Health care in Australia
This article is missing information about the National Disability Insurance Scheme. (March 2020)
Australia has a highly developed health care structure, though because of its vast size, services are not evenly distributed. Health care is delivered in Australia by both government and private companies which are often covered by Medicare. Health care in Australia is largely funded by the government at national, state and local governmental levels, as well as by private health insurance; but the cost of health care is also borne by not-for-profit organisations, with a significant cost being borne by individual patients or by charity. Some services are provided by volunteers, especially remote and mental health services.
The federal government-administered Medicare insurance scheme covers much of the cost of primary and allied health care services. The government provides the majority of spending (67%) through Medicare and other programs. Individuals contribute more than half of the non-government funding.
Medicare is a single-payer universal health care scheme that covers all Australian citizens and permanent residents, with other programs covering specific groups, such as veterans or Indigenous Australians, and various compulsory insurance schemes cover personal injury resulting from workplace or vehicle incidents. Medicare is funded by a Medicare levy, which currently is a 2% levy on residents’ taxable income over a certain income. Higher income earners pay an additional levy (called a Medicare Levy Surcharge) if they do not have private health insurance. Residents with certain medical conditions, foreign residents, some low-income earners, and those not eligible for Medicare benefits may apply for an exemption from paying the levy, and some low-income earners can apply for reductions to the levy.
In 1999, the Howard Government introduced the private health insurance rebate scheme, under which the government contributed up to 30% of the private health insurance premium of people covered by Medicare. Including these rebates, Medicare is the major component of the total Commonwealth health budget, taking up about 43% of the total. The program was estimated to cost $18.3 billion in 2007–08. In 2009 before means testing was introduced, the private health insurance rebate was estimated to cost $4 billion, around 20% of the total budget. The overall figure was projected to rise by almost 4% annually in real terms in 2007. In 2013–14 Medicare expenditure was $19 billion and expected to reach $23.6 billion in 2016/7. In 2017–18, total health spending was $185.4 billion, equating to $7,485 per person, an increase of 1.2%, which was lower than the decade average of 3.9%. The majority of health spending went on hospitals (40%) and primary health care (34%). Health spending accounted for 10% of overall economic activity.
Medical costs of visitors to Australia may be covered under a reciprocal health agreement or by travel insurance. People who are not covered by the Medicare scheme or wish to be covered for out-of-pocket medical or hospital costs can take out voluntary private health insurance, which is also subsidised by the federal government, called a “private health insurance rebate”. In addition to Medicare, there is a separate Pharmaceutical Benefits Scheme, funded by the federal government, which considerably subsidises a range of prescription medications.
The federal Minister for Health administers Australia's national health policy, and state and territory governments (through agencies like Queensland Health) administer elements of healthcare within their jurisdictions, such as the operation of public hospitals and ambulance services. The funding model for healthcare in Australia has seen political polarisation, with governments being crucial in shaping national healthcare policy.
In 2005/2006 Australia had (on average) 1 doctor per 322 people and 1 hospital bed per 244 people. At the 2011 Australian Census 70,200 medical practitioners (including doctors and specialist medical practitioners) and 257,200 nurses were recorded as currently working. In 2012, the Australian Institute of Health and Welfare recorded data showing a rate of 374 medical practitioners per 100,000 population. The same study reported a rate of 1,124 nurses and midwives per 100,000 population.
Along with many countries around the world, there is a shortage of health professionals in Australia despite growth in the health workforce in previous years. From the years 2006-2011 the health workforce employment rate increased by 22.1%, which is reflected in the increase from 956,150 to 1,167,633.
In a sample of 13 developed countries, Australia was eighth in its population weighted usage of medication in 14 classes in 2009 and also in 2013. The drugs studied were selected on the basis that the conditions treated had high incidence, prevalence and/or mortality, caused significant long-term morbidity and incurred high levels of expenditure and significant developments in prevention or treatment had been made in the last 10 years. The study noted considerable difficulties in cross-border comparison of medication use.
|% of GDP|
|Source: Australian Institute of Health and Welfare|
Australia has a universal health care system, primarily funded by Medicare, which is funded partly by a 2% Medicare levy (with exceptions for low-income earners), with any shortfall being met by the government from general revenue.
