2001. NSW Midwives Data Collection unit record data is analysed for women who gave birth to a live singleton baby of term gestation (> or = 37 weeks) and cephalic presentation in NSW hospitals during 1997- 2001. Use of private hospitals for childbirth has increased in conjunction with increases in private health insurance coverage. Although some obstetric interventions have increased for both public and private hospitals over time, clinical factors do not explain the large differences in birth interventions and outcomes between NSW public and private hospitals. Incentives to increase private health insurance coverage appear to be having a negative impact on childbirth, in terms of higher birth intervention and operative birth rates in NSW private hospitals.