Fraser Forum

Unlike Canada, Australia embraces private sector to deliver universal health care

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Canadian health policy discussions are often hobbled by the misunderstanding that universal health care means government health care.

Reality, however, looks quite different. Some combination of government, private non-profit organizations, and private for-profit insurers and hospitals forms the basis of the world’s finest universal access health-care systems.

Let’s be clear: No one is talking about abandoning universality here. What we are talking about is allowing the private for-profit sector a larger role in health care to help better deliver on the noble promise of access to quality care regardless of ability to pay, in a time frame that provides comfort and peace of mind (not to mention greater safety and lower mortality).

We recently examined the universal health-care systems in Australia, France, Germany, the Netherlands, Sweden and Switzerland. Each of these countries deliver higher quality (more timely, better outcomes, or in many cases both) universal care for similar or lower costs than Canada. Unlike Canada however, these countries do not appear to be frozen by a fear of profit-making in health care. Rather, they have embraced private for-profit hospitals and insurers as part of their higher-performing approach to universality.

In this multi-part blog series, we present a brief characterization of each country’s universal health-care system, paying particular attention to the role of for-profit insurers and hospitals.

Part I: Universal health care in Australia

Australia spent approximately 10.1 per cent of its GDP on health care in 2012, slightly less than Canada (11.8 per cent) on an age-adjusted basis. At the same time, it generally had more medical resources (including more doctors, more diagnostic technology units, and more hospital beds), lower wait times, and comparable health outcomes.

From a policy perspective, Australia is in some ways quite similar to Canada. Both the Canadian and Australia systems are primarily funded through general taxation. Unlike Canada, however, Australia’s health-care system relies to a large extent on a private, parallel health-care sector to deliver health-care services to the population.

While everyone is covered by the public insurance system, the government actually encourages individuals to purchase private insurance through policies such as an income tax surcharge for high-income earners who do not have private insurance, lifetime community rating to ensure that older individuals and those in poor health do not face high premiums for private insurance, lifetime price reductions for those who purchase private health insurance at younger ages, and a rebate on private health-insurance premiums.

In 2013, 12.6 million Australians were covered by some form of private health insurance purchased from 34 private health insurance companies (eight for-profit and 26 not-for-profit). Notably, the two largest for-profit insurers (Medibank Private and BUPA) accounted for about 53.8 per cent of the market in 2012. The purchased insurance could be used to cover services not covered by the public scheme, as well as top up coverage for any unfunded health-care costs, pay for accommodation, and exercise choice of physician in either public or private hospitals.

Hospital care in Australia is delivered by 753 public, 115 private not-for-profit, and 477 private for-profit hospitals. While universally accessible services are generally provided through public hospitals, governments also contract with private hospitals for the provision of publicly-funded care. Further, public hospitals in Australia can contract certain tasks to private providers, while both public and private hospitals accept privately funded patients.

Privately funded patients treated in both public and private hospitals also take some public funding with them. A  public subsidy of 75 per cent of the federally determined schedule fee is provided for medical services for such patients, with private funding covering the cost of medical services beyond that as well as the costs of accommodation. Physicians in Australia may serve both public and private hospital patients, a policy known as dual-practice.

Public hospitals generally tend to focus on providing complex treatments, emergency services and intensive care, major surgery and organ transplants. On the other hand, private hospitals are generally smaller in size, cover a narrower range of services, and tend to focus on providing elective surgery for which there are usually long wait lists in the public system. As noted in a recent report however, this may be a positive outcome from a system perspective with less complex patients being treated in more appropriate settings.

There is clearly a deep sense of integration and cooperation between the public and private sector with regards to insurance and hospital services in Australia. Importantly, rather than being viewed as a potential threat to the goal of universal health care, the private sector (including for-profit insurers and hospitals) is embraced as a partner.


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