Industry Structure

Like many countries, Australia faces growing pressures in health funding due to the ageing of our population, technological changes and increasing patient expectations. The health industry currently accounts for almost 9 per cent of Australia’s gross domestic product. The federal government sets the national health policies and subsidises the provision of health services by State and Territory governments and the private sector. The federal government funds universal medical services and pharmaceuticals, and gives financial assistance to public hospitals, residential care facilities, hostels and home and community care. State and Territory governments have primary responsibility under the Constitution for the actual provision of health services including most acute and psychiatric hospital services. Medicare, a system of health insurance, was introduced in 1984. It is funded in part through a taxation levy of 1.5 per cent of income. Under Medicare, all permanent Australian residents are entitled to free public hospital care when choosing to be a public patient. Australians may elect to be treated as private patients in public hospitals or to use private hospitals in the private sector, patients can choose to pay directly for medical costs or use private health insurance. Private hospitals provide around 30 per cent of all hospital beds in Australia and just over 40 per cent of all Australians take out private health insurance. The federal government seeks a better balance between public and private sector by encouraging people to take out private health insurance, while preserving Medicare as the universal safety net.