In Australia, health services are funded by the Australian Government’s Medicare system, by State and Territory governments, privately through the purchase of private health insurance and by individuals through out of pocket expenses.
Medicare allows patients to be treated for no charge in a public hospital by a doctor appointed by the hospital. As a private patient in a hospital, Medicare covers 75% of the Medicare Benefits Schedule (MBS) fee for medical costs. In the out of hospital setting, Medicare reimburses at least 85% of the MBS fee for the treatment.
Private health insurance covers some or all of the costs of being a private patient in a public or private hospital. In addition, private health insurance covers a range of costs that Medicare does not cover.
The private health insurance industry in Australia is highly fragmented, with 37¹ insurers operating during 2008/09. The size range of private health insurers is significant, with the industry dominated by the six largest private health insurers, which hold a combined market share of 77.8%¹ of the industry.
The introduction of the Federal Government Rebate and Lifetime Health Cover initiatives in 1999 and 2000 respectively saw the number of people with hospital insurance grow dramatically to its current level of approximately 44.5%¹.
During 2007/08 total healthcare expenditure in Australia was estimated to be around $100 billion²; the private health insurance industry provided in excess of $10 billion² of this amount in funding for hospital, dental, optical and other policyholder’s healthcare costs.
Further information regarding the private health insurance industry can be found at The Private Health Insurance Administration Council’s (PHIAC) website www.phiac.gov.au
¹Source PHIAC Operations of the Private Health Insurers (Annual report 2008-09).
²Source PHIAC Operations of the Private Health Insurers (Annual report 2007-08).