Health system overview

Every day, millions of Australians come into contact with the health system. It may be through health promotion and disease prevention programs such as school-based vaccinations; an appointment with a general practitioner (GP); a visit to the pharmacist to pick up a prescription; or a more complex interaction, such as being admitted to hospital for surgery. A key role of the health system is to respond to these individual needs by providing safe, effective, accessible and appropriate treatment and other services.

Australia’s health system is a complex mix of service providers and other health professionals across a range of organisations. These include Australian and state and territory government and private sector service providers. Collectively, the health system works to meet the physical and mental health care needs of Australians.

The complex structure of Australia’s health system is reflected in its funding arrangements. The health system is funded by Australian and state and territory governments as well as non-government funders such as private health insurers and individuals. 

For information on how much is spent on health goods and services, the sources of health funding and trends in the distribution of health spending, see Health expenditure.

The health system is not the only system playing a part in health outcomes. Health can be influenced by many other factors, including social and economic factors like education, housing and employment. For more information, see Social determinants of health and What are determinants of health?

Who is responsible for the health system?

The Australian and state and territory governments broadly share responsibility for funding, operating, managing and regulating the health system. The private for-profit and not-for-profit sectors also play a role in operating public and private hospitals, GP surgeries, pharmacies and medical practices, specialist clinics, dental clinics as well as providing private health insurance products (Department of Health 2019).

Health services are delivered by a range of health professionals working in a variety of settings, from large hospitals (in capital cities and regional centres) to small health clinics (such as those in remote areas). Australia’s health workforce includes GPs, surgeons and other medical specialists, nurses and midwives, dentists, allied health practitioners including Aboriginal and Torres Strait Islander health workers, paramedics and administrative and other support staff. For more information, see Health workforce.

A variety of organisations support health services. Government health departments and other agencies are responsible for policy and service planning. Government departments, and research and statistical organisations collect and publish information on Australians’ health status and health conditions, use of health services and the performance of the health system. Universities and health services train health professionals. Consumer and advocacy groups have a role in public debates on policies and regulation. Voluntary and community organisations also provide support directly to individuals, as well as fundraising for research and awareness raising through health advocacy programs.

Australia also has Primary Health Networks, which are independent organisations funded by the Australian government to support local communities connecting with the health services they need, where and when they need them. Primary Health Networks work directly with GPs, other primary care providers, secondary care providers and hospitals (Department of Health 2021b).

Role of government

Through the Health Ministers’ Meeting (HMM), state and territory government health ministers, together with the Australian Government Minister for Health and Aged Care, work together to shape Australia’s health system with the aim of improving health outcomes and ensuring the sustainability (Department of Health and Aged Care 2023a). 

The main roles of each level of government in Australia’s health system are:

The Australian Government:

• develops national health policy
• funds medical services through Medicare and medicines through the Pharmaceutical Benefits Scheme (PBS)
• provides funds to states and territories for public hospital services
• funds population-specific services, including community-controlled Aboriginal and Torres Strait Islander primary health care, health services for veterans, and residential aged care
• funds health and medical research
• regulates medicines and medical devices
• supports access to, and regulates, private health insurance.

State and territory governments:

• fund and manage public hospitals
• regulate and license private hospitals and other health premises
• regulate products with health impacts such as alcohol and tobacco
• deliver community-based and preventive services (for example, cancer screening and immunisation), ambulance services, and address complaints.

Local governments in some jurisdictions can be involved in:

• delivery of community and home-based health and support services
• environmental health services (for example, waste disposal, water fluoridation)
• public health activities.

Additionally, all levels of government have shared responsibilities, including education and training of health professionals, regulation of the health workforce, food standards and safety, improving the safety and quality of health care and funding of programs and services (Biggs and Cook 2018; Department of Health 2019; Duckett and Willcox 2015).

What services are available?

Many services are required to meet the health needs of Australians and deliver a high-quality health system. These include:

• Health promotion and health protection and disease prevention programs, which focus on improving health and preventing the root causes of ill health. This includes immunisation and vaccination, healthy lifestyle initiatives and cancer screening.
• Primary care, which is often a person’s first contact with the health system. It comprises frequently accessed services including general practice, allied health and other primary care services, dispensing medicines, and community health.
• Specialist care, which provides services for those with specific or complex conditions or issues. This includes mental health services, cancer treatment, alcohol and other drug treatment services, palliative care and clinical assessment for surgery. Specialist care also includes pathology, imaging and other diagnostic services and referred medical specialist services, where the patient’s presentation to the specialist is recommended by another medical practitioner.
• Hospitals, where health services are provided to admitted and non-admitted patients (outpatient clinics and Emergency Department care).

