Australia has both a private and public (Medicare) healthcare system. If you need treatment, Medicare will offer it for free. However, private health has a range of benefits that the public system can't provide
Public healthcare is funded by Medicare and offers free or low-cost treatment in public hospitals, but there can be longer waiting times.
Private healthcare can provide more choice of hospitals and doctors and can have shorter waiting times, but it is more expensive.
Only you can decide if public or private is best for your needs.
How does private and public healthcare work?
In Australia, there are two healthcare systems, public (Medicare) or private. Medicare is a comprehensive public healthcare system that provides free treatment in a public hospital for anyone with a Medicare card. Most medically neccessary treatments are covered at no charge for citizens, permanent residents and some travellers.
Australia's private healthcare system is made up of private hospitals and other services providers that charge for care. Most private patients hold private health insurance, so most of the bill is paid by a health fund. However, most private treatments come with out-of-pocket costs, even after the health insurance benefit.
Pros and cons of public vs private healthcare
Public system (Medicare)
Private system
You won't pay any out-of-pocket costs in a public hospital.
You'll probably have out-of-pocket costs to pay as a private patient, even if you have health insurance.
Most hospital treatments are available for free in public hospitals.
There aren't many treatments that the private system offer that aren't available under Medicare.
Covers some out-of-hospital treatments, like GP and specialist visits, and some medications.
Out-of-hospital treatments, like GP visits and PBS medications, are still available to private patients.
You'll be subject to public waiting lists for some surgeries.
Your wait for surgery in the private system will generally be shorter than the public system.
You'll be assigned a doctor or surgeon for your treatment.
You'll often have your choice of doctor, specialist or surgeon.
As a public patient you'll often have to share a room with other patients.
As a private patient - in a public or private hospital - you may have access to a private room.
Because public health is available to every eligible Australian, those with private health insurance can still choose to be treated as a public patient in a public hospital. As a public patient, your treatment is covered by Medicare. This includes all eligible accommodation, doctor services, diagnostic tests and medications. Drawbacks of being treated as a public patient include:
Your doctor is allocated to you by the hospital.
You might not have the option of a private room.
You're subject to more extensive waiting lists for elective surgery.
What's included as standard in a public hospital?
As a public patient in a public hospital, you'll not usually pay anything for your hospital treatment, as everything will be covered by Medicare. Services covered include:
The main advantage of going private in a public hospital is that you get to choose your own doctor if they are available. However, you might still have to share a room, as private rooms are reserved for those who need them most.
Being treated as a private patient in a public hospital is sometimes necessitated by location. For example, if you live in an area that does not have a private hospital with which your health insurance fund has an agreement.
If you're a private patient in a public or private hospital, Medicare will cover 75% of the Medicare Benefits Schedule (MBS) fee for these services, leaving you with 25% to pay. Whether you have out-of-pocket expenses or not will depend on the level of hospital cover you have and whether your health fund has a gap agreement with the hospital in question, in which case the remaining 25% may be covered by your health insurance. It will also depend on whether your chosen doctor charges more than the MBS fee and if so, whether your insurance will cover this.
At the time of admission, you will be asked if you wish to go private in a public hospital. Some public hospitals will encourage you to choose to be treated as a private patient, as they can make more money – but it's up to you.
Private patient in a private hospital
If you have a higher level of health insurance that entitles you to be admitted as a private patient in a private hospital, you have the advantage of being admitted faster for elective treatments than in the public system. You'd also be able to choose your own doctor and are more likely to get a private room rather than sharing.
The proviso to this is that the private hospital you're being admitted to has to have an arrangement with your doctor allowing them to treat private patients and has the accommodation and services available at the time you wish to be admitted.
Questions to ask before being admitted
Before you go into hospital as a private patient, you need to find out the estimated cost of your treatment and whether your health insurance policy will cover most or all of the costs. Be sure to confirm the following with:
Your health fund. Speak with your health fund about your level of cover and whether your procedure is included, any waiting periods or exclusions that may apply and whether they have a gap agreement with the hospital you will be treated at.
Your treating doctor. Make sure you ask your doctor for a written estimate of the services for that you will be billed for, whether there are any additional charges, whether they are participants in your health fund's gap agreement and if there are any other costs not covered by Medicare (e.g. pharmaceuticals or diagnostic tests).
Childbirth in the public vs private system
Public hospital childbirth
The main advantage of going public for childbirth is that all hospital costs can be paid for by Medicare (apart from any treatments required for your newborn baby, in which case Medicare only pays 85% of the fee). However, you typically won't be able to pick your own doctor, midwife and/or obstetrician, and you'll likely be in a shared room.
