Health Care in Australia
The cost of MedicareAustralia's Medicare system compares well with any country in the world in terms of facilities, but it also costs a lot to run.
Much of Medicare's own literature refers to 'free or low-cost healthcare', but whether it really is 'low cost' for most people is open to interpretation.
Below we estimate how much a 'typical' Australian family with two working adults and two dependant children might pay towards their health care.
Medicare LevyLet's say our 'typical' family has one partner earning a salary of $100,000 and the other earning $70,000. They will each have to pay a Medicare Levy equal to 1.5% of taxable income, which is included in their annual tax assessment. So that's $1500 on the $100,000 salary and $1050 on the $70,000 salary.
An additional levy (The Medicare Levy Surcharge) is applied to higher earners. The threshold for a couple is $160,000 plus $1500 per child, so $163,000 for this family. As their joint taxable income is $170,000, they will be liable for the surcharge if they did not have private hospital cover. This would be an extra 1% of taxable income, so $700 and $1,000 respectively.
So, this family pays at least $2,550 per year and possibly as much as $4,250 per year for Medicare through taxation.
Note that if the family has private hospital cover, they will not have to pay the surcharge.
Out-of-Pocket Payments - DoctorHere's a very common example; a standard consultation at the doctor's surgery. Under the Medicare Benefits Schedule, this will normally be item 23, Level B, for which the Schedule Fee is $35.60.
For this item, Medicare pay 100% of the schedule fee, so you get the full $35.60 back.
But the fee that our local surgery charges is actually $70, almost double the Medicare Schedule Fee, leaving out-of-pocket expenses of $34.40.
The patient is actually only getting about 50% back from Medicare.
Out-of-Pocket Payments - SpecialistThis example involves an examination by a specialist doctor (real case, in Perth 2012)
The consultation cost $155, the Medicare Schedule fee was $82 and the benefit was 85% of that, which was $69, leaving the patient to pay out-of-pocket expenses of $86.
In this example, Medicare paid 44% of the cost.
As can be seen, often the Medicare Schedule Fee is nowhere near the actual fees that doctors charge
Who Sets the Fees?
The Medicare Benefits Schedule is set by the government, but doctors set their own fees. The Australian Medical Association3 provides a list of fees for doctors but this is for guidance only, doctors are free to set their fees at whatever level they see fit.
Resources1Australian Taxation Office for tax aspects of Medicare.
2DIAC 457 Health Insurance FAQ.
3Australian Medical Association Policy on Doctors Fees