The Australian vs American Healthcare Systems


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Over the past few months, I have become increasingly disillusioned with the state of healthcare in the United States of America.  In part, this disillusion arose because I have been increasingly exposed to the gaping chasms in the US system thanks to my American Twitter friends.  In part, the disillusion is from the increasing publicity of Obamacare in the media.  In part it is because I am continually impressed with the provisions in healthcare that we see in Australia.

For much of my youth, I was under the impression that Australia’s healthcare was sub-standard.  The constant public-hospital-bashing that comes around in the media around election time (and it always seems to be election time) exclaims at the increasing need for hospital beds despite dwindling space in hospitals, the poor performance of hospitals in obscure locations and the poor management of a few select cases.  It wasn’t until I started Medical School that I my eyes were opened to the provisions of our system.  It’s only this year that I’ve started to see the luck bestowed upon this ‘lucky country’.

Australia’s Gross Domestic Product (GDP) is just under a trillion dollars, with a population of almost 22 million.   Of this, approximately 10% is spent on all forms of health care, 70% of which is funded by government bodies (local, state and federal).  The other 30% is covered by private health funds and out of pocket expenses.  The burden of these extra costs, however, is reduced through safety nets, whereby a limit is set on how much an individual must pay of their own cash for healthcare in a year.  Similar systems are also in place for pharmaceuticals.

The Australian Medicare system has not been around since Federation.  It came to life in 1984, some 38 years after a Constitutional change allowed the Federal government (in addition to State governments) to provide health care benefits.  This move allowed national rollout of many health services, although many Australians will tell you that dual control of hospitals and services leads to much red tape and passing of the buck.

Medicare provides free or low-cost medical care to all Australian and New Zealand citizens as well as Australian permanent residents.  A necessary stay in a public hospital is free (that treatment, food, accommodation) although private health insurance affords patients the ability to choose their doctor while in a public hospital.  Even in private hospitals, Medicare will pay a considerable portion of the fees with the remainder being left to private health insurance providers and patient out-of-pocket expenses.  Approximately 43% of Australians have private health insurance, which covers extra services, such as dental and optometric visits. 

Here, hospitals, disease control programs, maternal, school and dental health are funded by the state while the Federal government provides financial assistance, research funding and aged-care programs.  The cross-over can be a source of tension between States who may believe their funding allocation is disproportionate to their need or input into the tax system.

Funding for health services comes from the relatively high level of tax that Australians pay.  Our lowest tax rate is 15% for every dollar over $6000 and the highest 45% for every dollar over $18000 p.a. income.  In addition to this, there is a 1.5% Medicare levy for those without private health insurance and earning over $19000 p.a. with an additional 1% surcharge should a childless individual earn over $77 000 p.a. or a childless couple earn over $154000 p.a.  This levy provides for approximately 27% of the cost of Medicare.

Private health insurance is based on a community-model, which means that an individual cannot be denied coverage by any provider, although there are expensive excesses for pre-existing conditions.  Membership to a fund is encouraged through both the above Medicare levy as well as lower premiums to those who invest in insurance prior to age 31.

Sure, public hospitals aren’t always pretty places (unless you go to the Royal Prince Alfred Hospital or similar) but the care provided is of a high standard.  The number of patients to whom I’ve spoken at my public hospital who extoll the virtues of the public health system astounds me.  I have never gotten the impression that patients suffer as a result of being a public patient.  Many of the practitioners at public hospitals also have private rooms – this provides them with an opportunity to make a respectable income as well as to treat patients who may not be able to afford private health insurance. 

Comparatively, the GDP of the USA is $14 trillion for a population of 307 million. Of this, health spending approximates 16.5%, with a governmental input through Medicaid, Medicare and CHIP of approximately 49%.  Medicaid provides assistance on state-based eligibility for those under 65 while Medicare is reserved for those of retirement age (as well as a special subset of especially sick individuals).  Medicare is the nation’s largest health insurer.  The combined programs look after approximately 25% of Americans (link).

The health programs in the US have a triple aim, being to improve the experience of care, population health and reduce per-capita costs.  However, the most recent MEPS-HC suggests that 21% of the populations are uninsured.

While the investment in healthcare in the US is high, it appears that costs are less regulated, resulting in a higher burden on the government.  It also suggests that those who are not covered by any form of healthcare have more severe problems when they do present at hospital.  This results in increased cost to them or the system at time of presentation. 

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