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Australia's health system is considered one of the best in the world, providing safe and affordable healthcare for its citizens. The funding for this system comes from a mix of public and private sources. The government funds most of the spending for medical services, subsidised medicines, and health research, while private health insurance covers the rest. Medicare, the country's universal healthcare scheme, is the main funding source for health services, providing affordable and accessible healthcare to all Australians. It is financed largely from general taxation revenue, including a Medicare levy based on a person's taxable income. Private health insurance plays an integral role in the system, with substantial private sector involvement in the delivery and financing of healthcare services and facilities.
| Characteristics | Values |
|---|---|
| Type of System | Shared public-private model underpinned by Medicare |
| Who Runs the System? | All levels of Australian government (federal, state, territory, and local) |
| Who Funds the System? | Government funding and private health insurance |
| Medicare Funding | Funded through national tax system, including a Medicare levy based on taxable income |
| Medicare Coverage | Australian and New Zealand citizens, permanent residents, and people from countries with reciprocal agreements |
| Medicare Benefits | Free or low-cost access to most health services, including GPs, specialists, and public hospitals |
| Private Health Insurance | Provides choice of doctor, hospital, and timing of procedure; covers costs not covered by Medicare, e.g., dental, optical, and physiotherapy |
| Private Health Insurance Coverage | Nearly half of the population (46%) had private hospital coverage in 2016, but coverage varies by socioeconomic status |
| Government Funding for Research | Funded most of the $5.5 billion spent on health research in 2016-17 |
| State and Territory Governments | Regulate and administer doctors, public hospitals, and ambulance services; fund community health services |
| Federal Minister for Health | Sets national health policy and may attach conditions to funding provided to state and territory governments |
| National Disability Insurance Scheme (NDIS) | Provides funding and support for individuals with disabilities and their family members |
| Cancer Screening and Immunisation | Funded and delivered by government through community-based services |
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What You'll Learn
Medicare: the national single-payer funding model
Australia's health system is jointly run by federal, state, and territory governments, and local bodies. It is considered one of the best in the world, providing safe and affordable healthcare for all Australians. Medicare is the national single-payer funding model that underpins the entire system.
Medicare is the main funding source for health services in Australia and has been the country's universal healthcare scheme since 1984. It is available to Australian and New Zealand citizens, permanent residents in Australia, and people from countries with reciprocal agreements. Medicare covers the cost of public hospital services and some or all of the costs of other health services, including GPs and medical specialists.
Medicare can be broken down into four distinct programs, each run by Services Australia: the Medicare Benefits Schedule (MBS), the National Health Reform Agreement (NHRA), the Pharmaceutical Benefits Schedule (PBS), and My Aged Care (MAC). The MBS subsidises a portion of each 'episode' of a health service, while the NHRA covers the cost of treatment in state and territory facilities, such as hospitals, by sharing the cost between the Australian Government and state and territory governments. The PBS assists with the costs of some medicines and therapies, and MAC provides contributions towards the cost of aged care services.
Medicare is funded through the national tax system, including a Medicare levy based on a person's taxable income. The federal government defines and funds MBS benefits, which cover hospital care and medical services, including mental health and maternity care. Medicare contributions to health services are only made for Australian citizens and permanent residents.
The Australian Government usually funds most of the spending for medical services and subsidised medicines. State and territory governments fund most of the spending for community health services and regulate and administer the major elements of healthcare, including doctors, public hospitals, and ambulance services.
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Government funding: federal, state, and territory
The Australian healthcare system is jointly run by all levels of Australian government – federal, state and territory, and local. The federal Minister for Health sets national health policy and may attach conditions to funding provided to state and territory governments. The funding model for healthcare in Australia has seen political polarisation, with governments being crucial in shaping national healthcare policy.
The Australian Government usually funds most of the spending for medical services and subsidised medicines. It also funds most of the money spent on health research in Australia. The federal government defines and funds MBS benefits, which cover hospital care and medical services, including mental health and maternity care. MBS also provides for limited optometry and children's dental care. The federal government also has regulatory oversight of quarantine, blood supply, pharmaceuticals, and therapeutic goods and appliances.