Most Australians have exposure to preventive health measures across their life, from educational campaigns to free vaccines. Australians can utilise health services as needed, dependent on their health needs and personal circumstances. 

Medicare

Australia’s health system is underpinned by Medicare – a universal health insurance scheme. Medicare pays rebates for medical services and procedures provided by private practitioners in the community such as GPs and other medical practitioners, and ensures Australians have access to free hospital services for public patients in public hospitals and a range of prescription pharmaceuticals subsidised under the PBS (Biggs 2016).

Medicare is currently available to Australian and New Zealand citizens, permanent residents in Australia, and people from countries with reciprocal agreements (Department of Health 2019). People outside these categories have to pay full fees for health services or take out private health insurance (Private Health Insurance Ombudsman n.d.).

For more information, see Medicines in the health system, Referred medical specialist attendances, Pathology, imaging and other diagnostic services and General practice, allied health and other primary care services.

Private health insurance

Some medical and allied health services are not subsidised through Medicare. For example, Medicare does not usually cover costs for ambulance services, most dental services and optical aids (such as glasses and contact lenses). 

For these services, private health insurance is one option for managing health care costs (Department of Health 2021a). Private health insurance can also give people with cover the option to avoid waiting lists in the public system and the ability to choose their own doctor (Biggs and Cook 2018). 

The Australian Government offers a means-tested rebate to people who hold private health insurance and imposes the Medicare Levy Surcharge on higher-income earners who do not have an appropriate level of private patient hospital cover (ATO 2023).

Hospitals

Hospitals are an important part of the health system, providing a range of services to many people in need. Australians admitted to public hospitals should have access to fee-free treatment as public patients (Department of Health and Aged Care 2023b). Public hospitals are largely owned and managed by state and territory governments. The Australian Government contributes to state and territory public hospital funding through the National Health Reform Agreement (Department of Health and Aged Care 2023c). 

Private hospitals are owned and run by the private sector, including both for-profit companies and not-for-profit organisations. Private hospitals charge for their services and receive income from:

• private health insurers
• patients (who pay out-of-pocket expenses not covered by their health insurance policy, and any excess payments based on their policy)
• the Australian Government (through private health insurance rebates, the Department of Veteran’s Affairs and Medicare Benefits Schedule claims)
• state and territory governments when they contract private hospitals to deliver public hospital services (Department of Health and Aged Care 2023d).

For more information, see Hospitals. 

Health system challenges

Australia’s health system faces complex challenges. Some have the potential to influence patient experiences, the delivery of services and quality of care. The COVID-19 pandemic is a recent example of this. The pandemic transformed the way Australians used health services and how they were delivered. Throughout the pandemic, some services were suspended and/or forced to transition to telehealth. Hospitals experienced increased demand as COVID-19 cases and admissions rose and some people were hesitant to seek health care for fear of contracting COVID-19 (AIHW 2022). 

Examples of other health system challenges in Australia include:

• Digital health technologies: Australia’s health sector has a long history of using innovative technologies to improve health care delivery, empower health care users and providers to better manage health outcomes, and strengthen data systems. However, not all health providers and consumers have the same access to and experience with digital technologies. For more information, see Digital health.
• Good health data: While there are good quality health data available in Australia, some health data gaps remain. These gaps in comprehensive and quality information in crucial areas of the health system can limit the capacity for population health monitoring, research, planning and policy development. It can also create an imbalance in understanding the health system as a whole. For example, the relative lack of data for primary health care makes it difficult to assess the positive impact of the primary health care sector on the health of Australians or to identify where improvements are needed. Data linkage can support more meaningful insights by enabling data from one database to supplement data in another. For more information, see Australia’s health 2024: data insights article Australia’s health data landscape.
• Ageing population: As life expectancy and the number of older people in Australia continues to grow, understanding the diversity within older population groups and catering to changes in health care needs and the demand for health care is becoming even more important. For more information, see Health of older people.
• Chronic conditions: Chronic conditions are a leading cause of poor health, disability and premature death in Australia and continue to place a large demand on both the primary care and hospital system. As the proportion of people living with 2 or more chronic conditions continues to rise, so does the need for services from multiple providers, across multiple systems such as aged care, disability, education and social services. For more information see, Australia’s health 2024: data insights article The ongoing challenge of chronic conditions in Australia.

For more information, see COVID-19, Social determinants of health, What are determinants of health? and Australia’s health 2024: data insights article Enhancing communicable disease monitoring in Australia through data linkage.

Where do I go for more information?

For more information on the health system, see:

• Australia’s Health Performance Framework
• Department of Health and Aged Care The Australian health system
• Department of Health and Aged Care Mid-Term Review of the National Health Reform Agreement Addendum 2020-2025: Key recommendations from the Review