australia health insurance sha

Health care in Australia

Health care in Australia  Health care in Australia is delivered as a mixed system: universal health care (public) and private providers (insurance). The majority of Australia's health care is provided publicly (hospitals and primary health care eg General Practitioners) with the remaining provided by the private sector (private hospitals, allied health care such as physiotherapy and dental).

Medicare is Australia's universal health care system, which is the primary health scheme that subsidises most medical costs in Australia for all Australian citizens and permanent residents. A number of other schemes cover the medical costs in specific circumstances, such as for veterans or indigenous Australians, motor vehicle insurance, and workers' compensation  schemes, besides others. The current Medicare levy, paid by Australians who earn over a certain income is 2%.  Those that earn more are expected to pay an additional surcharge if they do not have private health insurance (Medicare Levy Surcharge).  

Medical costs of visitors to Australia may be covered by travel insurance or under a reciprocal health agreement. In addition, people who are not covered by the Medicare scheme or wish to be covered for out-of-pocket medical or hospital costs can take out voluntary private health insurance, which is also subsidised by the federal government. In addition to Medicare, there is a separate Pharmaceutical Benefits Scheme funded by the federal government which considerably subsidises a range of prescription medications.

Medicare is financed by a Medicare levy, which is compulsory and administered through the tax system. The federal Minister for Health, currently Greg Hunt, administers national health policy, and state and territory governments administer elements of health care within their jurisdictions, such as the operation of hospitals. The funding model for health care in Australia has seen political polarisation, with governments being crucial in shaping national health care policy.[1]

An additional levy of up to 1.5% is imposed on high-income earners without health insurance. Individuals can take out health insurance to cover out-of-pocket costs, with either a plan that covers just selected services, to a full coverage plan. In practice, a person with health insurance may still be left with out-of-pocket payments, as services in private hospitals often cost more than the insurance payment.

The government encourages individuals with income above a set level to privately insure. This is done by charging these (higher income) individuals a surcharge of 1% to 1.5% of income if they do not take out health insurance, and a means-tested rebate. This is to encourage individuals who are perceived as able to afford private insurance not to resort to the public health system,[12] even though people with valid private health insurance may still elect to use the public system if they wish.

Funding of the health system in Australia is a combination of government funding and private health insurance. Government funding is through the Medicare scheme, which subsidizes out-of-hospital medical treatment and funds free universal access to hospital treatment. Medicare is funded by a 2% tax levy on taxpayers with incomes above a threshold amount, with an extra 1% levy on high-income earners without private health insurance, and the balance being provided by the government from general revenue.[13]. Healthcare is only 9% of Australia's GDP.

Health insurance funds private health and is provided by a number of health insurance organizations, called health funds. The largest health fund with a 30% market share is Medibank. Medibank was set up to provide competition to private "for-profit" health funds. Although government-owned, the fund has operated as a government business enterprise since 2009, operating as a fully commercialized business paying tax and dividends under the same regulatory regime as do all other registered private health funds. Highly regulated regarding the premiums it can set, the fund was designed to put pressure on other health funds to keep premiums at a reasonable level.[14][15]

The Coalition Howard Government had announced that Medibank would be sold in a public float if it won the 2007 election,[16] however they were defeated by the Australian Labor Party under Kevin Rudd which had already pledged that it would remain in government ownership. The Coalition under Tony Abbott made the same pledge to privatize Medibank if it won the 2010 election but was again defeated by Labor. Privatisation was again a Coalition policy for the 2013 election, which the Coalition won. However, the public perception that privatization would lead to reduced services and increased costs makes privatizing Medibank a "political hard sell."[15]

Australian health funds can be either 'for profit' including Bupa and nib; 'mutual' including Australian Unity; or 'non-profit' including GMHBA, HCF Health Insurance and CBHS Health Fund. Some have membership restricted to particular groups, some focus on specific regions ? like HBF which centres on Western Australia, but the majority have open membership as set out in the PHIAC annual report.[17] Membership to most of these funds is also accessible using a comparison websites or the decision assistance sites. These sites operate on a commission-basis agreement with their participating health funds and allow consumers to compare policies before joining online.

Most aspects of health insurance in Australia are regulated by the Private Health Insurance Act 2007. Complaints and reporting of the health industry is carried out by an independent government agency, the Private Health Insurance Ombudsman.[18] The ombudsman publishes an annual report that outlines the number and nature of complaints per health fund compared to their market share.[19]

The private health system in Australia operates on a "community rating" basis, whereby premiums do not vary solely because of a person's previous medical history, current state of health, or (generally speaking) their age (but see Lifetime Health Cover below).[20] Balancing this are waiting periods, in particular for pre-existing conditions (usually referred to within the industry as PEA, which stands for "pre-existing ailment"). Funds are entitled to impose a waiting period of up to 12 months on benefits for any medical condition the signs and symptoms of which existed during the six months ending on the day the person first took out insurance. They are also entitled to impose a 12-month waiting period for benefits for treatment relating to an obstetric condition, and a 2-month waiting period for all other benefits when a person first takes out private insurance.[20]

Funds have the discretion to reduce or remove such waiting periods in individual cases. They are also free not to impose them, to begin with, but this would place such a fund at risk of "adverse selection", attracting a disproportionate number of members from other funds, or from the pool of intending members who might otherwise have joined other funds. It would also attract people with existing medical conditions, who might not otherwise have taken out insurance at all because of the denial of benefits for 12 months due to the PEA Rule. The benefits paid out for these conditions would create pressure on premiums for all the fund's members, causing some to drop their membership, which would lead to further rises, and a vicious cycle would ensue.

There are a number of other matters about which funds are not permitted to discriminate between members in terms of premiums, benefits or membership ? these include racial origin, religion, sex, sexual orientation, nature of employment, and leisure activities. Premiums for a fund's product that is sold in more than one state can vary from state to state, but not within the same state.

The Australian government has introduced a number of incentives to encourage adults to take out private hospital insurance. These include:

Lifetime Health Cover: If a person has not taken out private hospital cover by 1 July after their 31st birthday, then when (and if) they do so after this time, their premiums must include a loading of 2% per annum. Thus, a person taking out private cover for the first time at age 40 will pay a 20% loading. The loading continues for 10 years. The loading applies only to premiums for hospital cover, not to ancillary (extras) cover.

Medicare Levy Surcharge: People whose taxable income is greater than a specified amount (in the 2011/12 financial year $80,000 for singles and $168,000 for couples[21]) and who do not have an adequate level of private hospital cover must pay a 1% surcharge on top of the standard 1.5% Medicare Levy. The rationale is that if the people in this income group are forced to pay more money one way or another, most would choose to purchase hospital insurance with it, with the possibility of a benefit in the event that they need private hospital treatment ? rather than pay it in the form of extra tax as well as having to meet their own private hospital costs.

The Australian government announced in May 2008 that it proposes to increase the thresholds to $100,000 for singles and $150,000 for families. These changes require legislative approval. A bill to change the law was introduced but was not passed by the Senate. A changed version was passed on 16 October 2008. There have been criticisms that the changes will cause many people to drop their private health insurance, causing a further burden on the public hospital system, and a rise in premiums for those who stay with the private system. Other commentators believe the effect will be minimal.[22]

Private Health Insurance Rebate: The government subsidizes the premiums for all health insurance cover, including hospital and ancillary (extras), by 10%, 20% or 30%. In May 2009, The Rudd Labor government announced that as of June 2010, the rebate would become means-tested and offered on a sliding scale.