The amount paid by Medicare includes:
- patient health costs based on the Medicare Benefits Schedule. Typically, Medicare covers 100% of the schedule fee general practitioner, 85% of specialist and other services, if you are a private patient in a public or private hospital Medicare will cover 75% of the schedule fee. Both private and public patients treated in a public hospital will not incur out of pocket costs. In the private system aforementioned, Medicare will cover 75% of the schedule fee for services performed but as many medical professionals charge more than the Medicare fee schedules patients may incur out of pocket costs exceeding what is stipulated by the Medicare Benefits Schedule.
- patients may be entitled to other concessions or benefits
- patients may be entitled to further benefits once they have crossed a so-called safety net threshold, based on total health expenditure for the year.
Government expenditure on health care is about 67% of the total, below the OECD average of 72%.
The remainder of health costs (called out-of-pocket costs or the copayment) are paid by the patient, unless the provider of the service chooses to use bulk billing, charging only the scheduled fee, leaving the patient with no out of pocket costs. Where a particular service is not covered, such as dentistry and ambulance transport (excluding Queensland and Tasmania, where state government covers ambulance transport), patients must pay the full amount, unless they hold a Health Care card, which may entitle them to subsidised access. Services not covered by Medicare may be covered, in whole or in part, by health insurance.
Allied health services
Chronic Disease Management Plans allow for the subsidised medical treatment of chronic conditions by allied health providers through Medicare. Once a General Practitioner has drafted Team Care Arrangement(s) the services provided are facilitated through both the TCA and a referral to said Allied Health Provider. Providers covered by the scheme include: Aboriginal Health Workers, Audiologists, Chiropractors, Diabetes educators, Dietitians, Exercise physiologists, Occupational therapists, Osteopaths, Physiotherapists, Podiatrists and Speech pathologists. A separate scheme called Better Access provides a wide range of subsidised mental health care services to Australian residents.
Funding of the health system in Australia is a combination of government funding and private health insurance. Government funding is through the Medicare scheme, which subsidises out-of-hospital medical treatment and funds free treatment in a public hospital.
In Australia, health insurance is provided by a number of health insurance organizations, called health funds. Such insurance is optional, and covers the cost of treatment as a private patient in a hospital, and may provide “extras” cover.
- Hospital cover. Medicare covers the cost of treatment as a public patient at a public hospital for elective treatments as well as emergency or medically necessary treatments. A public patient is a person whose treatment is covered by Medicare, while a private patient is one whose treatment is covered by a health fund, with no Medicare contribution. There are a number of community objections to being a public patient in a public hospital, including the lack of choice of doctors or carers, long waiting lists, etc., and many people who take out health insurance do so to be treated as a private patient in either a public hospital or a private hospital. A private patient in a public hospital is entitled to a doctor of their choice, and cover for accommodation in a ward, and theatre fees for surgery. A person without insurance cover must resort to being a public patient at a public hospital or else carry the cost alone.
- Extras cover. Some non-medical or allied health services are not covered by Medicare or by standard health insurance, such as dentistry, medical devices and alternative medicine. A person may in addition or as an alternative take out “extras” cover for such treatments. What services are covered and how much is reimbursed and caps that apply vary between funds.
Health funds cannot differentiate in insurance premiums because of individual customers' age, gender, or other underlying risk factors.
The largest health fund with a 26.9% market share is Medibank. Medibank was set up to provide competition to private "for-profit" health funds. Although formerly government-owned, the fund operated as a government business enterprise from 2009 until it was privatised in 2014, operating as a fully commercialized business paying tax and dividends under the same regulatory regime as do all other registered private health funds. Medibank was privatised in 2014 and became for-profit. Australian health funds can be either 'for profit' including Bupa and nib; 'mutual' including Australian Unity; or 'non-profit' including GMHBA, HCF Health Insurance and CBHS Health Fund. Some have membership restricted to particular groups, some focus on specific regions – like HBF Health Fund which centres on Western Australia, but the majority have open membership. Membership to most of these funds is also accessible using a comparison websites or the decision assistance sites. These sites operate on a commission-basis agreement with their participating health funds and allow consumers to compare policies before joining online.
Most aspects of health insurance in Australia are regulated by the Private Health Insurance Act 2007. Complaints and reporting of the health industry is carried out by an independent government agency, the Private Health Insurance Ombudsman. The ombudsman publishes an annual report that outlines the number and nature of complaints per health fund compared to their market share.
