Unbiased Analysis of Today's Healthcare Issues

International Healthcare Models: Australia

Written By: Jason Shafrin - Sep• 07•10

Today I’ll be talking about healthcare in Australia.  Australia a rich country with 21.2 million residents, has the sixth highest life expectancy of any country in the world.  The review of the Australian healthcare system is based on the Australia’s Health 2008 report.  Unless otherwise noted, all dollar figures reference are in Australian dollars ($1 USD=1.10 AUD)

Health Spending

Almost 70% of total health expenditure in Australia is funded by government, with the Australian Government contributing two-thirds of this and state, territory and local
governments the other third. The Australian Government’s major contributions include the two national subsidy schemes, Medicare and the Pharmaceutical Benefits Scheme (PBS). Medicare subsidises payments for services provided by doctors and optometrists and other allied health professionals such as clinical psychologists, and the PBS subsidises payments
for a high proportion of prescription medications bought from pharmacies (individuals contribute out-of-pocket payments for these services as well). The Australian Government and state and territory governments also jointly fund public hospital services.

  • Australia spent 1 in every 11 dollars on health in 2005–06, equaling $86.9 billion, 9.0% of gross domestic product (GDP).
  • The Australian government pays for 68% of national health expenditures (NHE).
  • The federal government paid $37.2 billion (43% of NHE) and the state, territory and local governments paid $21.6 billion (25%)
  • As a share of its GDP, Australia spent more in 2005 than the United Kingdom (8.3%), a similar amount to Italy (8.9%) and much less than the United States (15.3%).
  • NHE per capita amounted to $4,226
  • Health spending per person was 45% more in 2005–06 than a decade before, even after adjusting for inflation.
  • For Indigenous Australians in 2004–05, health spending per person was 17% higher than for other Australians.
  • The spending on medications increased by 1.6% between 2004–05 and 2005–06—much less than the average increase of 8.6% per year in the decade before

Public Health Insurance

  • Australia’s universal health insurance scheme, Medicare Australia, began in 1984 and provides for free or subsidized treatment for all Australian residents.
  • Medicare sets reimbursement rates, but providers can charge any rate they wish.  If the charge exceeds the reimbursement rate, the provider will bill the patients directly and they will be responsible for the difference.
  • Bulk Billing: Providers can also “bulk-bill” Medicare directly if they charge the exact amount payable under the Medicare benefits Schedule.  79% of claims were bulk billed in 2006-2007.
  • The Pharmaceutical Benefits Scheme (PBS) subsides a wide range of prescription medicines.
  • Only medicines approved by the Pharmaceutical Benefits Advisory committee are included in the PBS benefits.  The drug must meet standards for safety, efficacy and (unlike in the U.S.) cost-effectiveness.
  • Drug prices are decided through negotiations between the manufacturer and the Australian Government Department of Health and Aging.


  • A payroll tax of 1.5% of income funds Medicare Australia.
  • High income families (>$50,000 for individual or >$100,000 for couples) pay an additional 1% surcharge if they do not have private hospital insurance.

Private Health Insurance

  • 43.5% of the population was covered by private health insurance.   The federal government provides tax rebates for the purchase of private health insurance.
  • Funding for health services through private health insurance was 9.5 billion (12% of NHE).  The government paid for about one-third of this cost ($3.2 billion) through private health insurance rebates.
  • Private Insurance and out-of-pocket payments cover 81% of dental services, 59% of private hospital services, and 47% of medications.


  • In 2005, Australia had 1.4 GPs, 1.3 specialists, 0.5 dentists and 10.9 nursese per 1000 people.
  • Australia’s supply of healthcare workers is more focused on nurses and GPs than the U.S.

Healthcare Services

  • Like other developed countries, rates of Caesarean section have risen over time, from 18% in 1991 to 30% in 2005.
  • In 2005–06, less than 2% of health expenditure was for preventive services.
  • About 85% of Australians visit a doctor at least once a year.
  • For the year 2005–06, over 9% of hospital admissions were considered potentially preventable.
  • Many state/territory governments offer a free 24-hour telephone-based health advice service.

Waiting Times

  • The median wait time for a surgical procedure was 32 days.
  • Cardiothoracic surgery had the shortest wait time (12 days)
  • Ophthalmology (69 days) and Orthopaedic surgeries (54 days) had the longest wait.
  • For procedures, the shortest wait for a high volume procedure was 15 days for CABG surgery and the longest was total knee replacement with a wait of 178 days.


  • State and territory governments license private hospitals, medical practitioners and other health professionals.
  • The federal government regulates the safety and quality of pharmaceutical and therapeutic goods, manages international quarantine arrangements, ensures a safe supply of blood products, and regulates private health insurance.


The bullets below contain additional background information on Australia from the CIA World Factbook (with world rankings in parentheses):

  • Population: 21.2 million (#56)
  • About 7% of the country is aboriginal and these indigenous groups have higher mortality rates.
  • GDP: USD$851 billion (#19)
  • GDP/person: USD$40,000 (#19)
  • Infant Mortality: 4.75 deaths/1,000 live births (#29)
  • Life Expectancy: 81.63 years (#6).


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