Do you know the difference between Australia’s private and public health systems? There are a lot of misconceptions out there about how our healthcare systems work, so it’s understandable if it’s a little confusing sometimes. We’ll take you through how to take full advantage of Australia’s health services by learning about just two things: Medicare and private health insurance.
There are some significant differences between public and private health in Australia. Where you’re treated, who treats you and how quickly you receive care for non-life-threatening issues often depends on whether you go through Medicare or 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 free or low-cost medical services and hospital care. Medicare covers a majority 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 added option to go privately. This means they can seek treatment without incurring significant out-of-pocket fees (compared to what those without private health insurance would have to pay if they were treated in a private hospital). This additional flexibility comes at the cost of ongoing premium payments.
Private healthcare also gives you a say in who you’re treated by and the option of having your own private room where available. You can usually avoid lengthy waiting periods 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 certain optometry services) that your 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:
While Australia’s healthcare system is one of the best in the world1, 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 covers (depending on your policy) |
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Medicare also reimburses 100% of your fees under MBS for trips to the GP and 85% of the MBS fee for specialists. The MBS lists 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.
What’s more, you may not pay anything if your medical 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 will be paid for by private 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 where you won’t be left out of pocket if these specialists treat you.
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:
Say you injured your leg while hiking, and you go see your GP, who informs you that your leg requires surgery. Your life isn’t in danger so it may not be considered medically urgent, no matter how much pain you’re in. In many instances, without private health insurance, you’ll be placed on a public waiting list for your procedure. Depending on how long the list is, you could be out of action for weeks or even months.
While every private health policy is different, taking out the right level of cover for this scenario could mean you avoid lengthy public hospital wait times. You would also have access to the other perks that come with being a private patient, such as getting a say in the specialist your GP refers you to.
There are pros and cons to consider when deciding between Medicare and private health insurance. Of course, your individual circumstances will be an important factor when it comes to deciding which path you want to take. Always consider these factors when weighing up your options.
Now that you understand the differences between Medicare and private health insurance, you can decide what works best for you. If you think private health is right for your circumstances, check out our free online comparison tool and browse a range of options.
1 Duckett, S., 2022. How does Australia’s health system rate internationally? This year it wins bronze. The Conversation.
