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Australia’s Health System Explained

Australia’s health system has been spruiked as one of the best and most accessible systems in the world. But how much do you really know about the system that keeps us healthy?

The World Health Organization describes a good health system as one that ‘delivers quality services to all people, when and where they need them’. In Australia, our health system is best descried as a complex mix of health professionals and service providers from a range of organisations, including government and non-government sectors, working to meet the health care needs of all Australians.

Australia’s health system has multiple components – health promotion, primary health care, specialist services and hospitals. To meet individual health care needs, a person may need – or have to engage with – the services of more than one part of the system.

1. Primary health care

Primary health care is often a person’s first contact with the health system. It comprises a range of services that are not referred: general practice, allied health services, pharmacy and community health. Various health professionals deliver these, including GPs, nurses, allied health professionals, community pharmacists, dentists and ATSI health workers.

2. Specialist services

Specialist services support people with specific or complex health conditions and issues, such as antenatal services for pregnancy, radiotherapy treatment for cancer and mental health services. Specialist services are generally referred by primary health care providers and often described as ‘secondary’ health care services.

3. Hospitals

Hospitals are a crucial part of Australia’s health system, delivering a range of services to admitted and non-admitted patients (outpatient clinics and emergency department care). All public hospitals in Australia are part of a Local Hospital Network.

State and territory governments largely own and manage public hospitals – which usually provide ‘acute care’ for short periods. Private hospitals are mainly owned and operated by either for-profit or not-for-profit organisations.

Australia’s health system may be more accurately described as various connected health systems, rather than one unified system. The Australian Government, state and territory governments and local governments share responsibility for it, including for its operation, management and funding. While the overarching framework for the health system is laid out by government, the private sector also operates and funds some health services. These including operating private hospitals, pharmacies and many medical practices, as well as funding through private health insurance.

Changes to Australia’s Constitution in 1946 allowed the Federal Government to become involved in the funding of public hospital services, resulting in the funding, operational and regulatory arrangements that exist today.

Australia’s health system is underpinned by Medicare – a universal public health insurance scheme. Medicare is funded by the Australian Government through general taxation revenue and a 2% Medicare levy. Intergovernmental arrangements for public hospital funding between the Australian Government and state and territory governments guarantee Medicare cardholders access to fee-free treatment as public patients in public hospitals. Medicare also covers a portion of the Medicare Benefits Schedule fee for medical services and procedures, and Medicare cardholders have access to a range of prescription pharmaceutical subsidies under the Pharmaceutical Benefits Scheme.

Some medical and allied health services are not subsidised through Medicare. For example, Medicare does not usually cover costs for ambulance services, most dental examinations and treatments, physiotherapy and optical aids (such as glasses and contact lenses).

Private health insurance is also an option for meeting health care expenses in Australia. People can choose the type of cover to buy. The two types of cover available are:

  • Hospital cover for some (or all) of the costs of hospital treatments as a private patient;
  • General treatment (‘ancillary’ or ‘extras’) cover for some non-medical health services not covered by Medicare – such as dental, physiotherapy and optical services.

Private health insurance works in tandem with the publicly funded system but does not cover the entirety of a private patient’s costs. Part of the cost of hospital admission as a private patient is covered by Medicare (the medical fee) and part can be covered by insurance.

The Australian Government and state and territory governments are responsible for the regulation of the health system. Various regulatory agencies within the system work to ensure that acceptable standards and quality of care and services are met, and that people are protected when using health goods and services and when dealing with health professionals.

The Australian Government is also responsible for regulating the safety and quality of pharmaceutical and therapeutic goods and appliances. The Therapeutic Goods Administration (TGA) is responsible for regulating therapeutic goods, including prescription medicines, vaccines, sunscreens, vitamins and minerals, and medical devices.

The Australian Government is also responsible for the Prostheses List. The Prostheses List is a list of medical devices that private health insurers are required to pay a benefit for when one of their members has the relevant coverage. For instance, if a member of a health fund has hospital orthopaedic cover and requires a hip replacement, their health fund is required to pay the minimum benefit for any artificial hip listed on the Prostheses List, with generally no out-of-pocket expenses for the patient.

This arrangement ensures surgeons can choose the best available medical device for their privately insured patients without private health insurers restricting their options.

The List is an essential part of the private health insurance offering, enabling Australians with private health insurance to receive the best quality heal care as determined by their doctor, and not by their health insurance provider.

While Australia’s health care system may indeed seem complex and confusing, it is still one of the best health care systems in the world.

Information in this article has been informed by the Australian Institute of Health and Welfare report, 'Australia's Health 2018'.
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