The private health system in Australia operates on a "community rating" basis, whereby premiums do not vary solely because of a person's previous medical history, current state of health, or (generally speaking) their age (but see Lifetime Health Cover loading below). Balancing this are waiting periods, in particular for pre-existing conditions (usually referred to within the industry as PEA, which stands for "pre-existing ailment"). Funds are entitled to impose a waiting period of up to 12 months on benefits for any medical condition the signs and symptoms of which existed during the six months ending on the day the person first took out insurance. They are also entitled to impose a 12-month waiting period for benefits for treatment relating to an obstetric condition, and a 2-month waiting period for all other benefits when a person first takes out private insurance.
Funds have the discretion to reduce or remove such waiting periods in individual cases. They are also free not to impose them, to begin with, but this would place such a fund at risk of "adverse selection", attracting a disproportionate number of members from other funds, or from the pool of intending members who might otherwise have joined other funds. It would also attract people with existing medical conditions, who might not otherwise have taken out insurance at all because of the denial of benefits for 12 months due to the PEA Rule. The benefits paid out for these conditions would create pressure on premiums for all the fund's members, causing some to drop their membership, which would lead to further rises, and a vicious cycle would ensue.
Health funds are not permitted to discriminate between members in terms of premiums, benefits or membership on the basis of racial origin, religion, sex, sexual orientation, nature of employment, and leisure activities. Premiums for a fund's product that is sold in more than one state can vary from state to state, but not within the same state.
A number of incentives encourage people to take out and maintain private hospital insurance, including:
- Lifetime Health Cover loading: If a person has not taken out private hospital cover by 1 July after their 31st birthday, then when (and if) they do so after this time, their premiums must include a loading of 2% per annum. Thus, a person taking out private cover for the first time at age 40 will pay a 20% loading. The loading continues for 10 years. The loading applies only to premiums for hospital cover, not to ancillary (extras) cover.
- Medicare levy surcharge: People whose "income for MLS purposes" is greater than a specified amount and who do not have an "appropriate level of cover" pay the MLS in addition to the standard Medicare levy.
- Private health insurance rebate: The government subsidises the premiums for all health insurance cover, including hospital and ancillary (extras), by 10%, 20% or 30%. In May 2009, The Rudd Labor government announced that as of June 2010, the rebate would become means-tested and offered on a sliding scale.
Medicare levy surcharge
The government encourages individuals with income above a set level to privately insure. This is done by charging these (higher income) individuals a surcharge of 1% to 1.5% of income if they do not take out health insurance, and a means-tested rebate. This is to encourage individuals who are perceived as able to afford private insurance not to resort to the public health system, even though people with valid private health insurance may still elect to use the public system if they wish.
The Howard Coalition government introduced a Medicare levy surcharge (MLS) with effect from 1 July 1997, as an incentive for people on higher incomes to take out and maintain an appropriate level of private health insurance, as part of an effort to reduce demand pressure on public hospitals by encouraging people to have insurance cover for them to use private hospitals. Individuals can take out health insurance to cover out-of-pocket costs, with either a plan that covers just selected services, to a full coverage plan. In practice, a person with health insurance may still be left with out-of-pocket payments, as services in private hospitals often cost more than the insurance payment.
Initially, MLS of 1% applied to individuals and families who did not have an “appropriate level of cover“ and whose taxable income was above a prescribed threshold. In 1997, the MLS threshold was $90,000 for individuals or $180,000 for families. The threshold increased by $1,500 for each dependent child after the first in the family group.
Since 1 July 2012, the basis of the threshold has been "income for MLS purposes", which includes the individual's or family group's taxable income, fringe benefits, superannuation contributions and net investment losses.
In 2014, the surcharge rate was increased from 1% to 1.25% for those with MLS income over $105,000, from $97,000, and 1.5% for those on incomes over $140,000, from $130,000; and the threshold amounts are doubled for families.
The MLS is calculated at the surcharge rate on the whole of an individual's MLS income, and not just the amount above the MLS threshold. The minimum MLS amount is $900.
