When it comes to health cover in Australia, there are two main options: Medicare and private health insurance. Both provide support with healthcare costs, but they serve different purposes and cover different services depending on your needs.
Medicare provides free or subsidised treatment for essential medical services, but many Australians choose to supplement this with private health insurance for additional cover and more flexibility in their care.
As of December 2025, around 46% of Australians have private hospital cover, while more than half hold extras cover, according to the Australian Prudential Regulation Authority (APRA).
Understanding what each option covers can help you make sense of your healthcare choices.
Private health insurance vs Medicare: coverage at a glance
Medicare and private health insurance both help with healthcare costs, but they cover different services. Here’s an overview of what each includes:
| Cover type | Medicare | Private health insurance |
|---|---|---|
| Hospital treatment |
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| Out-of-hospital medical services |
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| Routine out-of-hospital care (extras) |
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| Pharmaceuticals |
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| Ambulance |
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How does Medicare work?
Medicare is Australia’s public healthcare system. Funded by the Australian Government, it provides access to free or subsidised medical care for all Australian citizens and eligible permanent residents.
It helps cover a wide range of essential healthcare services, including emergency and hospital treatment, visits to doctors and specialists, diagnostic tests and imaging, and subsidised prescription medicines through the PBS.
The pros and cons of Medicare
Pros
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Affordable access to healthcare
Provides free or low-cost care for essential medical services, including treatment for serious conditions.
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Universal access
All Australian citizens and eligible permanent residents are covered, regardless of income, health and age.
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No need to manage cover or policies
Access is automatic, with no premiums, fund choice or policy decisions required.
Cons
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Longer waiting times and limited choice
Patients may experience longer waits for elective procedures and less control over doctor or hospital selection.
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Out-of-pocket costs still apply
Not all GP visits or specialist services are bulk billed, meaning some gaps may still need to be paid.
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Limited or no coverage for some services
Many services such as dental, optical and physiotherapy are not included, leading to additional out-of-pocket costs.
How does private health insurance work?
Private health insurance is cover you take out with a health fund and pay for through regular premiums. It helps contribute towards eligible healthcare costs when you have treatment as a private patient.
There are two types of private health insurance, which can be taken out on their own or as a combined policy:
- Hospital cover, which helps with the cost of treatment in hospital as a private patient.
- Extras cover, which helps pay for out-of-hospital services like dental, optical and physio.
While private health insurance isn’t mandatory in Australia, it can help “fill the gaps” by paying towards healthcare costs not fully covered by Medicare, while also providing more choice and flexibility in treatment options.
There are also financial incentives to take out private health cover. It can help you avoid paying the Medicare Levy Surcharge (MLS) if you earn above a certain income threshold, and taking out cover earlier in life can help you avoid or reduce Lifetime Health Cover (LHC) loading, which increases premiums the longer you wait to join.
The pros and cons of private health insurance coverage
Pros
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More choice in treatment
Private hospital cover can give you more control over your healthcare, including the option to choose your doctor and hospital.
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Shorter waiting times
It can help reduce waiting times for elective surgery and other planned procedures by allowing you to be treated as a private patient in a private hospital.
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Broader coverage for everyday health needs
Extras cover can help pay for services not included under Medicare, such as dental, optical and physiotherapy.
Cons
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Ongoing cost
Private health insurance comes with regular premium payments, which can be expensive depending on the level of cover.
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Out-of-pocket expenses still apply
Even with cover, you may still need to pay gaps or costs not fully covered by your policy.
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Waiting periods apply
You can’t always claim straight away, as most policies include waiting periods before benefits become available.
Can I have both private health insurance and Medicare?
Yes, you don’t need to choose between Medicare and private health insurance. Instead, private health insurance can build on the cover you already have through Medicare.
In Australia, access to Medicare is automatic if you’re an eligible citizen or permanent resident, and you can’t opt out of it, even if you don’t use it. You can still access and claim Medicare benefits in full, even if you also have private health insurance.
Private health insurance works alongside Medicare by adding cover for additional services, giving you more choice in where and how you’re treated, and helping reduce out-of-pocket costs for eligible treatment in the private system.
