Public vs private healthcare

It can be tricky to choose between going private or relying on the public health system. You'll need to consider many factors such as your health and how much flexibility you need. Also, you'll want to think about the role that private health insurance can play in meeting the cost of your treatment.

Public vs private healthcare: How the system works in Australia

Australia's healthcare system is a combination of government and privately-funded services. If you require any clinical treatment, you're generally able to get it for free – as long as you have a valid Medicare number.

Medicare also meets the cost of GP and specialist visits, along with the cost of some medications. This process is known as 'bulk billing'. However, you'll need to pay for any excess fee that can't be claimed through Medicare. This is called an 'out-of-pocket' or 'gap' payment. Then there are privately-run centres and hospitals, which charge patients directly for services. Private health insurance can help to cover some of the costs of being treated in a private facility.

Let's dig a bit deeper into the detail of public vs private healthcare.

Can I choose to be a private patient in a public hospital?

Yes, you can. 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.

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.

The key points of being a 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.

Being treated as a public patient in a public hospital

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.

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What's included as standard in a public hospital?

As a public patient in a public hospital, you will not usually pay anything for your hospital treatment, as everything will be covered by Medicare. Services covered include:

If you are 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.

Public or private for childbirth?

Whether you choose public or private to have your baby will depend on the following considerations:

• Whether you want your own doctor, midwife and/or obstetrician or those appointed by the hospital.
• Whether you want a private room or are willing to share.
• Whether your birth is likely to be normal or subject to complications, in which case you may want your own doctor in attendance.
• Whether you live in a metropolitan or rural area, as there are less private hospitals outside the major population areas.

What are the benefits?

• Giving birth in public hospital. 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).
• Giving birth in private hospital. 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.

Medical services and general treatment

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:

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.

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What is covered by the Pharmaceutical Benefits Scheme?

The Pharmaceutical Benefits Scheme (PBS) subsidises many prescription pharmaceuticals, so whether you have private health insurance or not, you will be able to purchase those medicines listed on the PBS at a reduced rate.

However, not all pharmaceuticals are covered by the PBS, so if you need such medications on a regular basis, this is where private health insurance can help. Depending on your level of cover, you can arrange health insurance that covers the cost, although you will normally be required to make a co-payment as well and there will be benefit limits on how much you can claim.

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.

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).

Speak with an advisor about your healthcare options

Whether you opt for private or public health cover will depend on your personal situation and finances. The main advantages of private cover are your choice of doctor, admittance when you need it and possibly a private room. If you don’t mind waiting, sharing and being treated by an unknown doctor, then perhaps public health cover would be all you require.

Compare your health insurance options now

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