The requirement that a higher-income earner have an “appropriate level of private hospital cover” is satisfied under the government's new four-tier hospital insurance structure introduced in 2019 by a basic hospital insurance cover. Extras or add-on insurance alone does not qualify.
Private health insurance rebate
In 1999, the Howard Government introduced the private health insurance rebate scheme, under which the government contributed up to 30% of the private health insurance premium of people covered by Medicare. The program was estimated to cost $18.3 billion in 2007–08. In 2009, before means testing was introduced, the private health insurance rebate was estimated to cost $4 billion, around 20% of the total budget. The overall figure was projected to rise by almost 4% annually in real terms in 2007.
Since 2009, the rebate has been income- and age-tested. For a single person whose "income for MLS purposes" is less than $90,000 a year, or $180,000 for a family, the rebate is 25.1% (1 April 2019 to 31 March 2020), covering both hospital and extras cover. The rebate phases down over those amounts and cuts out at $140,000 for a single person, and double for a family. The rebate can be claimed as a premium reduction or as a refundable tax offset.
Debates regarding Medicare focus on the two-tier system and the role of private health insurance. Controversial issues include:
- whether people with means should take up private health insurance
- whether rebates/incentives should be given in terms of private health insurance
- people with health insurance still accessing the tax-payer funded public system rather than relying on their insurance
- people with private health insurance are not required to pay the Medicare Levy Surcharge.
Critics argue that the rebate is an unfair subsidy to those who can afford health insurance, claiming the money would be better spent on public hospitals where it would benefit everyone. Supporters argue that people must be encouraged into the private health care system, claiming the public system is not universally sustainable for the future. Similarly, even after the introduction of the rebate, some private health insurance companies have raised their premiums most years, to an extent negating the benefit of the rebate.
In 2013/14 Medicare expenditure was $19 billion and expected to reach $23.6 billion in 2016/17. During FY2014, approximately 47.2% of Australians had private health insurance with some form of hospital cover.
Lifetime Health Cover loading
To arrest the decline in the number of Australians maintaining private health insurance, the government introduced the Lifetime Health Cover loading, under which people who take out private hospital insurance later in life pay higher premiums, called a “loading”, compared to those who have held coverage since they were younger, and may also be subject to the Medicare levy surcharge.
Four tier system
From 1 April 2019, the federal government introduced a four tiered system of private hospital insurance, under which health funds will classify hospital policies into four tiers – basic, bronze, silver and gold. Minimum coverage requirements will apply to each tier, and insurers can also offer add-ons (called "plus options") for the basic, bronze and silver tiers. The system will be rolled out by 1 April 2020. Research conducted by consumer advocacy group Choice found silver plus options offered by some health funds cost more than rival funds’ gold options, while providing less coverage.
Programs and bodies
Services Australia (formerly the Department of Human Services) is responsible for administering Australia's universal health care program, Medicare. It is primarily concerned with the payment of operational staff (such as doctors, nurses and administrators) as well as the financing of public hospitals.
The Pharmaceutical Benefits Scheme provides subsidised medications to patients. The level of subsidy depends on the above-noted tests. Low-income earners may receive a card that entitles the holder to cheaper medicines under the PBS. A National Immunisation Program Schedule that provides many immunizations free of charge by the federal government, the Australian Organ Donor Register, a national register which registers those who elect to be organ donors. Registration is voluntary in Australia and is commonly recorded on a driver's license or proof of age card are also managed by the federal government.
The Therapeutic Goods Administration is the regulatory body for medicines and medical devices in Australia. At the borders, the Australian Quarantine and Inspection Service is responsible for maintaining a favorable health status by minimising risk from goods and people entering the country.
The Australian Institute of Health and Welfare (AIHW) is Australia's national agency for health and welfare statistics and information. Its biennial publication Australia's Health is a key national information resource in the area of health care. The Institute publishes over 140 reports each year on various aspects of Australia's health and welfare. The Food Standards Australia New Zealand and Australian Radiation Protection and Nuclear Safety Agency also play a role in protecting and improving the health of Australians.
Each state is responsible for the operation of public hospitals.
State based projects are regularly set up to target specific problems such as breast cancer screening programs, indigenous youth health programs or school dental health.