State and territory governments fund most of the spending for community health services. They operate public health facilities where eligible patients receive care free of charge. They regulate and administer the major elements of healthcare such as doctors, public hospitals and ambulance services. State governments operate their own departments of health and have delegated the management of hospitals to Local Hospital Networks. These hospital networks are responsible for working collaboratively with federally funded Primary Health Networks, which were established to improve the efficiency, effectiveness, and coordination of care.
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.
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Private health insurance
Lifetime Health Cover is another Australian Government initiative that lets individuals avoid paying higher premiums for private hospital cover. To be eligible, individuals need to take out hospital cover before turning 31 years old. If someone is over 31 and takes out hospital cover for the first time, they may pay higher premiums for the next 10 years.
If an individual is in Australia on a temporary visa, they should consider buying insurance to cover medical treatment costs. International students who haven't returned to Australia due to COVID-19 should contact their private health insurer about options for extending or suspending their cover.
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Funding for medicines
The federal government has regulatory oversight of pharmaceuticals and therapeutic goods and appliances. The Therapeutic Goods Administration (TGA) regulates medicines and medical devices. 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 health care. 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 Prudential Regulation Authority regulates private health insurance, and the Australian Competition and Consumer Commission promotes competition among private health insurers. Private health insurance can assist with meeting the costs of private services that are not covered by Medicare, such as dental, optical, physiotherapy, and podiatry. The government also offers a means-tested rebate to people who hold private health insurance and imposes the Medicare Levy Surcharge on higher-income earners who do not have an appropriate level of private patient hospital cover.
The Australian Digital Health Agency, established in July 2016, has national responsibility for the country's digital health strategy. An interoperable national e-health program based on personally controlled unique identifiers is now in operation. More than 6 million patients (one-quarter of Australians) and 13.4 million providers are currently registered. As of February 2019, all Australians have a My Health Record created for them unless they have opted out of the system, although individuals can choose to delete their record at any time. The record supports prescription information, medical notes, referrals, and diagnostic imaging reports.
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Funding for health research
Australia's health system is jointly run by federal, state, and territory governments, and it is considered one of the best in the world, providing safe and affordable healthcare for all Australians. The Australian Government usually funds most of the spending for medical services and subsidised medicines. It also funded most of the $5.5 billion spent on health research in 2016–2017.
The National Health and Medical Research Council (NHMRC) is Australia's leading expert on health and medical research. It develops evidence-based advice on priority health topics to prevent disease, improve health, and help states and territories achieve consistent standards. NHMRC funding supports research translation centres (RTCs) in driving the integration of evidence-based healthcare to deliver better health outcomes. NHMRC also sets ethical standards for research and provides health guidelines.
The Medical Research Future Fund (MRFF) is another source of funding for health research in Australia. It provides grants for medical research and innovation projects, such as the Australian Brain Cancer Mission, which aims to advance knowledge and develop new therapies for brain cancer.
The National Clinical Quality Registry Program (National CQR Program) is yet another funding initiative that aims to improve healthcare quality and ensure better health outcomes for Australian patients. It supports existing national CQRs to undertake short-term projects that build their capability and capacity.
The Australian Government also funds health research through the Department of Veterans' Affairs, supporting veterans' healthcare, and community-controlled Aboriginal and Torres Strait Islander primary healthcare organisations.
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Frequently asked questions
The main source of funding for medical care in Australia is the government, through the Medicare system. Medicare is available to Australian and New Zealand citizens, permanent residents, and people from countries with reciprocal agreements.
Medicare is Australia's universal health care scheme and has been in place since 1984. It is funded through the national tax system, including a Medicare levy based on a person's taxable income. Medicare covers the cost of public hospital services and some or all of the costs of other health services, such as GP visits and medical specialists.
Private health insurance is an integral component of the Australian healthcare system, with the private sector involved in delivering and financing health care services and facilities. Private health insurance provides added benefits such as choice of doctor and hospital, and reduced waiting times. It can also assist with meeting the costs of services not covered by Medicare, such as dental and optical.
In addition to government funding and private health insurance, there are other sources of funding for specific programs and services. For example, the National Disability Insurance Scheme (NDIS) provides funding and support for individuals with disabilities, while the Department of Veterans' Affairs funds healthcare for veterans.
