Australia spends 9.4% of its GDP on healthcare, according to the World Health Organisation’s latest data, which is slightly more than the UK (9.1%).[1] Does that mean that the Australian healthcare system is better? Well, the answer is really yes and no. The OECD’s Better Life Index ranked Australia 3rd healthiest of a list of 38 countries, while the UK came in at 14.[2] But it isn’t better in all regards. According to the Commonwealth Fund, Australia is much better for overall health outcomes, whilst it has a slightly worse reputation in its treatment of society’s poorer.

Australia’s approach to medicine is to mix state and private care. For every dollar spent on healthcare in Australia, 67 cents are paid by the government. This is via the state-run Medicare, which offers universal healthcare and is financed by a 2% Medicare tax levy. The other 33 cents are paid privately.

How does the Australian healthcare system work?

Public healthcare

Medicare is available to Australian citizens and residents. Under the Reciprocal Healthcare Agreement, Medicare is also available to British citizens. Like with an EHIC in Europe, however, Medicare is only guaranteed for British people in cases of emergency while in the country. There is no cover for pre-existing conditions, non-emergency requirements, pharmaceuticals when not a hospital in-patient and for ambulance services. Full Medicare eligibility is only possible for permanent Australian residents; so it is important to make sure you have adequate private health until then.

What does Medicare cover?

Although patients do pay for treatment at doctor’s surgeries, prescribed medicines and ambulances, at least 75% of will usually be paid back to you under Medicare. Patient pay the balance and can do so through a top-up insurance. Medicare fully covers hospital in-patient treatment. If you are looking for a private hospital you will still receive some cover from the state.

What you don’t get?

Medicare does not cover fees for dentistry, optometry and ambulance transport.

Private healthcare

Although costly, many Australians see the benefit of combining private funds with Medicare for faster treatment and, in some cases, better equipped facilities. The Australian government offers several incentives to encourage more people to use private insurance. Currently, the state subsidises premiums for all health insurance cover. A rebate of 30-40% is applied on all covers irrespective of income and wealth. To date, this has been a very popular policy. To further encourage the take-up of private cover, the state levies an additional 1% on high income earners who do not have adequate private hospital cover.

What plans are available?

There are two types of health plans – in-patient hospital policies and general cover. Broadly, in-patient hospital policies are a ‘budget’ plan and cover top up in-patient medical costs that aren’t covered by Medicare. If you are looking for general cover than  a  ‘comprehensive’ plan is your best option.

How to choose an insurance provider?

There are nearly 50 private insurance companies to choose from in the Australian healthcare system. The largest is Medibank and, even though it is state-owned, it falls under the same regulations as all other private insurers. Bupa Australia also has a large presence with around 15% of the market and over three million customers. To be eligible for the 30-40% government rebate your insurer has to be a registered fund. A good place to start is have a look on Moneytime, iSelect and HelpMeChoose.

What is the basis of insurance premiums?

Premiums for health insurance in Australia are based more on a ‘pool risk’ factor as opposed to the assumed risk of the policyholder. This means that insurers are not allowed to calculate premiums based on sex, age, policyholder’s jobs, previous medical history or current health, religion and sexual orientation.