Private hospital childbirth
The main advantage of going private for childbirth is that you may receive a more individual level of care, possibly having your own doctor or midwife, your own room and possibly an extra day or two to recover from the birth before being discharged. However, the cost of childbirth in a private hospital is significantly more than in the public system. Even with a gold health insurance policy, the out-of-pocket costs can be several thousand dollars or more.
Medical treatment outside of hospital is only partially covered by Medicare, which covers 100% of the MBS fee for a visit to a GP and 85% of the cost of seeing a specialist. Medicare also provides a benefit for tests and X-rays and some surgical and therapeutic procedures performed by approved doctors and dentists. Medicare does not cover any of the following:
Most dental examinations and treatments
Most physio, chiro, podiatry and psychology services
To be covered for these out of hospital expenses, you'll usually need to have extras cover as part of your private health insurance, which will reimburse you for some or all of these services up to a benefit amount determined by your level of cover.
Are ambulance costs covered?
Medicare does not cover the cost of emergency or other ambulance services, except in some states (Queensland and Tasmania) and in some circumstances (pensioners and low income earners in NSW and ACT).
So this is another area where private health insurance can help. Most health funds include cover for emergency ambulance transport, which can be many hundreds of dollars if you are required to pay the bill yourself.
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Frequently asked questions
Yes you can. Having private health insurance does not stop you from using Medicare for eligible services. For example you can still visit a GP and have part of the cost covered by Medicare. When you are admitted to a hospital you can choose to be treated as a private patient using your insurance or as a public patient under Medicare.
No private health insurance is not compulsory in Australia. However the government uses incentives and penalties to encourage people to take out private health insurance. These include the Medicare Levy Surcharge and Lifetime Health Cover loading which can add significant costs if you do not have appropriate hospital cover.
The Medicare Levy Surcharge or MLS is an extra tax paid by higher income earners who do not have an appropriate level of private hospital cover. It is in addition to the standard Medicare Levy and can range from 1% to 1.5% of your income. It applies to singles earning over $105,000 and couples or families earning over $210,000.
Lifetime Health Cover or LHC loading is a government initiative designed to encourage people to take out private hospital cover earlier in life and maintain it. If you do not have hospital cover by July 1 following your 31st birthday you will pay a 2% loading on top of your private hospital insurance premiums for every year you delay taking out cover. This loading can accumulate up to a maximum of 70%.
Medicare generally does not cover out of hospital treatments such as dental work, optical services, physiotherapy, chiropractic care and psychology. To receive benefits for these services you will need to have extras cover as part of your private health insurance policy. The level of cover and benefit limits will vary depending on your chosen policy.
Waiting periods are the time you must wait after buying a private health insurance policy before you can claim benefits. These are set by the government and health funds. Common waiting periods include two months for most hospital and general extras services, 12 months for pre-existing conditions and obstetrics and 12 months for major dental or optical.
Many overseas visitors are not eligible for Medicare and therefore will need to arrange their own health cover while in Australia. This is often a visa requirement. Travel insurance may offer some cover for medical emergencies but specific Overseas Visitor Health Cover OVHC is designed for longer stays and provides more comprehensive medical treatment.
James Martin was the insurance editor at Finder. He has written on a range of insurance and finance topics for over 7 years. James often shares his insurance expertise as a media spokesperson and has appeared on Prime 7 News, Insurance News, 7NEWS and The Guardian. An experienced journalist, James' work has featured in publications including The Irish Times, Companies100 and In Business. He holds a Tier 1 General Insurance (General Advice) certification and a Tier 1 Generic Knowledge certification, both of which meet the requirements of ASIC Regulatory Guide 146 (RG146).
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A seasoned journalist with over 10 years of experience in news, politics and finance reporting, Tim has previously held roles at the ABC, SBS and Fairfax Media. Tim’s expert insights have been quoted in The Australian, The Daily Telegraph, The Courier Mail and more. He regularly appears on TV and radio, and has been interviewed on 7 News, Sunrise, SBS News, ABC Local, 3AW and 5AA. Tim is passionate about simplifying complex insurance topics for Australian consumers. He holds a Bachelor of Arts (Politics) from Macquarie University and a Tier 1 General Insurance (General Advice) certification, which meets the requirements of ASIC Regulatory Guide 146 (RG146).
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You pay nothing. Finder is free to use. And you pay the same as going direct. No markups, no hidden fees.
You save time. We spend 100s of hours researching health insurance so you can sort the gold from the junk faster.
You can trust us. We say it like it is. We aren't owned by an insurer and our opinions are our own.