Explore Harvard's Nieman network Nieman Fellowships Nieman Lab Nieman Reports Nieman Storyboard

For a model health care system, how about Australia's?

ASK THIS | August 24, 2010

'Medicare for all' isn’t just an expression in Australia, it’s a reality, and there aren’t any death panels or government intervention in the choice of doctors or treatment. Bill Claiborne, a longtime Washington Post reporter now living in Australia, describes the system.

By William Claiborne

--During the long, rancorous public debate over American health care reform I heard and read quite a bit of incendiary rhetoric in the media about "socialized medicine" in countries like Australia, where I have lived for the last decade as an American immigrant (and now dual national). But I don't recall reading very much about how public-option universal health care systems like Australia's actually work, from the perspective of someone who is able, from personal experience, to compare the health care systems in both countries.

What I remember from the debate in the U.S. Senate late last year and early this year was quite a bit of reporting of allegations of "death panels," the imminent "Europeanization" of the United States, the exaggerated fears of a "government takeover" of medicine and of perceived threats to freedom of choice in selecting doctors. Okay, I appreciate the fact that conflict and controversy are the engines of journalism when covering emotive stories like health care reform. But I believe that the debate would have been better served if more reporters had come down to Australia and asked us, "How, exactly, does your health care system work?"

The discussion in America hasn't been settled; some are urging repeal of what was enacted; some want a much stronger plan. So a look at health care in Australia is still appropriate. Here are a few questions I'd ask:

Q. Is Australia's universal health care system socialized medicine?

No, not by any reasonable definition. The 35-year-old universal health care system is a hybrid of public and private plans. Every permanent resident or citizen in Australia -- that's everyone, regardless of age -- is covered by the government's Medicare program and is entitled to highly-subsidized, or even free, treatment by doctors in their offices, and fully-covered treatment and care in public hospitals. I go to a primary care physician who charges the maximum-allowable $60 (all currency figures in this report are in U.S. dollars at the current exchange rate) per visit, half of which is automatically refunded into my bank account by Medicare after I pay the fee with my debit card. Many doctors, like the one my wife sees,"bulk bill" their patients' fees to Medicare and no money changes hands at the office. We each chose our own doctor for our own personal reasons. The only "government takeover" is in the refunding of half of my doctor's fee, thereby making health care more affordable.

When I recently underwent cataract surgery in both eyes, I chose one of Melbourne's top retina and cataract surgeons (on my GP's recommendation). Because I supplement Medicare with an eminently affordable private insurance policy, I had virtually no waiting period, and a week later when I had the surgery my only expense was a $250 co-pay (tax deductible) for everything -- surgeon, anesthetist, hospital costs, prescription drugs, follow-up visits, the works. Moreover, over the years my primary care doctor has from time to time sent me to specialists for various examinations and in-hospital procedures, such as a colonoscopy and an angiogram, and the costs have always been minimal or nonexistent. He didn't have to consult any government body before referring me. He just sent me to the specialists. That doesn't sound like "socialized medicine" or "government intrusion" to me.

The system isn't perfect; what health care system is? Yes, occasionally there are published reports of people waiting long periods for admittance to public hospitals, or put on gurneys for hours in an emergency ward of an overcrowded public hospital. That happens anywhere, even in the United States. But overall I think any objective person would have to say that Australia's health care system is pretty damned good. I speak from experience on that question.

Q. How does private health insurance blend with public Medicare?

As I've said, everyone is covered by Medicare. But if someone whose income exceeds $62,000 cannot or will not join a supplemental privare health plan, he/she pays a 1 per cent surcharge over the 1-1/2 per cent Medicare levy that everyone (except low-income earners) pays in income taxes. This is a carrot-and-stick approach, and consequently nearly half of Australians opt in for private health insurance, which not only reimburses coverage gaps in physician and hospital fees, but entitles the purchaser to avoid long waiting periods at public hospitals and obtain private rooms in private hospitals. For obvious reasons touching on class distinctions there’s a bit of ongoing controversy over this two-tier system, but its supporters say it alleviates the pressure on free public hospitals and helps keep health coverage affordable for all.

To encourage people to take up private coverage, the government subsidizes 30 per cent of their insurance premiums, increasing to up to 40 per cent in rebates for people over 65. My wife and I each pay an annual premium of $750, after the rebate, for private insurance. We think that's quite affordable.

Q. Is there a safety net for blow-out medical costs?

Yes. Medicare covers all of any fee gaps once a family reaches an annual threshold of total gap costs. For my wife and me the threshold is $1,000. For low-income earners it is $500. If we pay more than $1,000 in a year in out-of-pocket medical expenses, we have no co-pays for the rest of the year.

Q. Does Medicare provide prescription coverage?

Yes. The Pharmaceutical Benefits Scheme not only subsidizes prescribed drugs but controls the retail prices through negotiations between a Pharmaceutical Pricing Authority and the pharmaceutical companies. Regardless of the cost of a drug, my co-pay per monthly prescription is $30. If my family's total co-pay gap reaches a threshold of $1,140 (which it hasn't yet) my co-pay virtually disappears. For low-income (under $62,000 a year) earners there is no gap threshold and the co-pay never exceeds $4.80.

Q. How does the government pay for all of this?

The Medicare program currently costs about $17.8 billion a year, and is rising about 4 per cent annually in real terms. That doesn't sound like much in American terms, but for a country with a population of only 22 million it is fairly hefty. It is about 35 per cent of the total federal health budget ($50.5 billion), which includes the cost of running all public hospitals as well as Medicare. The health budget, in turn, is about 16 per cent of the total federal spending for the current fiscal year ($313.2 billion).

The government pays for universal, publicly-funded health care because historically Australian governments -- conservative and liberal alike -- have cared for the health and well being of its people. The only spending item in the federal budget larger than health costs is social security and welfare, at $102.3 billion. Defense spending is at $18.7 billion. That says something about Australian values, I think.

When my Australian friends hear or read that our Medicare system is dismissed by a fair number of American politicians and their constituents as "socialism" they laugh.

And, after nearly a decade of enjoying the benefits of a benevolent -- and efficient -- health care policy, I laugh right along with them. All the way to the bank.

health insurance
Posted by blackwood
08/25/2010, 07:08 AM

Health care (transformation) is one of the best issues this current administration has done thus far. With this change individuals will have the opportunity to seek professional and quality health care services. Who would want to return to the days of the horse and buggy, b/w tv sets, manual typewriters, pac man, you get the point? That's about how old the health care system was in the USA. Each day the news is filled with social tragedies in which lives are taken at the hands of known acquaintences and/or family members. Our society is stricken with the institutions of white collar crime permeating throughout this great nation and greed which tends to strike at the very fabric of our country. If you are looking for affordable health insurance check out http://bit.ly/9fDY7U .... I hope everyone will soon recognize and use the resources made by this transformation to seek professional medical attention as the need arises rather than turning to illegal and criminal activities to resolve their issues.

Australia's Health Care System
Posted by Tim
09/17/2010, 12:56 PM

Correction, the government does not pay for universal, publicly-funded health care, the people do in the form of taxes. Throughtout Bill Claiborne's testimony he never mentions the tax burden on the tax paying citizens of Australia. Furthermore, I would be interested to see if the public system places a higher value on younger, as apposed to older, citizens. Finally, do the citizens have access to cutting edge technology and the most recent introductions of ground breaking drugs? As Americans pay the market prices for drugs, we subsidize those countries that control the price and availability of drugs. Unfortunately, Bill provides personal experiences, which leaves many questions unanswered.

The NiemanWatchdog.org website is no longer being updated. Watchdog stories have a new home in Nieman Reports.