Funding of Health Care in Australia: An Overview

In terms of efficiency and effectiveness, health care in Australia is widely considered to be a world-class. Like any other country, Australia too is encountering enormous pressure on health funding due to Australia's aging population, the increased cost of healthcare itself, increasing expectations of the patients and the technological changes. Government provides financial assistance to the public as well as the private health care sectors in Australia.

According to the Australian Government, Department of health and ageing, an estimated $103 billion was spent by the government on health care in Australia. Out of which, $ 30.8 billion was spent on the services provided by the public hospitals in Australia and over seven per cent was spent on the private hospitals in Australia. The Health-care system consists of health service providers from both the public and the private sectors and series of funding and regulatory mechanisms which includes:

1. The Australian Government

The Australian government provides funding to the universal medical services and pharmaceuticals and, as well, provides financial funding to residential aged care facilities; home and community care for the aged along with the public hospitals in Australia. Apart from this, it also provides support for training health professionals and financial aid to tertiary students. It also majorly provides funding to various health care researches. It fulfills the primary role of constructing broad national policies and regulation as well as funding.

2. State, Territory and Local governments

Their responsibilities include delivery and management of public health services and maintenance of direct relationships with most health care providers which consist of regulating health professionals and private hospitals in Australia.

3. Private practitioners

It includes consultant physicians, specialists and general practitioners.

4. Profit and non-profit organizations including voluntary agencies.

Government's funding to the system of health care in Australia includes three major national subsidy schemes such as Medicare, the pharmaceutical benefit schemes and rebate of 30% on Private health insurance.

Health financing to the public sector

In 1984, government introduced a comprehensive system of health-care in Australia, known as Medicare. It provides access to all eligible residents of Australia to low-cost or even free medical and optometrist care as well as care in public hospitals in Australia while leaving them free to choose the option of private health services.

Public hospitals in Australia jointly receive funds from the Australian government as well as the state and territory governments. However, their administration is in the hands of the state and territory health departments.

People admitted to public hospitals in Australia as public (Medicare) patients receive free treatment by doctors and specialists nominated by the hospital.

Private patients in public or private hospitals have the freedom to choose the doctors according to their own individual preferences. Medicare schedule fee of 75% for services provided by the treating doctors is paid by Medicare. Patients opting for private hospitals in Australia are charged for hospital accommodation and items such as theater fees and medicine. Private health insurance may cover some of these costs but Medicare does not cover these costs.

Health financing to the private sector

Of all the hospital beds, about one-third is provided by the private hospitals in Australia. The government is trying to achieve a balance between public and private sector involvement in the system of health care in Australia by encouraging more and more people to take private health insurance in order to preserve Medicare as the universal safety net. In an effort to make private health insurance more affordable, the Australian government offers 30% rebate for the cost private health insurance premiums. In order to assist people facing high annual out-of- pocket health costs, government has introduced safety nets for medical services and pharmaceuticals.

The Australian Government helps to make private health insurance more affordable by offering a 30 per cent rebate (and higher rebates for older Australians) for the cost of private health insurance premiums. Safety nets for medical services and pharmaceuticals assist people facing high annual out-of-pocket health costs. An Extended Medicare Safety Net, introduced in 2004, provides further assistance by meeting 80 per cent of the out-of-pocket cost of medical services provided out of hospital once an annual threshold is reached.