Health currently accounts for about 9.3 per cent of Australia’s gross domestic product.
Like other countries, Australia faces growing pressures in health funding because of the ageing of the population, technological changes and increasing patient expectations.
The federal government funds universal medical services and pharmaceuticals, and gives financial assistance to public hospitals, residential care facilities, hostels, and home and community care. It is also the major source of funds for health research, and provides support for the training of health professionals and financial assistance to tertiary students.
State and Territory governments have primary responsibility under the Constitution for the actual provision of health services, including most acute and psychiatric hospital services. The States and Territories also provide a wide range of 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.
Public sector health financing
A universal system of health insurance, Medicare, was introduced in 1984. It is funded, in part, through a taxation levy of 1.5 per cent of income. Medicare’s two main functions are to cover the cost of services by medical practitioners and of public hospital care.
Under Medicare, all permanent Australian residents are entitled to free public hospital care when choosing to be public patients.
Doctors who are appointed by the hospitals provide their medical treatment. State and Territory governments provide public hospital services and work closely with the federal government and professional bodies to ensure that quality of care and appropriate standards are maintained. Australians may elect to be treated as private patients in public hospitals or to use private hospitals. In the private sector, patients can choose to pay directly for medical costs or use private health insurance.
Medicare also meets the bulk of costs for all out-of hospital medical services, such as general practitioner and specialist consultations. The Medicare contribution or benefit is 85 per cent of standard fees set by the federal government for each type of service. Many doctors charge more than the standard fee and the patient pays the difference.
The Health Insurance Commission, a statutory authority within the federal Health and Aged Care portfolio, is responsible for processing and paying Medicare benefits for approved services. The commission also pays pharmaceutical benefits under the Pharmaceutical Benefits Scheme, which subsidises an agreed list of prescription drugs. In both medical and pharmaceutical services, safety net arrangements exist to make sure that patients who need a high level of treatment do not incur significant out-of-pocket expenses. Medicare does not normally cover some services, such as dentistry, physiotherapy and chiropractic services.