Queensland and Tasmanian state governments cover the cost of ambulance transport, including emergency ambulance services. Citizens of these states may, in some circumstances, pass the cost of ambulance services they receive in another state to their home state government, often through reciprocal health agreements. Outside of Queensland and Tasmania, the cost of ambulance services varies state-by-state, but is either a call out fee + cost/km or membership to that state's ambulance provider (Ambulance Victoria, etc.).
Lifeblood (a service run by the Australian Red Cross) collects blood, plasma and other essential donations and provides them to healthcare providers. Other health services such as medical imaging (MRI and so on) are often provided by private corporations, but patients can still claim from the government if they are covered by the Medicare Benefits Schedule. The National Health and Medical Research Council (NHMRC) funds competitive health and medical research, and develops statements on policy issues.
In a report published by HealthWorkforce Australia in March 2012, a shortage of nearly 3,000 doctors, over 100,000 nurses and more than 80,000 registered nurses was predicted in the year 2025. In the conclusion of the report, the HWA explains: "For nurses, given the size of the projected workforce shortages presented in this report, HWA will conduct an economic analysis to quantify the cost to allow an assessment of the relative affordability of the modelled scenarios to close the projected gap." Governments, Higher Education and Training, Professions and Employers are also identified as key players in the process of addressing future challenges.
Quality of care
In an international comparative study of the health care systems in six countries (Australia, Canada, Germany, New Zealand, the United Kingdom and the United States), found that "Australia ranks highest on healthy lives, scoring first or second on all of the indicators", although its overall ranking in the study was below the UK and Germany systems, tied with New Zealand's and above those of Canada and far above the U.S.
A global study of end of life care, conducted by the Economist Intelligence Unit, part of the group which publishes The Economist magazine, published the compared end of life care, gave the highest ratings to Australia and the UK out of the 40 countries studied, the two country's systems receiving a rating of 7.9 out of 10 in an analysis of access to services, quality of care and public awareness.
- around 250,000 avoidable hospital admissions each year because of medication problems
- 18% of diagnostic tests seem to be duplicated
- equity of access for those living in remote and rural Australia, particularly for indigenous people who live eight years less than residents in prosperous suburbs on the Eastern seaboard.
Australia's life expectancy is approximately 83 years, however 10 of these years are expected to include an increase in disability from a chronic disease. The increase in chronic diseases are a contributor of higher healthcare costs overall. Additionally the older generation shows an increased need for health services, and utilizes services frequently. From the years 1973 to 2013 the total number of people 65 or older tripled, increasing from 1.1 million to 3.3. As for the population of 85 and older there was an increase from 73,100 to 439,600. In order for the Australian health care system to handle the gradual population aging, government and administration must develop new policies and programs to accommodate the needs of changing demographics.
Rural and remote health care
Health care services, their availability and the health outcomes of those who live in rural and remote parts of Australia can differ greatly from metropolitan areas. In recent reports, the Australian Institute of Health and Welfare noted that "compared with those in Major Cities, people in regional and remote areas were less likely to report very good or excellent health", with life expectancy decreasing with increasing remoteness: "[c]ompared with Major Cities, the life expectancy in regional areas is 1–2 years lower and in remote areas is up to 7 years lower." It was also noted that Aboriginal Australian and Torres Strait Islander peoples experienced worse health than non-Indigenous Australians.
Electronic health records
The Australian Government has a policy to development a lifetime electronic health record for all its citizens. PCEHR—the Personally Controlled Electronic Health Record—is the major national EHR initiative in Australia, being delivered through territory, state, and federal governments. This electronic health record was initially deployed in July 2012, and is under active development and extension by the Australian Digital Health Agency. It is now called "My Health Record".
MediConnect is an earlier program that provides an electronic medication record to keep track of patient prescriptions and provide stakeholders with drug alerts to avoid errors in prescribing.
The Australian standards organisation, Standards Australia, and the Commonwealth Department of Health have created an electronic health website, "e-health" relating to information not only about Australia and what is currently going on about EHRs but also globally. Many key stakeholders contribute to the process of integrating EHRs within Australia. They range from each States Departments of Health to Universities around Australia and National E-Health Transition Authority to name a few. The name of PCEHR has changed to My Health Record since 2015 with opt-out model. Australian government budgeted around $485million for this system which potentially could save nearly 5,000 lives per year when functional state.
