What’s health care like in Australia?

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To start off some balanced discussions of what universal health care looks like around the world, I thought I would begin with Australia, a system that we could learn a great deal from.

In the US system, we do not have universal healthcare, we have mostly employer-subsidized healthcare, private insurance and medicare covering people’s health expense. We also lack a universal electronic medical record, our main recourse for responding to poor care is lawsuits, and we have a high disparity in services available to those with money and those who do not. We still manage to spend more on health care per capita than any country in the world, while being ranked 37th in the world by the WHO, 72nd in the world for healthiness of its citizens, and 19th among industrialized countries (last) by the Commonwealth fund. We have a very poor infant mortality rate, which is only partially explained by our willingness to treat more premature infants than other countries, and is mostly a result of poor health care infrastructure in several of the poorer, Southern states.

Australia’s system is not too fundamentally different from the mixture of employer and public based funding found here in the US. An outline of the health system is available from the Australian government and the Wikipedia entry is here. It’s spends about 8.8% of GDP on health care, compared to the US at 15.3% based on 2007 OECD data (or 9% and 16% respectively according to the Commonwealth fund data). Of that, about two-thirds is public, one third private expenditure. Let’s take a closer look…


If you remember this figure we see a breakdown of how the Aussies are spending their money:
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As well as our post on attitudes about health care around the world you see the Aussies spend a relatively larger amount of money out of pocket on health care, but almost half of what the US spends overall. Australia compares favorably with other nations in quality of care, and much better than the US. Australia also has one of the lowest mortality rates for health care amenable diseases among 19 industrialized nations. As described in the health affairs article we discussed, Australians report they can see a doctor within one day 40% of the time (compared to the US at 30%), have wait times for elective surgeries nearly identical to the US, and are less likely to avoid a physician or refill a prescription when sick because of worries about cost. Satisfaction with their system lags, with numbers comparable to that in the US. But considering that the system is actually doing a very good job based on the numbers, this might just be the very human tendency to never be satisfied with health care.

Australia’s system, called medicare, provides universal basic coverage to all citizens, and free treatment at public hospitals, and most treatments free or subsidized by the government. They cover dental, optho, and mental health, as well as services for the elderly and disabled. There is some cost-sharing, and that means at private hospitals government will pay a majority of the bill (75%), but at public hospitals they cover more or all of it. They subsidize prescription drugs that are listed on their scheme (not some more recreational drugs like Viagra) and have a safety net for those who can’t pay the ~$20USD co-pay on prescriptions. You can choose your doctor, or your hospital, public or private. Wait times are probably longer at the public hospitals for elective procedures.

All of this is funded by an additional income tax of 1.5% on all citizens, some out-of-pocket and cost sharing (about 20% of the total expenditures), private expenditures, and higher taxes on high-income individuals who do not purchase private insurance.

One of the reasons the system may be compatible with US preferences in health care is that above this baseline of universal health care, private insurance does exist to provide coverage over and above the basic government system. This would be more easy to implement in the context of a place like the US that has such a huge infrastructure devoted to private insurance provided by employers. People who make more money are expected to get private insurance (although it is subsidized by the government), and this coverage provides more ready access to private hospitals and more rapid access to elective procedures. 50% of the population opts for some private coverage above the basic health plan.

Criticisms of this system from within are that the mixture of private and public systems creates a two-tier system, but I think most in the US would be OK with this as we probably would prefer a system where we could pay more and get more, as opposed to a system like Canada’s in which you are forced to operate within the public system.

In summary, Australia provides universal coverage with a mixed public-private funding system. It provides some of the top care in the world as assessed by preventable mortality and healthiness of the population, but this may partly due to cultural characteristics of the population. Their total costs are dramatically less than that of the US system, costing almost half as much per capita, despite covering the entire population and retaining private elements.

I would like to hear from Australians about what they think of their system, with the caveat that individual descriptions of good or bad stories aren’t very informative since every system has its disasters and usually far more success stories that you never hear. I would like to hear if this description reflects the reality (I, of course, have never been treated in Australia), some more criticisms of the system, pitfalls we in the US can avoid and how it may be improved.