Leslie Massey
Australia's healthcare system is considered one of the best in the world, providing safe, affordable, and quality healthcare for all Australians. The system is jointly run by all levels of Australian government – federal, state, and territory, and local. Medicare, Australia's universal healthcare scheme since 1984, is the main funding source for health services and is available to citizens, permanent residents, 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 GP visits, medications, and specialist care. The National Health Reform Agreement (NHRA) serves as a foundation for cooperation and financial agreements between the Australian Government and state and territory governments, while the National Health Funding Pool Administrator (the Administrator) oversees the distribution of government spending on healthcare. Australia's healthcare system continues to evolve, with a focus on addressing challenges such as resource allocation, workforce shortages, and managing chronic conditions.
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What You'll Learn
Medicare: Australia's universal healthcare scheme
Medicare has been Australia's universal healthcare scheme since 1984. It is the main funding source for health services in the country. Medicare is available to Australian citizens, permanent residents, and people from countries with reciprocal agreements, such as New Zealand.
Medicare covers all the costs of public hospital services and some or most of the costs of other health services. This includes services provided by general practitioners (GPs) and medical specialists, as well as some costs for physiotherapy, community nursing programs, and basic dental care for children.
The Pharmaceutical Benefits Scheme (PBS) is another important part of Medicare. The PBS makes some prescription medicines cheaper by subsidising the costs. The Medicare Benefits Schedule (MBS) is a list of all health services that the government subsidises. This list is kept up-to-date by a team of medical experts.
Medicare is funded by taxes, with residents paying 2% of their income to the Medicare Levy. This funding model ensures that most patients do not pay fees at their medical appointments and can claim reimbursements if they do. Medicare also subsidises 85% of specialist costs.
Medicare is 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)
- My Aged Care (MAC)
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National Health Reform Agreement (NHRA)
Australia's health system is jointly run by federal, state, and territory, and local governments. Medicare is the country's universal healthcare scheme and has been since 1984. It is available to Australian and New Zealand citizens, permanent residents in Australia, and people from countries with reciprocal agreements.
The National Health Reform Agreement (NHRA) is one of the four distinct programs that make up Medicare. 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 NHRA came into effect on 1 July 2020 and will remain operational until 30 June 2025. The Australian Government will contribute about $133.6 billion during this period for public hospital services. The NHRA will increase funding for public hospitals and set a new pathway for long-term reform of the health system. It introduces six long-term health reforms and opportunities for states to trial new funding models and care models. The six reforms outlined in Schedule C of the NHRA are:
- Empowering people through health literacy – person-centred health information and support will empower people to manage their own health well and engage effectively with health services.
- Prevention and wellbeing – to reduce the burden of long-term chronic conditions and improve people’s quality of life.
- Paying for value and outcomes – enabling new and flexible ways for governments to pay for health services.
- Joint planning and funding at a local level – improving the way health services are planned and delivered at the local level.
- Enhanced health data – integrating data to support better health outcomes and save lives.
- Nationally cohesive health technology assessment – improving health technology decisions will deliver safe, effective, and affordable care.
The NHRA reaffirms all governments' commitment to the Medicare principles, which underpin public hospital services. These principles ensure equitable access to public hospital services for all eligible persons that are free of charge as public patients, based on their clinical need and regardless of their geographic location.
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Funding: Government and private insurance
Australia's health system is jointly run by federal, state, and territory governments, with local governments also playing a role in the delivery of community health and preventive health programs. Funding for healthcare in Australia is a combination of government funding and private health insurance.
Government Funding
The federal Minister for Health sets national health policy and may attach conditions to funding provided to state and territory governments. Medicare is the main funding source for health services in Australia and the universal healthcare system. It is available to Australian citizens, permanent residents, and people from countries with reciprocal agreements, such as New Zealand, Belgium, and the United Kingdom. Medicare covers the cost of public hospital services, GP visits, and some or all of the costs of other health services, including specialists, physiotherapy, community nursing programs, and basic dental care for children.
