Lexi Webster
Australia's health system is jointly run by the federal, state, and territory governments, and is considered one of the best in the world. It provides safe and affordable healthcare for all Australians, with free public hospital care and subsidised private care. The system is funded by a combination of government funding and private health insurance. The government funding is through the Medicare scheme, which subsidises out-of-hospital medical treatment and funds free treatment in public hospitals. Medicare is available to Australian and New Zealand citizens, permanent residents in Australia, and people from countries with reciprocal agreements. It covers the cost of GP visits, hospital visits, and prescription medications. The Pharmaceutical Benefits Scheme (PBS) subsidises the cost of prescription medications, making them more affordable for Australians. Additionally, the government offers a means-tested rebate to those with private health insurance and imposes a Medicare Levy Surcharge on higher-income earners without appropriate private patient hospital cover.
| Characteristics | Values |
|---|---|
| Type of System | Single-payer, universal healthcare program |
| Who it covers | Australian citizens, permanent residents, New Zealand citizens, and people from countries with reciprocal agreements |
| Cost | Funded through taxes, including a 2% Medicare Levy on resident incomes |
| Ownership | Jointly run by federal, state and territory, and local governments |
| Safety Nets | Medicare Safety Net, PBS Safety Net, Extended Medicare Safety Net |
| Private Health Insurance | Approximately half of Australians have it; the federal government pays a rebate towards the premium |
| Dental Care | Not covered by Medicare except for basic dental care for children |
| Cancer Screenings | Free for certain populations |
| Immunizations | Free |
| Prescription Drugs | Capped costs; lower charges for low-income people |
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What You'll Learn
Medicare: a universal health insurance scheme
Australia has a single-payer, universal health insurance programme called Medicare. It has been in place since 1984 and is funded by the government through taxes. Residents pay 2% of their income to the Medicare Levy, which funds the public system. Medicare covers the cost of GP visits, hospital visits, and 85% of specialist costs. It also subsidises prescription medications to provide them at a discounted cost.
Medicare is available to Australian and New Zealand citizens, permanent residents in Australia, and people from countries with reciprocal agreements. It provides free public hospital care and subsidised private care. Medicare covers services such as consultations with general practitioners and specialists, and diagnostic tests and imaging.
There are three safety nets to help with out-of-pocket costs: The Original Medicare Safety Net, the Extended Medicare Safety Net, and the PBS Safety Net. The PBS Safety Net helps make medicines cheaper. Without it, medicines would be more expensive, sometimes costing tens of thousands of dollars more. The PBS lists brand name, generic, biologic, and biosimilar medicines. There are over 5,200 products on the PBS.
Medicare also covers some costs for physiotherapy, community nursing programs, and basic dental care for children. It does not cover dental care 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.
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Funding: government, private insurance, and individual contributions
Australia's health system is jointly run by all levels of Australian government and funded by a combination of government funding, private health insurance, and individual contributions.
The federal, state, and territory governments, as well as local governments, all play a role in funding and administering healthcare services. The National Health Funding Pool Administrator (the Administrator), through the National Health Funding Body (NHFB), oversees the National Health Funding Pool (NHFP), which is a lump-sum account of all government spending on healthcare. The Administrator uses information from the Independent Health and Aged Care Pricing Authority (IHACPA) to distribute those funds to the local health networks that operate public hospitals.
The Australian government funds healthcare through the Medicare scheme, which provides universal health coverage for Australian citizens, permanent residents, and eligible New Zealand citizens. Medicare covers the cost of medical appointments, hospital visits, prescription medications, and some preventive services like cancer screenings and immunizations. It also subsidizes out-of-hospital medical treatment, ensuring that most patients never pay medical fees at their appointments. Medicare is financed through taxes, with residents paying 2% of their income to the Medicare Levy.
Private health insurance is another source of funding for Australia's healthcare system. Approximately half of Australians purchase private insurance to access private hospital care, dental services, and other services not fully covered by Medicare. The government offers a means-tested rebate to encourage people to buy private insurance and charges a tax penalty on higher-income households that do not have private insurance. This rebate has been criticized for benefiting those who can already afford health insurance, potentially taking away funding from public hospitals.
Individuals also contribute to the funding of healthcare in Australia through out-of-pocket fees. While Medicare covers many services, there are still some costs that individuals must pay directly, such as for certain dental services and medications not covered by the Pharmaceutical Benefits Scheme (PBS). These out-of-pocket fees can be mitigated by safety nets like the Original Medicare Safety Net and the Extended Medicare Safety Net, which help reduce costs once individuals reach a certain threshold of out-of-pocket expenses.
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Safety nets: support for out-of-pocket costs
Australia's health system provides safe and affordable healthcare for all Australians. It is jointly run by all levels of Australian government – federal, state and territory, and local. Medicare, Australia's universal health care scheme, provides free public hospital care and substantial coverage for physician services and pharmaceuticals for Australian citizens, permanent residents, and people from countries with reciprocal agreements.
However, there are still out-of-pocket costs for Australians, especially for those who require frequent medical attention. To mitigate this, Australia has implemented safety nets to ensure that out-of-pocket expenses remain manageable.
The Medicare Benefits Schedule (MBS) is one such safety net. It helps individuals pay less for services once they reach a certain amount of out-of-pocket costs. This is particularly beneficial for those with high medical expenses in a given year.
The Pharmaceutical Benefits Scheme (PBS) is another safety net that makes medicines more affordable. Without the PBS, medicines would be significantly more expensive, with some costing tens of thousands of dollars more. The PBS offers a range of brand-name, generic, biologic, and biosimilar medicines, all of which have been independently assessed for safety and efficacy. If enrolled in Medicare, individuals only pay a portion of the cost of PBS medicines, with the Australian government subsidizing the rest. Additionally, individuals with concession cards or those who spend a substantial amount on medicine can receive further rebates through the PBS Safety Net.
