Australia's Economy
Medicare and the PBS
How Australia combines public Medicare with private insurance, and how the Pharmaceutical Benefits Scheme negotiates low medicine prices.
Australia has a mixed health system.
Medicare
- Introduced in 1984, Medicare provides universal coverage for doctor visits and public hospitals, funded by taxes and a Medicare levy.
- Bulk billing means some doctors bill Medicare directly, so patients pay nothing.
Private insurance
- About half of Australians have private health insurance.
- Higher earners without it pay a Medicare Levy Surcharge, encouraging private cover.
PBS
- The Pharmaceutical Benefits Scheme (from 1948) subsidises medicines.
- The government negotiates prices with drug companies, using cost-effectiveness assessments.
- Australians pay much less for many medicines than Americans.
Bargaining power
A single national buyer has strong bargaining power to lower prices.
Challenges
- Declining bulk billing rates raised out-of-pocket costs; the government increased incentives in 2023-25.
- Waiting lists in public hospitals.
The subsidised medicine
An Australian pays a small co-payment for a prescription that might cost many times more in the US, thanks to PBS negotiations.
Thinking universal systems ban private insurance
Australia combines Medicare with private insurance.
Key takeaways
- Medicare provides universal coverage since 1984.
- About half of Australians have private insurance.
- The PBS negotiates low medicine prices.
- Declining bulk billing raised costs.
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