The Australian health system

Australia’s health system is one of the best in the world, providing safe and affordable health care for all Australians. It is jointly run by all levels of Australian government – federal, state and territory, and local.

Australia’s health system is one of the best in the world. It provides quality, safe and affordable health care for you and your family. It’s a key reason why we enjoy one of the longest life expectancies in the world.

There are many providers of health care in Australia, including:

  • primary care services delivered by general practitioners (GPs)
  • medical specialists
  • allied health workers
  • nurses.

Medicare and the public hospital system provide free or low-cost access for all Australians to most of these health care services. Private health insurance gives you choice outside the public system. For private health care both in and out of hospital, you contribute towards the cost of your health care.

Medicare – the foundation of our health system

Medicare has been Australia’s universal health care scheme since 1984. Its 3 major parts are:

  • medical services
  • public hospitals
  • medicines

Medicare is available to Australian and New Zealand citizens, permanent residents in Australia, and people from countries with reciprocal agreements.

Medicare covers all of the cost of public hospital services. It also covers some or all of the costs of other health services. These can include services provided by GPs and medical specialists. They can also include physiotherapy, community nurses and basic dental services for children.

The other important part of Medicare is the Pharmaceutical Benefits Scheme (PBS). The PBS makes some prescription medicines cheaper.

The Medicare Benefits Schedule

The Medicare Benefits Schedule (MBS) is a list of all health services that the Government subsidises. A team of medical experts keeps the list up to date, safe and best practice.

The MBS has a safety net. It can help by making sure you pay less for services once you reach a certain amount of out of pocket costs. This might be the case if you have a year where you pay a lot for medical care. Find out more about the Medicare Safety Net.

The Pharmaceutical Benefits Scheme

The PBS helps make medicines cheaper. Without the PBS, medicines would be more expensive. In some cases, they would cost tens of thousands of dollars more.

The PBS lists brand name, generic, biologic and biosimilar medicines. There are over 5,200 products on the PBS. All products are shown to be safe and effective before being sold in Australia. Independent medical experts advise on what is added to the PBS.

You only pay some of the cost of most PBS medicines if you are enrolled in Medicare. The Australian Government pays the rest. You pay even less if you have a concession card.

If you spend lots on medicine, the PBS Safety Net helps keep costs down. When you reach the Safety Net Threshold amount, prescriptions will cost even less for the rest of the year.

Private health insurance

Many Australians have private health insurance cover. There are 2 kinds of cover:

  • hospital cover for some (or all) of the costs of hospital treatment as a private patient
  • general treatment (‘ancillary’ or ‘extras’) cover for some non-medical health services not covered by Medicare — such as dental, physiotherapy and optical services.

Some people with private health insurance have either hospital cover or extras cover, and some people have both.

The Government provides a means-tested rebate to help you with the cost of your private health insurance.

Primary health networks

Primary health networks (PHNs) are organisations that coordinate health services in local areas. There are 31 PHNs across Australia.


  • support community health centres, hospitals, GPs, nurses, specialists and other health professionals to help improve patient care
  • coordinate different parts of the health system — for example, between the hospital and GP when a patient is discharged
  • assess the health needs of their local area
  • provide extra services that are needed, such as:
    • after-hours services
    • mental health services
    • health promotion programs
    • support for primary care (GPs), including continuing education

Government responsibilities

The Australian, state and territory, and local governments share responsibility for running our health system.

