Australian Government - Department of Foreign Affairs and Trade

Advancing the interests of Australia and Australians internationally

Australian Government - Department of Foreign Affairs and Trade

Advancing the interests of Australia and Australians internationally

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Health care in Australia

The Australian Government, through the Department of Health and Ageing, sets national health policies and subsidises health services provided by state and territory governments and the private sector. Total expenditure on health by all levels of government and the private sector accounts for about 9.8 per cent of Australia’s gross domestic product.

Like other countries, Australia faces growing pressures on health funding because of technological changes, increasing patient expectations and, to a lesser extent, an ageing population.

The Australian Government funds universal medical services and pharmaceuticals and gives financial assistance to public hospitals, residential aged care facilities and home and community care for the aged. It is also the major source of funds for health research and provides support for training health professionals and financial assistance to tertiary students.

State and territory governments provide a variety of direct health services, including most acute and psychiatric hospital services. State and territory governments also provide community and public health services, including school health, dental health, maternal and child health, occupational health, disease control activities and a variety of health inspection functions.

The main health responsibilities of local government are in environmental control such as garbage disposal, clean water and health inspections. Local governments also provide home care and personal preventive services, such as immunisation.

Public sector health financing

In 1984 a comprehensive health care system, Medicare, was introduced. Medicare facilitates access by all eligible Australian residents to free or low-cost medical, optometric and public hospital care, while leaving them free to choose private health services.

Individuals’ financial contributions to the public health care system are based on their income and are made through a taxation levy known as the Medicare levy.

Australia’s public hospital system is jointly funded by the Australian Government and state and territory governments and is administered by state and territory health departments.

People admitted to public hospitals as public (Medicare) patients receive treatment by doctors and specialists nominated by the hospital. They are not charged for care and treatment or after-care by the treating doctor.

Private patients in public or private hospitals can choose the doctor who treats them. Medicare pays 75 per cent of the Medicare schedule fee for services and procedures provided by the treating doctor. For patients who have private health insurance, some or all of the outstanding balance may be covered. Private patients are charged for hospital accommodation and items such as theatre fees and medicine. These costs may also be covered by private health insurance but are not covered by Medicare.

Medicare Australia is the agency within the Department of Human Services responsible for processing and paying Medicare benefits for approved services. Medicare Australia also pays pharmaceutical benefits under the Pharmaceutical Benefits Scheme, which subsidises an agreed list of prescription drugs.

For both medical and pharmaceutical services, safety net arrangements exist to make sure patients who need a high level of treatment or medication during a financial year do not incur significant out-of-pocket expenses. Out-of-pocket costs are the difference between the Medicare benefit and what the patient is actually charged.

The Australian Government also provides medical, pharmaceutical and hospital services for veterans, war widows and their eligible dependants under legislation administered by the Department of Veterans’ Affairs.

The Australian Government provides about two-thirds (67 per cent) of public sector expenditure on health, and state, territory and local governments provide the rest.

Non-government health sector financing

Private hospitals provide about one-third of all hospital beds in Australia. Private medical practitioners provide most out-of-hospital medical services and, along with salaried doctors, perform a large proportion of hospital services. Private practitioners provide most dental services and allied health services such as physiotherapy.

About half of all Australians have private health insurance. Forty-three per cent of the population (or nine million people) are covered by hospital insurance for treatment as private patients in both public and private hospitals. Forty-three per cent of the population (or nine million people) have ancillary cover for non-medical services provided out of hospital, such as physiotherapy, dental treatment and the purchase of spectacles.

The Australian Government is seeking to achieve a better balance between public and private sector involvement in health care by encouraging people to take out private health insurance, while it also preserves Medicare as the universal safety net. The Australian Government helps to make private health insurance more affordable by offering a 30 per cent rebate (and higher rebates for older Australians) for the cost of private health insurance premiums. Safety nets for medical services and pharmaceuticals assist people facing high annual out-of-pocket health costs. An Extended Medicare Safety Net, introduced in 2004, provides further assistance by meeting 80 per cent of the out-of-pocket cost of medical services provided out of hospital once an annual threshold is reached.

Private sector expenditure on health accounts for about one-third of total health expenditure. The majority (around 60 per cent) of this is individuals’ out-of-pocket expenses and the remainder is expenditure by private health and other insurers such as workers’ compensation and third-party motor vehicle insurers.

Working with the world

International collaboration allows Australia and other countries to learn from combined experience and enables Australia to contribute to international and regional health policies. Australia works with health ministries in other countries, international organisations, and health and medical institutes on a range of international health issues. Cooperation with these bodies also helps Australia to set international health standards and support health promotion.

Australia places particular emphasis on the Asia–Pacific region, collaborating with ministries of health in China, Indonesia, Vietnam and Pacific Island countries. Australia also works with regional international organisations such as the World Health Organization, Asia–Pacific Economic Cooperation and the Organisation for Economic Co-operation and Development on issues that affect the region’s and Australia’s public health. Issues include the prevention and control of emerging and re-emerging infectious disease, pandemic preparedness, health system strengthening, and health and medical research and trade.

Australia also participates in international research and health policy exchange programs and contributes to research foundations such as the Commonwealth Fund and the Nuffield Trust.

Medicare Australia works with the World Bank, AusAID and the World Health Organization to provide international consultancy services in a range of areas including: the development and management of secure online health business solutions; health system financing; health insurance administration; health information systems; pharmaceutical systems design and operations; and training and institutional development.

Visitors to Australia

The Australian Government has signed reciprocal health care agreements with the governments of the United Kingdom, the Republic of Ireland, Finland, Italy, Malta, the Netherlands, Norway, New Zealand and Sweden. Visitors from these countries are eligible for Medicare assistance for medically necessary treatment.

If hospital treatment is required, such visitors are eligible for treatment only as Medicare patients, not as private patients. The agreements between Australia and these countries vary slightly. Other visitors are not eligible for Medicare and should arrange for health insurance to cover their stay in Australia.

Royal Flying Doctor Service of Australia

The Royal Flying Doctor Service, founded in 1928 by the Reverend John Flynn, is unique to Australia. It provides a 24-hours-a-day, 365-days-a-year aeromedical emergency and health care service to people who live, work or travel in Australia’s remote areas. The service has contact with some 242 000 patients each year, about 35 000 of whom are medically transported. From its 21 bases, the service’s 47 aircraft fly over its ‘territory’ of 7 150 000 square kilometres and cover almost 22 million kilometres annually.

Although probably best known for its emergency evacuation role, the Royal Flying Doctor Service conducts some 12 000 health care clinics each year, treating about 127 000 patients. It is continuing to build on its primary health care role for people in remote areas. A large proportion of its work also involves telephone and radio consultations by doctors and nurses with people at remote outposts.

The Royal Flying Doctor Service receives grants from the federal, state and Northern Territory governments, but also relies on funds donated by the business sector and the general public.

Since 1 July 2007, the Australian Government has fully funded the delivery of the Royal Flying Doctor Service’s traditional services: aeromedical evacuations, primary and community health care clinics, telehealth consultations and medical chests. Over the four years to 30 June 2011, the Australian Government will provide up to an additional $154.4 million in recurrent and capital funding for this purpose, bringing its total funding over this period as high as $247 million. The state and Northern Territory governments will continue to be responsible for funding the transportation of patients between hospitals.

This fact sheet is also available to download (PDF)

last updated April 2008

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