Medicare vs Private Health Insurance

What is Medicare?

Medicare is Australia’s universal health insurance scheme. It subsidises hospital and medical services at low or no cost to patients, and there are even Medicare safety nets to help people save money if they use lots of medical services in a year.  

If you’re an Australian citizen with a Medicare number, you can use Medicare. Just remember it doesn’t cover everything health related. New glasses, adult dental, ambulance transport and many other out-of-hospital health needs aren’t included. However, you could be sorted for some kids’ dental, pathology tests and biopsies for that mole you’re a little suspicious of. 

What is private health insurance? 

If you’re after cover for something Medicare doesn’t include or just want a little bit more of a VIP experience in hospital, private health insurance could be the answer. There are different policies with different inclusions and exclusions, which you can choose from to suit your budget and lifestyle. This includes picking Hospital Cover, Extras Cover, Combined Cover or simply Ambulance Cover. 

Once you find a policy you like, you’ll pay the insurer a regular premium to keep the cover active. You’ll likely have to serve some waiting periods too, along with sticking to preferred providers. Your policy document will outline what’s what. 

While not every Australian has private health insurance like they do with Medicare, as of March 2024, 44.8% of the population has Hospital Cover while 54.6% has Extras Cover.¹APRA – Quarterly private health insurance statistics: March 2024, p2 

Is Medicare or health insurance better for me? 

Whether you prefer Medicare or private health insurance can come down to where you are in your life. If you’re young, healthy and not planning on starting a family any time soon, Medicare might be all you want. However, you could also find you have more peace of mind with private health insurance if something were to happen. Plus, proactively looking after your health (like seeing your dentist more than once every few years) could help you get more value out of your insurance.  

Alternatively, you may be all about the figures, particularly the ones on your tax bill. For example, in a survey of 1,000 Australians, we found that 43% of those who had private health insurance bought it at least in part to avoid paying the Medicare Levy Surcharge (MLS).²iSelect commissioned i-Link Research to conduct a national online survey between 8 May and 16 May 2024. The sample is n=1,000 Australians 18+ years, with data weighted to represent the population by age, state and gender, and is representative of all Australian adults 18+.

The table below gives you a quick overview of how the two shape up on different issues and what they either fully or partially cover.

	Medicare	Private health insurance
Coverage	Most surgeries and procedures, including follow-up care Emergency care Consultations with GPs, specialist and other health practitioners Diagnostic imaging Some dental for children Some mental health services Pathology tests Eye tests Some medications	Depends on tier and policy but can include: Some or all of the hospital services Medicare covers Emergency transportation (if not covered by your state government) Physio General and major dental Glasses and contact lenses Speech therapy Some medications not covered by Medicare
Choice	Can’t choose hospital or doctor	Can choose from hospitals and doctors who have agreements with insurer Restricted to preferred providers
Out-of-pocket costs	Depends on the treatment but generally low to no cost Medicare safety nets can help minimise your annual spend	Can include excesses, co-payments and gap payments Medicare can cover some hospital costs too
Tax	If you earn above the threshold and don’t have private health insurance, you’ll need to pay the Medicare Levy Surcharge	If earn above the income threshold, having suitable hospital cover means you won’t need to pay the Medicare Levy Surcharge You can receive the private health insurance rebate if your income is below the threshold If you don’t get private health insurance before you turn 31 and take it out later, you’ll need to pay Lifetime Health Cover loading for 10 years
Waiting periods	No waiting period to access Medicare, but there can be long waiting lists for elective surgery	Hospital cover has set waiting periods, while insurers can decide their waiting periods for Extras Cover Skip the public system waiting lists

‘I have two chronic health conditions — lipoedema with secondary lymphoedema — which need long-term management, with support from all types of health practitioners, like a massage therapist and physio, plus hospital outpatient services. Medicare doesn’t cover much of these, but thankfully my private health insurance does. It also has cover for mental health services if my diagnosis and treatment ever get me down.’

Madeline Pettet
Digital Writer, iSelect

How are public and private hospitals different? 

No one looks forward to a stay in hospital — there are far better holiday destinations out there — but you can still have plenty of preferences about what your ideal stay would be like. For some people this might include a private room and choosing a doctor they’re comfortable with. Others, however, might just want to leave without a bill in hand. 

We’ve pulled together some of the differences between public and private hospitals below, along with some real-life experiences from the iSelect team. All this information might help you make up your mind on your preferred hospital experience or at least get you thinking about it further. 

‘I know that surgeons are very well educated and qualified, but I thought, if I’m going to be undergoing a major surgery, I don’t want just anybody. With my private health insurance, I was able to ‘shop around’ and meet with a few surgeons. Some of them I just didn’t vibe with or didn’t feel like they understood how much pain I was in. Anyway, I picked a great one; he even has a physio attached to his practice that’s familiar with my particular injury.’

Brittany Salkeld
SEM Manager, iSelect

‘I’ve been lucky (or unlucky) enough recently to experience both Melbourne’s public and private hospital systems. Public: when I slammed my mum’s hand in the car door (sorry, Mum) and spent a day with her in the nearest emergency ward. Private: when I had day surgery at a local clinic. The clinic’s fancy chairs, art and coffee table books were sort of fun, but the care and treatment at both places was great.’

Ellie Garran
Digital Editor, iSelect

Where can I find and compare health insurance? 

With private health insurance, you can tailor your cover to suit your needs for now and into the future. Medicare will always be there, but you might find it doesn’t always include what you’d like, and health insurance could fill the gaps. 

To see what you could be covered for, you can compare a variety of health insurance policies from different providers with iSelect. You can also call us on 1800 784 772 to speak with one of our health comparison experts. health insurance can be tricky whether you’ve always had it or it’s your first time. That’s why we’re here to help you save you time and effort.