Security and privacy concerns have been raised. Originally, participation of the system was to opt-in by each person giving consent, however due to low participation rates, participation without consent become the default option and each person must opt-out to be excluded from the system. Each person had three months, or until October 2018 to opt-out. After October 2018, however, any user can delete their My Health Record, as well as restrict access to providers. In a life-threatening emergency, certain providers (like hospital emergency departments) can access a patient's My Health Record without being given explicit access. There are 13,000 health providers involved, from specialists and general practice doctors to pharmacies and hospitals.
Government subsidies have not kept up with increasing fees charged by medical professionals or the increasing cost of medicines. Data from the Australian Institute of Health and Welfare shows that out-of-pocket payments increased four-and-a-half times faster than government funding in 2014–15. This has led to large numbers of patients skipping treatment or medicine. Australian out of pocket health expenses are the third highest in the developed world.
Adoption of US-style preferred provider contracts
Since around 2010 Private Health Insurance (PHI) companies have introduced Preferred Provider contracts with healthcare providers. Whilst seemingly a win win scenario at the start the PHI companies now have a great deal of control over these providers. The introduction of 1- Differential rebating 2- HICAPS and access to members data 3- Patient steering have led to a high level of discontent amongst healthcare providers. The Senate enquiry into the value and affordability of private health insurance conducted 2017–18 led to a host of recommendations to Parliament to end these practices however as of the time of writing the minister for Greg Hunt has not taken any action. The ACCC have also looked at this matter without recommending any action be taken. The impact of these PHI policies has been overwhelmingly to place financial pressure on healthcare providers and reduce the choice of healthcare provider to the patient as rebate amounts differ depending on which provider the patient attends. This has led to a number bankruptcies in the Dental field.
Corporatisation of the dental industry
The Australian Dental Association [ADA] set quality and care standards for the industry, but provide no standardised pricing schedule for services and treatment. Large corporate dental practices, which have a wide footprint, often have check-up and service KPIs. As there is no standard pricing schedule, this can quite often leave patients with large expenses, and on occasion unnecessary treatment. It also leads to cases where identical treatment plans can have drastically different pricing. 
Increased scope of dental auxiliaries
Further relaxation of standards has led to training of dental auxiliaries in some dental procedures. This "dentistry by the back door" further disrupted the dental profession and led to an inevitable lowering of standards.
Other health care programs
- National Disability Insurance Scheme (NDIS) - Australia's national disability-related health care program, managed by the National Disability Insurance Agency
- Healthdirect Australia – Healthdirect provides access to quality health information and is funded by the Australian Government.
- DoctorConnect – To encourage overseas doctors to work in Australia.
- HealthcareLink – Australia's first healthcare and medical job board was created to eliminate the challenges faced by many Australian healthcare employers and employees in both sourcing quality candidates and finding suitable job opportunity.
- Better Access Scheme - To provide subsidised mental healthcare to Australian residents.
Pharmaceutical Benefits Scheme
The Pharmaceutical Benefits Scheme (PBS) subsidises certain prescribed pharmaceuticals. The PBS pre-dates Medicare, being established in 1948. It is generally considered a separate health policy to 'Medicare'. The PBS is now administered by the Department of Human Services Insurance, with input from a range of other bodies such as the Pharmaceutical Benefits Pricing Authority.
Dental care services
With some exceptions, such as the Teen Dental Plan, dental care is generally not covered by Medicare for all Australians, although the various States and Territories provide free or subsidised dental services to certain categories of the population, such as Health Care Card and Pensioner Concession Card holders. For example, Victoria provides subsidized dental care to concession card holders through a network of community clinics and the Royal Dental Hospital. There is also a voucher system available for general and emergency dental care where these can not be met by the public system. Vouchers allow patients to receive $799 worth of necessary general and/or emergency dental treatment at a time. The patient co-payment in these situations is generally $27 a visit up to a maximum of 4 visits at $108.
National Diabetes Services Scheme
The National Diabetes Services Scheme is funded by the Australian government to deliver diabetes-related products at affordable prices.
- Aged care in Australia
- Australian paradox
- Biosecurity in Australia
- Emergency medical services in Australia
- Euthanasia in Australia
- Home medicines review
- Medical education in Australia
- Nursing in Australia
- Paramedics in Australia
- Private Health Insurance Ombudsman
- Rural health care in Australia
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