Private health insurance

Australians enjoy universal public health insurance, Medicare, financed through progressive personal income tax and an income-related levy. They also have the option to take out privately funded health insurance to cover the costs of becoming a private patient in a private or public hospital, medical costs in hospital, and costs associated with services not covered under Medicare (such as ambulance, natural therapies and private dental care).

Health insurance funds offer hospital covers and ancillary covers and a combination of these.

Private health insurance is provided through organisations registered under the National Health Act 1953. There are two types of private health funds: restricted membership organisations (such as employees of a particular firm or industry) and funds open to the general public.

Private health insurance funds are registered with and monitored by the Private Health Insurance Administration Council, a statutory authority. Private health insurance providers adhere to the the Private Health Insurance Code of Conduct, a voluntary, self-regulatory industry code.

The Private Health Insurance Ombudsman deals with inquiries and complaints about any aspect of private health insurance. The Private Health Insurance Ombudsman is an Australian Government agency but acts independently in dealing with complaints and is independent of the private health funds and health service providers.

Australians under 65 years of age, eligible for full Medicare benefits, enjoy the Federal Government's 30% rebate on private health insurance premiums. The rebate is 35% for people aged between 65 and 69 and 40% for those aged 70 and over.

Australians who took out hospital cover before 1 July 2000 and maintain it, only pay a base rate regardless of their age, pursuant to the Federal Government's Lifetime Health Cover initiative.

Private health insurance organisations are regulated by the Federal Government to ensure affordable access to private health insurance for all through the principle of community rating. Pursuant to this principle, the insurance premium is the same regardless of the health status or claims history of a member or new member. Reinsurance supports the principle of community rating by sharing between health insurers the hospital and medical costs of high risk members admitted to hospital. Funds with a greater proportion of low risk members contribute into a reinsurance pool and those with a greater proportion of high risk members receive transfers from it.