Home / Compare Health Insurance / Health Insurance Guides / Medicare vs private heal…
Do you know the difference between Australia’s private and public health systems? We’ll take you through how to take advantage of Australia’s health services by learning about just two things: Medicare and private health insurance.
Medicare is a public healthcare program run by the Australian Government. Established in 1984, its primary goal is to give Australian residents access to free or low-cost medical services and hospital care. Medicare covers a range of health care costs for hospital, medical and pharmaceutical expenses and entitles you to be treated publicly in a public hospital for treatments listed on the Medicare Benefits Schedule (MBS). However, you don’t get to choose when or where you’re treated and who performs your procedure.
Those with private health insurance can still elect to use the public health system for treatment. However, they also have the option to go privately. This means they can seek treatment in a private hospital with less out-of-pocket fees than those without an appropriate level of hospital cover.
Private healthcare also gives you a say in who you’re treated by (subject to availability) and the option of having your own private room where available. You can usually avoid lengthy public waiting lists and generally have more say in your treatment with private hospital insurance. There are also some health services and costs that aren’t covered by Medicare (such as physiotherapy and prescription glasses) that an extras health insurance policy may cover.
There are three types of policies you can take out through the private health system, either individually or together through a combined cover policy. These options are:
Whether private insurance is better than Medicare depends entirely on your circumstances. Medicare provides fantastic benefits to all Australians and treats many common issues. Meanwhile, private health insurance goes further by covering additional treatments, reducing wait times and giving you more control. Here are some of the benefits of private cover to consider when comparing Medicare and private health insurance:
While Australia’s healthcare system is one of the best in the world,1 Medicare doesn’t cover all treatments and you’re often subject to lengthy hospital wait times. This is where private health insurance may be beneficial.
The table below details some medical costs Medicare will and won’t cover. Depending on the private health policy you take out, your insurer may cover all or part of the cost for services Medicare doesn’t pay for.
Expenses Medicare covers | What private health insurance covers (depending on your policy) |
---|---|
> Consultation fees for certain doctors and specialist services (e.g. X-rays and pathology tests) > Some surgical procedures performed by approved dentists > Eye tests performed by optometrists > Medically necessary surgery and treatment in hospital (subject to public waiting lists) > Prescription medicine listed under the Pharmaceutical Benefits Scheme (PBS). |
> Ambulance services if you aren’t otherwise entitled to cover through your state or territory government > Some private hospital fees (like accommodation or surgery costs). Surgery costs will be covered up to the MBS. > Most dental examinations and treatments > Payments for glasses and contact lenses (extras) > Hearing aids and associated appliances (extras) > Most physiotherapy, chiropractic, psychology and podiatry services. |
Medicare also reimburses 100% of the MBS fee for trips to the GP and 85% for specialists (private health insurance does not pay a benefit towards trips to the GP and outpatient specialist appointments). The MBS is a list of costs for medical treatment that the government deems a fair price for each service listed; however, medical professionals, doctors and clinics can set their fees above the listed MBS price. When the price of a treatment is higher than the MBS fee, you may still have out-of-pocket costs even if you have private health insurance.
What’s more, you may not pay anything if your healthcare provider bulk bills.
If you choose to be treated as a private patient, Medicare still plays a significant role in your procedure. Medicare will cover 75% of the MBS fee for any treatment listed on the MBS, while your insurer will pay the remaining 25%.
You may ask, “If Medicare covers such a large percentage of healthcare costs, what’s the point of getting health insurance?” The answer is simple: while Medicare does offer many benefits, it doesn’t cover everything.
In a private hospital, you may still need to pay for:
Depending on your level of cover, some or all of these costs could be paid for by private hospital insurance. However, you may still pay out-of-pocket if the hospital or doctor charges more than the MBS fee for their services; this is known as the gap payment. However, some doctors have gap agreements with insurers. This is where the treating doctors agree to only charge the amount Medicare and your health fund will pay (no gap), or a set amount above what Medicare and your health fund will pay (known gap). It’s a good idea to speak with your doctors and health fund prior to a hospital admission to understand if they participate in any no gap or known gap agreements.
As the Executive General Manager of Health, Life and Energy, Steven Spicer is a strong believer in the benefits of private cover and knows just how valuable the peace of mind that comes with cover can be. He is passionate about demystifying the health insurance industry and advocates for the benefits of comparison when it comes to saving money on your premiums.
1 Australian Institute of Health and Welfare, International health data comparisons. Updated July 2022.