Public vs Private Health Cover
We like to consider ourselves the lucky country in Australia, and it’s true that we have a fantastic public healthcare system that provides a high standard of care. But it doesn’t cover everything, which is why so many of us decide to take out private health insurance.
But if you are budget-conscious, young and healthy, or simply don’t feel the need to pay for private cover, it can get confusing trying to figure out whether you actually should be investing in private health insurance.
So, should you stick with Medicare and the public healthcare system, or is it worth it to take out private health cover for all those extras that could potentially break the bank without insurance? When it comes to public vs private healthcare in Australia, here’s what you need to know about the pros and cons of both.
How does public healthcare in Australia work?
Australia’s public healthcare system is managed through Medicare, which provides free and subsidised healthcare services to all Australian citizens and permanent residents.
It’s a system that’s funded through taxation. In other words, Medicare is able to cover the cost of treatments in public hospitals, consultations with doctors and a range of other medical services thanks to you: the taxpayers.
Pros of public healthcare
- Free or low-cost treatments: A big advantage of the public healthcare system is that many treatments, including emergency care, hospital stays and doctor visits, are free or heavily subsidised. Australians pay into this system through the Medicare levy, which is a small percentage of your taxable income. Essentially, it makes sure everyone has access to healthcare services when they need them.
- Universal access: Having public healthcare means every Australian can get essential medical treatment – regardless of financial situation. This is especially important for people who are on low incomes or dealing with chronic conditions, as they can receive treatments without worrying about out-of-pocket costs.
- Essential coverage for public hospital services: Medicare can cover treatments in a public hospital with no charges for the stay, medical procedures or specialist consultations. There’s nothing like having that peace of mind knowing you’ll get care without unexpected bills.
Cons of public healthcare
- Long waiting times: Despite all the pros, one of the most common complaint about the public system is the long wait times for elective surgeries and non-urgent procedures. Due to high demand, patients can – and often do – have to see out long delays for procedures like joint replacements, cataract surgeries, non-life-threatening conditions and more.
- Limited choice of doctors and hospitals: In the public system you don’t get to choose your doctor or hospital. If you need specialist care, you will be assigned a healthcare provider based on their availability. For many Australians, not having a choice over your medical professional is a major reason why they get private health insurance.
- Excluded services: While Medicare does indeed cover a wide range of services, there are also (sometimes substantial) gaps. Dental, optical, physiotherapy, chiropractic and alternative therapies aren’t included in standard public healthcare cover, which means you’ll need to pay out-of-pocket or get private health insurance to cover these costs.
How does private healthcare in Australia work?
Having private health cover is the best way to make sure you always receive care in a private hospital and have access to extra services not covered by Medicare.
When you’re thinking about getting private health insurance, you’ll need to see if you want hospital cover (for in-hospital treatments) or extras cover (for things like dental, optical, physio, etc.). You can also have a combination of both with hospital and extras cover.
Pros of private healthcare
- Shorter waiting times: Top benefits of private health insurance include having the ability to skip the long public hospital waiting lists for elective surgeries. Patients with private cover will get treatment much faster in private hospitals.
- Your choice of doctor/specialist and hospital: Private healthcare means you’ll have more control over your medical care. You can choose your own doctor or specialist, as well as the hospital where you are treated. If you’re someone who values continuity of care with a trusted medical professional, private cover is the way to go.
- Private rooms and better amenities: Because they are privately funded, private hospitals tend to have more comfortable facilities for their patients, including private rooms and lots of amenities. For those who value privacy and comfort during their hospital stay, this can be a big reason to get private health cover.
- Cover for services not included under Medicare: You can only get cover for services not within Medicare’s remit – dental, optical, physio, chiro, etc. – if you take out private health insurance. Just make sure you do your research on the level of cover you need, especially when it comes to taking out an extras policy.
