Australia: #5 in the 2022 World Index of Healthcare Innovation
45 percent of Australians choose private health insurance, despite the universal availability of government-run coverage.
By Gregg Girvan, Grant Rigney, and Avik Roy
Introduction
Australia ranked 5th overall in the 2022 World Index of Health Innovation, up from 7th in 2021 and 11th in 2020. Australia’s ascent draws from its excellent performance in Quality (5th) and Choice (3rd). Both dimensions speak to the unique two-tiered public-private health system that Australia successfully employs. But Australia also performed below average on the dimensions for Science & Technology (18th) and Fiscal Sustainability (18th).
Background
Australia’s public-private, two-tiered healthcare system is analogous to the U.S. system of public and private primary and secondary schools. All U.S. taxpayers fund the public school system, even if those families send their children to private schools. Similarly, all Australians are eligible for the public, single-payer healthcare system, called Medicare, but 45 percent of Australians still choose private insurance.
The main benefit of private insurance is greater patient choice. On balance, private coverage offers a better selection of doctors and significantly shorter wait times. Moreover, the government resists the temptation to favor one health delivery model over the other. It offers patients a tax rebate to enroll in the private health insurance market or, conversely, through a Medicare levy surcharge if individuals’ incomes are above a certain level.
Australia provides universal public health insurance via Medicare for Australian citizens, residents with permanent visas, and New Zealand citizens. Australian Medicare consists of three programs: the Original Medicare Safety Net, covering all Medicare services outside the hospital above an annual out-of-pocket threshold of $447 AUD ($290 USD); the Extended Medicare Safety Net, covering 80 percent of out-of-pocket costs above an annual threshold of $648 AUD ($420 USD); and the Greatest Permissible Gap, setting the maximum out-of-pocket fee per out-of-hospital service at $79.50 AUD ($52.00 USD).
Similar to the United States, the Australian health system struggles to close the gaps between urban and rural areas and among different ethnicities. For example, the Aboriginal and Torres Strait Islander populations face significant disparities in health outcomes.
Quality
The Australian health system provides very good care to its patients. Accordingly, Australia ranked 5th for the second consecutive year in Quality. In particular, Australia ranked 5th in infrastructure and 10th in patient-centered care. It also ranked above the median in disease prevention (9th) and pandemic preparedness and response (10th).
Choice
The Australian health system also provides an exceptional amount of choice to its patients. Australia moved up two spots from 2021 and ranked 3rd in Choice. The elements bolstering this higher ranking were affordability of health coverage (8th), access to new treatments (7th), and freedom to choose healthcare services (3rd). These measures were also integral in Australia improving its overall ranking from 7th in 2021 to 5th in 2022.
Science & Technology
Australia lagged behind the median in its global contribution to innovation, ranking 18th in Science and Technology. Notably, Australia improved in medical advances (25th) and scientific discoveries (14th), but stagnated in the adoption of electronic health records and thus retained its 27th rank in health digitization.
Fiscal Sustainability
Australia ranked 18th for Fiscal Sustainability. Australia’s strong economy drove its debt-to-GDP ratio above the median and stood 13th in national solvency. However, its rising healthcare costs — particularly in the public sector —contributed to lower rankings in growth in public health spending (19th) and public healthcare spending (20th).