Medicare Safety Nets also provide extra support for high out-of-pocket medical costs for out-of-hospital services. Once an individual incurs a certain amount of out-of-pocket expenses, Medicare gives a higher reimbursement for the rest of the year. This encourages individuals to continue seeking necessary medical attention without being overly burdened by costs.
There are two types of Medicare Safety Nets: the Original Medicare Safety Net (OMSN) and the Extended Medicare Safety Net (EMSN). The OMSN covers the MBS fee for all out-of-hospital Medicare services above an annual out-of-pocket threshold, which was AUD 576 for individuals in 2025. The EMSN covers 80% of out-of-pocket, out-of-hospital costs above the MBS fee, with different annual thresholds depending on an individual's circumstances. For instance, those with government-issued concession cards, such as low-income individuals, seniors, and caregivers, have a lower threshold of AUD 668, while the threshold for others is AUD 2,093.
These safety nets are essential in ensuring that Australians can access affordable healthcare without facing excessive financial burdens.
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Pharmaceuticals: subsidised through the PBS
Australia's health system is jointly run by all levels of the Australian government and is considered one of the best in the world. The Pharmaceutical Benefits Scheme (PBS) is a program of the Australian Government that subsidises prescription medication for Australian citizens, permanent residents, and international visitors covered by a reciprocal health care agreement. The PBS is part of the Australian Government's broader National Medicines Policy, which aims to meet medication and related service needs to achieve optimal health outcomes and economic objectives.
The PBS was established in 1948, initially providing free medicines for pensioners and a list of 139 'life-saving and disease-preventing' medicines at no charge for others in the community. Today, the PBS provides timely, reliable, and affordable access to necessary medicines for Australians. It is available to all Australian residents with a current Medicare card, and eligible international visitors from countries with a Reciprocal Health Care Agreement (RHCA) with Australia. These countries include the United Kingdom, Ireland, New Zealand, Malta, Italy, Sweden, the Netherlands, Finland, Norway, Belgium, and Slovenia.
The PBS Schedule lists all the medicines available to be dispensed to patients at a government-subsidised price. This schedule is updated monthly and is available online. The PBS covers brand name, generic, biologic, and biosimilar medicines, with over 5,200 products listed. All products are shown to be safe and effective before being sold in Australia, with independent medical experts advising on what is added to the PBS.
The PBS helps make medicines more affordable, with the Australian Government paying a portion of the cost of most PBS medicines. The price paid when filling a prescription is the dispensed price for the maximum quantity listed in the schedule. If the medicine costs less than the general patient co-payment, the cost of the prescription may vary between pharmacies as pharmacists can add additional charges. However, the patient cannot be charged more than the co-payment, except when a premium applies. The PBS limits the amounts of medication in a prescription and the number of repeat prescriptions before a patient must be re-examined by their doctor.
The PBS also includes safety nets to help keep costs down for those who spend a lot on medicine. Additionally, people with certain concession cards can receive further rebates and pay less for PBS medicines.
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Dental care: not covered by Medicare, but subsidised by states
Dental care is not covered by Medicare in Australia, except for some exceptions like the Teen Dental Plan. However, dental services are provided for free or subsidised by the various states and territories for specific population categories. The Australian Government works in collaboration with state and territory governments to fund and improve dental health services.
State and territory governments have schemes in place to help pay for dental costs, and about one-third of Australians are eligible for public dental care. In New South Wales, for instance, all children under 18 years of age can access free dental care at NSW Health public dental clinics. Some areas of NSW also offer free dental care for children through the Primary School Mobile Dental Program. In the Northern Territory, children under 18 who are still in school and not working full-time can receive free dental care. Additionally, children in the NT can access free mouthguards. Adults in the NT who live in remote areas and are more than 100km from their nearest health service can access emergency dental care at public dental clinics. In Queensland, adults can access public dental services if they are eligible for Medicare and receive benefits from a concession card.
The Child Dental Benefits Schedule (CDBS) is a government initiative that supports access to dental services for eligible children up to 17 years of age. The CDBS covers part or all of the costs, up to $1,132 over two calendar years, for basic dental services. This scheme aims to promote good oral health from an early age.
While Medicare does not typically cover dental care, there are safety nets in place to help with out-of-pocket costs. The Original Medicare Safety Net covers the MBS fee for out-of-hospital services above an annual threshold of AUD 461. The Extended Medicare Safety Net covers 80% of out-of-pocket costs above an annual threshold of AUD 668 for those with concession cards and AUD 2,093 for others. These safety nets help to ensure that dental care is more accessible and affordable for Australians.
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Frequently asked questions
No, healthcare in Australia is low-cost or free for citizens and permanent residents. For others, it depends on their status. Expatriates, including workers and students, pay for their own healthcare.
Funding for Australia's healthcare comes from a combination of government funding and private health insurance. The government funding is through the Medicare scheme, which subsidises out-of-hospital medical treatment and funds free treatment in public hospitals. Medicare is funded by taxes, with residents paying 2% of their income to the Medicare Levy.
Medicare covers the cost of GP visits, hospital visits, and 85% of specialist costs. It also subsidises prescription medications to provide them at a discounted cost. It covers some costs for physiotherapy, community nursing programs, and basic dental care for children.
The Medicare Safety Net helps with out-of-pocket costs. It ensures that you pay less for services once you reach a certain amount of out-of-pocket costs. There are two safety nets: the Original Medicare Safety Net and the Extended Medicare Safety Net.
Australia's healthcare system is a mix of service providers, including government and private sector providers. It is jointly run by federal, state, and territory governments. Medicare provides universal healthcare, while private health insurance is an option for those who can afford it and want to avoid waiting lists.
