Australia: #11 in the 2020 World Index of Healthcare Innovation

44% of Australians choose private health insurance, despite the universal availability of government-run coverage.

By Gregg Girvan, Mark Dornauer, and Avik Roy

Introduction

Australia’s two-tiered health care system ranks 11th in the World Index of Healthcare Innovation, with an overall score of 48.38. Australia ranked highest for Quality, with an 80.9 score for patient-centered care. Australia also performs well on Choice (45.38, #7), due to its two-tiered public-private system.

Australia performed poorly on Science & Technology (26.67, #26) due to restrictions on the use of new technologies in the public system. Australia’s debt-to-GDP ratio is a manageable 32.3%, but health care spending is growing at a fast clip.

Background

Australia’s two-tiered health care system is analogous to the U.S. system of public and private primary and secondary schools. U.S. taxpayers fund the public school system, even if they send their children to private schools. Similarly, all Australians are eligible for the public, single-payer health care system, but 44% of Australians still choose private insurance, because private coverage offers greater choice of doctors and significantly shorter wait times. The government encourages enrollment into private health insurance through a tax rebate, or conversely, through a Medicare levy surcharge if individuals are above a certain threshold.

Australia provides universal public health insurance via Medicare for Australian citizens, residents with permanent visas, and New Zealand citizens. Australian Medicare consists of three programs: (1) the Original Medicare Safety Net, covering all Medicare services outside the hospital above an annual out-of-pocket threshold of $447 AUD ($290 USD); (2) the Extended Medicare Safety Net, covering 80 percent of out-of-pocket costs above an annual threshold of $648 AUD ($420 USD); (3) the “Greatest Permissible Gap,” setting the maximum out-of-pocket fee per out-of-hospital service at $79.50 AUD ($52.00 USD).

Similar to the United States, Australia struggles to close the gap between urban and rural areas, as well as between socioeconomic divides. The native Aboriginal and Torres Strait Islander populations face significant disparities in health outcomes.

Quality

The quality of the Australian health care system is exceptional. Ranking 2nd overall, Australia performed well in the subcategories of patient-centered customer service (4th), disease prevention (7th), and health system infrastructure (7th).

Choice

The Australian health system ranked in the top third of countries for patient choice (8th overall). In particular, the Australian system offers patients ample freedom of choice for health services (7 of 31) and access to new medical technologies (10 of 31). However, the affordability of Australian health insurance remained in the lower third of countries examined (19 of 31).

This article is part of the FREOPP World Index of Healthcare Innovation, a first-of-its-kind ranking of 31 national health care systems on choice, quality, science & technology, and fiscal sustainability.

Science & Technology

The Australian system lagged behind other countries in terms of overall contribution to scientific and technological innovation, ranking 26 of 31. Notably, Australia’s EHR adoption rate ranked 28th, and its contribution to medical innovation ranked similarly (25th).

Fiscal

Australia ranked 18th overall in fiscal sustainability. Due to its strong economy, Australia ranked 9th in the subcategory of debt-to-GDP ratio. However, it ranked lower in both public health spending per capita (20th) and the growth of health spending as a share of its GDP over the last 10 years (22nd).