Cons of private healthcare
- More expensive: Yes, for many Australians the cost of private health insurance is a sticking point. That’s because the premiums can be expensive, especially when you are paying for the highest tiers like a Gold policy. In some cases, there are also additional out-of-pocket expenses for treatments, even after insurance covers its portion. Extras cover, while useful, might also be limited by things like annual caps on the benefits.
- Choosing a plan can be confusing: Choosing the right private health insurance plan can be a time-consuming process. With so many options on the market, from Basic hospital cover to combined hospital and extras packages, finding the right plan that matches your situation – and your budget – can be overwhelming. The good news is an online comparison service can make your decision much easier.
- Gap fees: Even if you have the most comprehensive private health insurance, there are some instances where you will need to pay the ‘gap’. This is an out-of-pocket cost that is the difference between what your doctor charges you and what your insurer will cover. Having to pay for out-of-pocket expenses – especially when they are unexpected – can be a rude shock that might put you in a tough financial spot.
Portability
Don’t re-serve waiting periods when you switch to a new health fund or policy
“John was immediately covered for a hip replacement in private hospital because he had already served his waiting periods for joint replacements on his old policy”
Public vs Private Healthcare: How they compare
Ready to start comparing public vs private healthcare in Australia? What’s most important is to weigh up the pros and cons of each cover, and factor in your own personal healthcare needs.
| Public Healthcare | Private Healthcare | |
|---|---|---|
| Cost | Free or low-cost through Medicare | Higher premiums, possible out-of-pocket expenses |
| Choice of doctor | Limited, assigned by availability | Full choice of doctor and specialist |
| Waiting times | Long for elective and non-life-threatening procedures | Shorter for most treatments |
| Choice of hospital | No choice, public hospitals only | Choice of public or private hospitals |
| Comfort | Basic hospital accommodation | Private rooms, more comfort |
| Extras cover | Limited – no dental, optical or physio | Cover for dental, optical, physiotherapy, etc. (with an extras policy) |
| Gaps in cover | Medicare doesn’t cover everything | Some out-of-pocket costs despite insurance |
Which is right for you?
Your decision about whether to stick with public health cover or go for private health insurance will ultimately depend on things like your current health needs, your financial situation and budget, as well as your personal preferences about what you might need in future medically. If you’re healthy, young and comfortable with longer waiting times for elective procedures, the public healthcare system might be the most cost-effective option.
But if you don’t want to deal with long waiting times, prefer to have a choice about your medical care and want to take advantage of extra services like dental and optical, then private health insurance will be a worthwhile investment.
There’s also the fact that some Australians take out private health insurance in order to avoid the Medicare Levy Surcharge and Lifetime Health Cover (LHC) loading, so different situations will apply to different people.
Combining public and private healthcare
If you’ve got a family or have specific healthcare needs, then you might find that the best solution for health insurance is taking advantage of the public healthcare system while also using private cover for specific purposes. You’ll still be able to access free and low-cost public healthcare for essential treatments, while at the same time enjoying the benefits of private health insurance for extras and elective procedures.
Conclusion
The bottom line when comparing public vs private healthcare in Australia is this: there’s no one-size-fits-all answer. Both have their pros and cons, and it’s up to you to decide what’s best for your individual healthcare needs and financial situation. Whether you stick with public healthcare or fork out for private health insurance, you now have all the knowledge at your disposal to make an informed decision for your circumstances.
Ultimately, your health is your most valuable asset, so making sure you have the right level of cover can give you peace of mind and financial protection for the future
Aaron Savrone, founder of Fair Health Care Alliance (FHCA), is a health insurance expert with over 15 years of experience. Specializing in transparent, customer-focused advice, Aaron launched FHCA in 2017 to address the lack of genuine care in the health insurance comparison space. With a commitment to simplifying complex policies and data, Aaron and the team have earned FHCA top ratings and awards, including a 5-star Google Review score from hundreds of reviews and Best Insurance Comparison Website in 2023 and 2024 (ProductReview).
