The public health system is called Medicare. It ensures free universal access to hospital treatment and subsidised out-of-hospital medical treatment. It is funded by a 1.5% tax levy.
The private health system is funded by a number of private health insurance organisations. The largest of these is Medibank Private, which is government-owned, but operates as a government business enterprise under the same regulatory regime as all other registered private health funds; the Howard government has announced that Medibank will be privatised in 2008 assuming it is returned to office at the 2007 election. Some private health insurers are 'for profit' enterprises, and some are non-profit organizations.
Most aspects of private health insurance in Australia are regulated by the Private Health Insurance Act 2007.
The private health system in Australia operates on a "community rating" system, whereby premiums do not vary solely because of a person's previous medical history or current state of health. Balancing this are waiting periods, in particular for pre-existing conditions. 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.
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 the 1st July after their 30th 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 10 per cent 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 and who do not have an adequate level of private hospital cover must pay a 1% surcharge on the standard 1.5% Medicare Levy.
Private Health Insurance Rebate: The government subsidises the premiums for all private health insurance cover, including hospital and ancillary (extras), by 30%, 35% or 40%.
