Australia: #7 in the 2021 World Index of Healthcare Innovation
Forty-four percent of Australians choose private health insurance, despite the universal availability of government-run coverage.
By Gregg Girvan, Mark Dornauer, and Avik Roy
Introduction
Australia ranked 7th overall in the 2021 WIHI Analysis. Notably, Australia rose four spots from its inaugural ranking due to its excellent scores in the WIHI Dimensions for Quality (5th) and Choice (5th). Both metrics speak to the unique two-tiered public-private health system that Australia successfully employs. Nevertheless, there are benefits and tradeoffs for every health system. While Australia excelled globally in Quality and Choice, it performed below average on the Dimensions for Science & Technology (19th) and Fiscal Sustainability (18th).
Background
Australia’s public-private, two-tiered health care 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 health care system, but 44 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 encourages public enrollment into the private health insurance market through a tax rebate, or conversely, through a Medicare levy surcharge if individuals’ incomes are above a certain level.
Australia provides universal public health insurance via Medicare for (1) Australian citizens, (2) residents with permanent visas, and (3) New Zealand citizens. Australian Medicare consists of three programs: (1) the Original Medicare Safety Net, covering all Medicare services outside the hospital above an annual out-of-pocket threshold of $447 AUD ($290 USD); (2) the Extended Medicare Safety Net, covering 80 percent of out-of-pocket costs above an annual threshold of $648 AUD ($420 USD); (3) 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 divide between urban and rural areas and among different ethnicities. For example, the native Aboriginal and Torres Strait Islander populations face significant disparities in health outcomes.
Quality
The Australian health system provides exceptional quality. Accordingly, Australia ranked 5th in the WIHI Dimension for Quality. In particular, Australia ranked 5th in the Element “Patient-Centered Care.” It also ranked above the median in the Elements “Measures of Preventable Disease” (12th) and “Pandemic Preparedness and Response” (11th).
Choice
The Australian health system also provides an exceptional amount of choice to its patients. Australia ranked 5th in the WIHI Dimension for Choice. Bolstering this high ranking were two Elements in particular, “Freedom to Choose Health Care Services” (3rd) and “Access to New Treatments” (12th). However, the main setback for the Australian system was the affordability of its health insurance for the average patient. Subsequently, Australia ranked 25th in the Element “Affordability of Health Insurance.”
Science & Technology
Australia lagged behind the median regarding its global contribution to scientific and technological innovation, ranking 19th in the Dimension for Science & Technology. Notably, Australia’s slower EHR adoption rate placed it behind other countries. Thus, Australia ranked 27th in the Element “IT.” Additionally, Australia’s smaller than average contribution to global medical research ranked 27th in the Element “Medical Advances.”
Fiscal Sustainability
Australia ranked 18th in the WIHI Dimension for Fiscal Sustainability. Australia’s strong economy ranked its debt-to-GDP ratio above the median (and stood 12th in the Element “National Solvency”). However, its rising health care costs — particularly in the public sector — ranked it lower in the Elements “Growth in Public Health Spending” (22nd) and “Public Health Care Spending” (20th).