The National Health Reform Agreement (NHRA) serves as a foundation for cooperation and financial agreements between the Australian Government and state and territory governments. The agreement aims to establish a unified, effective, fair, and sustainable healthcare system nationwide. The Australian Government contributes to state and territory public hospital funding through the NHRA.
The Pharmaceutical Benefits Scheme (PBS) is another important component of Medicare. It subsidises the cost of some prescription medications, making them more affordable for Australians. The Medicare Benefits Schedule (MBS) is a list of all health services that the government subsidises, which is kept up-to-date by a team of medical experts.
Private Health Insurance
Private health insurance in Australia offers advantages such as coverage for eyeglasses, dental costs, and ambulance care, which are not typically covered by the public system. It also provides individuals with choices outside of the public system, such as shorter waiting times and more modern and comfortable facilities. Private hospitals are owned and run by the private sector, including for-profit companies and non-profit organisations. They charge for their services, receiving income from patients' out-of-pocket expenses and the Australian Government through private health insurance rebates.
The Australian Prudential Regulation Authority regulates private health insurance, and the Australian Competition and Consumer Commission promotes competition among private health insurers. Expatriates living in Australia, including workers and students, typically pay for their healthcare using cash or private health insurance.
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Hospitals: Public and private
Australia's healthcare system is a mix of public and private organisations. Public hospitals are owned and run by the government, while private hospitals are owned by the private sector but licensed by the government. States are responsible for regulating private hospitals.
Public hospitals provide free or low-cost healthcare to Australian citizens and permanent residents, as well as people from countries with Reciprocal Health Care Agreements. Medicare covers all the costs of public hospital services. Public hospitals are funded by the government, but also receive funding from health insurance when patients choose to use their private cover in a public hospital. In 2021–22, state and territory governments spent the most on public hospitals, while non-government entities spent the most on private hospitals.
Private health insurance is not compulsory in Australia, but it is encouraged. With private health insurance, patients can choose to be treated as a public or private patient in a public or private hospital. As a private patient, one can choose their doctor, may have shorter wait times for planned surgery, and may be more likely to have a private room. Private patients in public hospitals are also covered by Medicare, which covers 75% of the fee on the Medicare Benefits Schedule for doctors' services in hospitals.
In 2022–23, there were 12.1 million hospitalisations in Australia, with public hospitals providing 59% and private hospitals providing 41%. The average length of stay for overnight hospitalisations with at least one hospital-acquired complication was 21.7 days in public hospitals and 17.1 days in private hospitals. Without a hospital-acquired complication, the average length of stay was 5.1 days in public hospitals and 4.7 days in private hospitals.
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The National Disability Insurance Scheme (NDIS)
The NDIS provides funding to eligible people with disabilities to gain access to medical management and social support to help them pursue their dreams, careers, and hobbies. It also provides funding to support their families and caregivers. The scheme also connects anyone with a disability to services in their community. The NDIS has two main entry points: Early Childhood Early Intervention for those under 6 and the general scheme for those between 6 and 65 years old.
In the first nine months of the scheme, 5,400 people with disabilities accessed an NDIS plan. By 2015, the number of people assisted rose to 20,000, with over 7,000 young disabled people living in aged care homes. The NDIS aims to get younger people with disabilities out of residential aged care settings. In 2017, the NDIS had an annual budget of $700 million for specialist disability accommodation, to be used to house 28,000 people with high support needs.
In 2024, legislation was passed to reform the NDIS to better manage the cost of the program and the efficacy of the supports provided. This legislation was introduced in response to concerns about fraud and the funding of low-value supports. The Australian Government is committed to making improvements to the NDIS for all participants and their families.
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Frequently asked questions
Australia's health care system is jointly run by all levels of Australian government – federal, state, and territory, and local. Medicare is the main funding source for health services in Australia and the universal health care 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 also covers some costs for physiotherapy, community nursing programs, and basic dental care for children.
Medicare is available to Australian citizens, permanent residents in Australia, and people from countries with reciprocal agreements, such as New Zealand, the UK, and several European countries.
The funding model for healthcare 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 public hospitals.
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