Medicare vs private: What does health insurance cover that Medicare doesn’t?

If you’ve never really had to think about how the Australian healthcare system works, you might not know the exact differences between Medicare – our public health insurance scheme – and private health insurance. While Medicare covers a range of services at little or no cost, there are some big gaps in cover that private health insurance can fill.

But let’s get down to brass tax. What exactly does private health insurance do that Medicare doesn’t? Can you get away with just using public health insurance, or will you ultimately regret it when those huge out-of-pocket expenses come knocking. We’re here to break down the differences – without any of the jargon – so you can make the best decision for your circumstances.

As our country’s publicly funded health insurance scheme, Medicare is an umbrella service that casts a wide net of medical services to Australians. In short, it covers all the necessary medical and hospital treatments and services deemed essential by the government. With Medicare, you can get access to free or subsidised treatments from all sorts of healthcare professionals – not just doctors, but specialists as well. You’ll also get a rebate for some medical services and tests, including x-rays, pathology reports and other diagnostic services.

In a public hospital, Medicare covers the full cost of treatment, including accommodation, food and nursing. However, you won’t get to choose your preferred doctor or surgeon, as this will be up to the hospital. Medicare will also cover part – or in some cases all – of the cost of some prescription medications through the Pharmaceutical Benefits Scheme (PBS). What’s more, Medicare covers some dental services for kids under the Child Dental Benefits Schedule and limited dental services for adults with certain medical conditions.

The program covers 85% of the Medicare Benefits Schedule (MBS) fee for non-hospital services and 75% of the MBS fee for in-hospital services carried out by doctors. In other words, it’s a way to guarantee that basic healthcare is given to all Australians without the burden of excessive medical bills – a huge boon at a time when the cost of living seems out of control.

Despite it being a cornerstone of our healthcare system, Medicare isn’t all-powerful. On the contrary, look beyond the surface and you’ll see it has some major limitations. It doesn’t cover ambulance services, which can mean out-of-pocket expenses in emergencies unless covered by a separate insurance policy or a state-based ambulance subscription. Medicare also excludes most dental treatments for adults, except for those under specific public dental programs, leaving patients to pay for dental care themselves or through private health insurance.

Then there’s the fact that Medicare doesn’t cover alternative therapies like chiropractic services, acupuncture and remedial massage – unless deemed necessary by a medical practitioner and conducted by a registered health professional. Likewise, Medicare excludes cosmetic surgeries that aren’t medically necessary, which can become a bit of a grey area for certain things. Perhaps biggest of all, Medicare doesn’t cover the cost of glasses, contact lenses or hearing aids, which impacts a huge portion of our population. If you want any type of cover for these costs, you’ll need to take out private health insurance.

Private hospital treatments, including elective surgeries, aren’t covered under Medicare. This means you can get stuck with long wait times in the public system. Medicare also only has relatively limited cover for mental health services, with a cap on the number of subsidised therapy sessions you can get every year.

On the other hand, private health insurance plans can give you extensive cover – especially when compared to just Medicare. One of the biggest pros of private cover is that it means patients can get treatment in private hospitals, where you can choose your own doctor or specialist and probably have a much shorter wait time for elective surgeries and other non-urgent medical procedures.

Private health insurance will cover a range of allied health services not included under Medicare. From physiotherapy to chiropractic to remedial massage and beyond, private insurance also covers dental treatments, such as regular check-ups, cleanings and orthodontic work, which can be a big financial relief for families with ongoing dental needs.

Then there are all the trimmings: cover for optical, including prescription glasses and contact lenses; ambulance services; mental health cover for counselling and psychology services; plus so much more.

No level of private health insurance is a cover-all. It does have its own limitations and exclusions, although there are much fewer compared to Medicare. Some policies won’t cover cosmetic procedures unless they are medically necessary. Like Medicare, this means you’ll need to pay out-of-pocket if you want something like a facelift or rhinoplasty. Other policies might exclude alternative therapies like acupuncture or naturopathy, unless included in their extras packages.

As you might have expected, there are still waiting periods with private health cover. They can range from two months to 12 months or longer, depending on the policy. Most policies also have annual and lifetime benefit limits, which cap the amount you can claim for certain services within a year or over your life. Once these limits are reached, any new costs must be covered by you.

At the end of the day, we recommend you do some homework and compare private health insurance policies from multiple providers so you can work out what is and isn’t covered – and then choose the most appropriate fund for you.

Pros:

• Good amount of cover: Medicare covers you for a range of essential medical services.
• Affordable: Medicare is free or low-cost for most services.
• Universal access: All Australian citizens and permanent residents get access to affordable healthcare through Medicare.

Cons:

• Limited cover: Some services, especially big ones like dental and optical, aren’t covered under Medicare.
• Long wait times: Public hospitals often have long wait times for elective surgeries and non-urgent treatments.

Pros:

• Shorter wait times: Having private health insurance means getting faster access to elective surgeries and specialist appointments.
• Your choice of service provider: You can choose your preferred doctor or specialist.

Cons:

• Cost: Private health insurance premiums can be expensive, especially for higher tiers like Gold hospital cover.

Take a good look at your current healthcare needs and your budget for premiums (including future increases) so you can settle on the best health insurance for your situation – whether that’s sticking with just Medicare or getting more comprehensive cover with private health insurance.

Regardless of what you end up going with, remember that having direct access to quality healthcare is what matters most – so be glad that we have excellent public and private health insurance systems here in Australia!