Medicare is Australia’s universal health insurance scheme. It guarantees all Australians (and some overseas visitors) access to a wide range of health and hospital services at low or no cost.
What is Medicare?
Medicare is Australia’s universal health insurance scheme. Medicare officially started on 1 February 1984. It guarantees all Australians (and some overseas visitors) access to a wide range of health and hospital services at low or no cost.
The Department of Health manages how Medicare works. The Department of Human Services administers Medicare and pays Medicare benefits.
What benefits does Medicare offer?
Medicare funds access to health care in two main ways. The Medical Benefits Scheme provides subsidies for:
- out-of-hospital medical services, including general practitioner (GP) and specialist services
- selected diagnostic imaging and pathology services
- dental care for children in some circumstances
- eye checks by optometrists
- allied health services in limited circumstances, and
- some medical services for private patients in public and private hospitals.
The Commonwealth’s Medicare legislation also guarantees public patients free treatment in public hospitals. Public hospitals are owned and operated by the state and territory governments, but are funded jointly by the Commonwealth and the states and territories.
Medicare is complemented by the Pharmaceutical Benefits Scheme, which subsidises the cost of a wide range of pharmaceutical medicines.
What Medicare doesn’t cover?
Medicare does not cover dental, some allied health, and ambulance services.
Health services not covered under Medicare may be funded or partially funded through a range of other Commonwealth and state government programs, by private health insurers, or paid for by consumers themselves.
Private health insurance
About 47% of the Australian population has private health insurance as well as the assurance provided by Medicare. Depending on the insurance product purchased, private insurance provides benefits for hospital treatment, ancillaries (such as glasses, allied health services and dental services), and, in some jurisdictions, ambulance services.
How do I access Medicare?
You can then use your Medicare card to claim Medicare benefits when accessing health services.
How does Medicare work?
Medicare is funded through taxes raised by the national government with taxes also raised by states and territories for public hospitals. The Medicare Levy which is part of the income tax system pays for only a small proportion of the real cost of Medicare.
The Medicare Benefits Schedule (MBS)
The MBS is a list of health services that are 'covered' or eligible for a benefit payment under Medicare.
You can check which health services are on the MBS by viewing the MBS online.
When you use a health service listed on the MBS:
- Medicare pays you the benefit payment (the Schedule fee)
- you pay the difference between the Schedule fee and the full cost, known as the gap.
To get Medicare benefits, show your Medicare card and any concession cards to your health provider.
The benefits paid to patients under Medicare are generally 85% of the fee listed for the service in the Medicare Benefits Schedule (75% of the schedule fee for private patients in hospital). When providers are willing to accept the Medicare benefit as full payment for a service, they bill the government directly (bulk-billing) and no payment is required from the patient.
The MBS also has a safety net (Medicare Safety Net) for people who require a lot of health care over a year. If your health care costs reach the Medicare Safety Net threshold, Medicare gives you higher benefit payments. This means you pay less or get health services for free, even if the doctor charges more than 85% of the schedule fee.
A team of medical experts, the Medical Services Advisory Committee, keeps the MBS up to date and ensures that the health services listed are safe and best practice.
At present, the whole MBS is being reviewed for the first time. This will ensure that out of date and inappropriate medical services are no longer subsidised.
Australia's public hospitals
The public hospital system is an important part of our overall health system.
Under Medicare, the Commonwealth provides funding to the states and territories to assist with the cost of providing free public hospital services to public patients.
The amount of funding is negotiated between governments. Under the current National Health Reform Agreement, the level Commonwealth funding is decided by a formula linked to hospital activity (activity-based funding).
Private health insurance
Many Australians choose to supplement the insurance provided by Medicare by buying private health insurance (PHI). Some people who have private health insurance are eligible to receive an income tested rebate from the Government which is designed to ensure that PHI is affordable.
What part does the Department of Health play in Medicare?
The Department of Health does not make Medicare benefit payments to consumers or doctors. We advise the Government on policy relating to Medicare and manage aspects such as:
- which health services are listed on the MBS and the amount of money that will be rebated for them
- the threshold for the yearly MBS Medicare Safety Net.
Who looks after Medicare benefit payments?
The Department of Human Services administers Medicare services and pays Medicare benefits on behalf of the Department of Health.