Aussie citizens, permanent residents, and other eligible individuals have access to Medicare, Australia’s universal healthcare system. However, nearly half of the population take out private health insurance to supplement what they already have through Medicare. So what’s the difference between the two and what can you access through each option? We outline what Medicare and private health insurance cover.
Medicare
Medicare is partly funded by the Medicare levy, which is 2% of your taxable income, though some people can be exempt or pay less. Medicare is designed to help you cover some of the costs of healthcare, but it doesn’t cover all medical services. The Medicare system has three components: hospital, medical, and pharmaceutical.
1. Hospital
Medicare gives you the option to be treated as a public patient in a public hospital for free by a doctor chosen by the hospital, not by you. This is true even if you have private hospital insurance. You might not be able to choose when to be admitted.
Medicare doesn’t include ambulance service costs. Medicare won’t cover you for private patient hospital costs, such as theatre fees and accommodation. It won’t cover you for medical and hospital costs you incur in another country. If you have medical and hospital treatment that are not clinically necessary or surgery only for cosmetic reasons, you won’t be covered.
2. Medical
If you see a doctor outside a hospital setting, Medicare covers you for 100% of the Medicare Benefits Schedule (MBS) fee for a GP. For a specialist, you get 85% back. However, if your doctor bills Medicare directly (offers bulk billing), you don’t need to pay for anything.
So the range of benefits covered by Medicare for outside-hospital treatment include consultation fees for doctors, including specialists. It also includes tests and exams like X-rays and pathology tests, along with optometrists fees and most surgical and therapeutic procedures. Some surgical procedures by dentists are covered.
It doesn’t cover most dental exams and treatment and things like physiotherapy and occupational therapy.
3. Pharmaceutical
Medicare gives you access to the Pharmaceutical Benefits Scheme (PBS), which covers some of the cost for most prescription medicines.
Private health insurance
Private health insurance typically comes in the form of hospital cover, general treatment or extras cover, and ambulance cover. Ambulance cover is usually incorporated into hospital or extras cover, or it could be available as a standalone product.
Both hospital and extras cover come in different levels of coverage, with hospital cover now subject tothe government-mandated Gold/Silver/Bronze/Basic product tiers. A higher level of cover usually gives you coverage for more treatment or service types, rebates, and benefits. As such, it’s a good idea to review your coverage level when you start a new life stage (such as marriage or starting a family) or whenever your circumstances change.
1. Hospital cover
If you have hospital cover, you can choose your own doctor and hospital. You’ll also have more control over when you’ll be admitted. You can be a private patient at a public or private hospital, and you could alternatively choose to be a public patient at a public hospital. You could have cover for things not on the MBS, like cosmetic surgery or laser eye surgery.
2. Extras cover
Extras covers gives you coverage for some or all of your ancillary health service costs. These include dental, chiropractic, home nursing, podiatry, optical, and other services or products.
Medicare vs private insurance: pros and cons
Medicare alone could well be insufficient for your personal requirements and preferences. These pros and cons give you a quick overview of limitations and benefits of both Medicare and private health insurance.
| Pros | Cons | |
|---|---|---|
| Medicare | 1. Covers you 100% for the MBS fee for GPs and 85% for the MBS fee for specialists. 2. If your doctor bulk bills, you pay nothing out of pocket. 3. Covers many tests, examination, pathology tests, eye tests, and procedures by doctors. 4. Covers you for part of the cost for PBS prescription medications. 5. Hospital care in a public hospital as a public patient is free. | 1. You can’t choose your preferred doctor or hospital. Your choices will depend on where you live. 2. You usually can’t choose when you’ll be admitted. Waiting times can be longer than for private hospitals. 3. No coverage for private patient costs. 4. No overseas cover for medical and hospital costs. 5. No cover for services that aren’t clinically necessary (such as cosmetic surgery). 6. Does not cover you for ambulance services. 7. No coverage for ancillary services like dental, physiotherapy, occupational therapy, and other services and products, like optical. |
| Private health insurance | 1. Choose your doctor, hospital, and admission time. 2. Get covered for ancillaries like physiotherapy, dental, optometry and podiatry, that are not covered by Medicare. 3. Retain the option of choosing public hospital. 4. You could have a better chance of having your own private room if you need hospital treatment. 5. Government subsidises some of your premiums through the Private Health Insurance Rebate. And you might need to pay the Lifetime Health Cover loading and Medicare Levy Surcharge if you don’t have hospital insurance. 6. Different tiers to suit your life stage, requirements, and budget. | 1. Might not cover you for total services provided in hospital, so you might need to pay out-of-pocket costs. 2. Waiting periods can apply for different treatments. 3. Comes with exclusions and restrictions limiting your coverage. 4. Long-stay patients (35 successive days) usually need to pay more out of pocket. |
While Medicare offers eligible Australian residents with fairly extensive public hospital, GP, and specialist fees, its coverage has wide gaps when it comes to ancillary services. Additionally, Medicare-provided hospital cover doesn’t give you choice of hospital, doctor, and admission time like private health insurance generally does. Understanding the limitations and benefits of both Medicare and private insurance can help you make a smarter choice about the private cover you take out so you can make the best of both options.
At It’s My Health, we’re passionate about health insurance and keeping things simple as we help you find the right cover. For further help selecting a health insurance policy that benefits you, Itsmyhealth can help you find a plan that meets all your needs.