Australian Government responsibilities

  • Medicare Benefits Schedule (MBS)
  • Pharmaceutical Benefits Schedule (PBS)
  • supporting and regulating private health insurance
  • supporting and monitoring the quality, effectiveness and efficiency of primary health care services
  • subsidising aged care services, such as residential care and home care, and regulating the aged care sector
  • collecting and publishing health and welfare information and statistics through the Australian Institute of Health and Welfare
  • funding for health and medical research through the Medical Research Future Fund and the National Health and Medical Research Council
  • funding veterans’ health care through the Department of Veterans’ Affairs
  • funding community controlled Aboriginal and Torres Strait Islander primary healthcare organisations
  • maintaining the number of doctors in Australia (through Commonwealth-funded university places) and ensuring they are distributed equitably across the country
  • buying vaccines for the national immunisation program
  • regulating medicines and medical devices through the Therapeutic Goods Administration (TGA)
  • subsidising hearing services
  • coordinating access to organ and tissue transplants
  • ensuring a secure supply of safe and affordable blood products
  • coordinating national responses to health emergencies, including pandemics
  • ensuring a safe food supply in Australia and New Zealand
  • protecting the community and the environment from radiation through nuclear safety research, policy, and regulation

State, territory and local government responsibilities

  • managing and administering public hospitals
  • delivering preventive services such as breast cancer screening and immunisation programs
  • funding and managing community and mental health services
  • public dental clinics
  • ambulance and emergency services
  • patient transport and subsidy schemes
  • food safety and handling regulation
  • regulating, inspecting, licensing and monitoring health premises

Shared responsibilities

The Commonwealth also shares responsibility with the states and territories for other activities under national agreements such as the Council of Australian Governments (COAG). These other activities include:

Find your state or territory health department.

Local governments play an important role in the health system. They provide a range of environmental and public health services, community-based health and home care services.

Health system challenges

Australian health system challenges include:

  • an ageing population and increasing demand on health services
  • increasing rates of chronic disease
  • costs of medical research and innovations
  • making the best use of emerging health technologies
  • making better use of health data

These challenges look set to continue in coming decades.

Ageing population

A healthier older population will need different types of health services. To meet these new and different needs, we will need a flexible and well-trained health workforce in all areas of the country.

Chronic diseases

Managing chronic conditions is another challenge. The rise in many chronic conditions also increases demand for flexible, person-centred treatment models.

To address this, governments are taking a national approach to coordinated care in their health plans and policies, including GP-led team-based care for patients with chronic and complex conditions. We continue to work on ways to improve sharing of health and medical information between providers.

Health and medical research

Advances in medical science are set to completely change health care. For example, genomic testing will help doctors diagnose health conditions and diseases earlier, as well as provide better prevention and treatment options for people. But these advances are very costly and come with some difficult ethical and legal issues that need to be worked through.

New technology

New technologies also have an impact on health and medical services — from digital health technologies to automated health and diagnostic services. These technologies help to improve the health system, but they can affect patients and the health workforce.

To meet some of these challenges, the Australian Government is investing in medical research and technological innovation through the Medical Research Future Fund. This will see more innovations developed, tested and made available for Australians in all areas of health care.

Better use of health data

Comprehensive data can help us to improve health policy, programs and services. That’s why linking different health information across the health system is an important part of our work.

Other challenges

Australia shares other health system challenges with countries around the world — the rising cost of the health system, being able to respond to new health issues, inequality in access to health services and hospital waiting times.

Cost of health care in Australia

Australia’s health system is complex — and so are its funding arrangements. It is funded by:

  • all levels of government
  • non-government organisations
  • private health insurers
  • individuals when they pay out-of-pocket costs for products and services that aren’t fully subsidised or reimbursed

In 2016–17, Australia spent nearly $181 billion on health:

  • 41% by the Australian Government
  • 27% by state and territory governments
  • 17% by individuals (for products and services that aren’t fully subsidised or reimbursed)
  • 9% by private health insurers
  • 6% by non-government organisations

Health spending was about 10% of gross domestic product. This means $1 in every $10 spent in Australia went to health.

The Australian Government usually funds most of the spending for medical services and subsidised medicines. It also funds most of the $5.5 billion spent on health research in Australia in 2016–17.

State and territory governments fund most of the spending for community health services.

The Australian Government and state and territory governments share funding of public hospital services.

Date last updated:

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