Medicare is Australia's publicly-funded, universal health scheme, providing affordable treatment by doctors and in public hospitals for all citizens and permanent residents (as well as tourists from countries which have reciprocal arrangements with Australia).
The scheme was introduced in 1983 by the Labor Federal Government of Bob Hawke, following on from the earlier Medibank scheme introduced by the Whitlam Government in about 1974. It is nominally funded by an income tax surcharge known as the Medicare levy, but in practice the levy raises only a fraction of the money required to pay for the scheme. The Medicare levy is currently set at 1.5% of annual personal income for all taxpayers except those on very low annual incomes. The Medicare levy is set at 2.5% of personal income for those on high annual incomes yet do not have private health insurance coverage. This is part of an effort by the current Liberal Party Federal Government to encourage people to be responsible for arranging their own private health insurance policies.
In Australia, government-run hospitals are actually built and operated by the various State and Territory governments. Therefore, in practice, the state governments, as well as private doctors, act as pseudo-contractors for the Medicare scheme, providing medical services at fixed rates for the federal government. There are also some private not-for-profit hospitals run by various organisations - for instance the Sisters of Charity religious order operate St. Vincents Hospital in Sydney, yet this hospital is still part of the Medicare system.
For most outpatient services, Medicare funds 85% of the scheduled fee for the service, leaving the patient to pay the remainder (up to a maximum level of $52.50). Treatment in a public hospital is fully subsidised. Some doctors bill the Medicare system for the 85% directly without requiring the payment for the remaining 15% from their patients - this practice is known as bulk billing. Other doctors bulk-bill only patients who can not afford to pay medical fees out-of-pocket; still other doctors don't bulk-bill at all. Bulk billing is often very rare outside large cities where there is a chronic shortage of medical practitioners.
Despite the universality of the system, approximately 30% of Australians also retain private health insurance, a proportion that was declining but has increased again with the introduction of lifetime community rating (where people who enter health insurance later in life pay higher premiums than those who have held coverage since they were younger) and tax incentives to take out private cover. These patients prefer private cover to fund their stays in private hospitals (which offer private rooms, better food, and other amenities making hospital more tolerable) and on-demand treatment for elective surgery such as joint reconstructions or heart bypass surgery (for which there are often long waiting times in the system of public hospitals).
Medicare has been popular with the general public since its inception, but is disliked by many in the medical profession (possibly because it caps their fees and thus income). The conservative side of politics would like to reduce its coverage, but have found it too popular to tamper with thus far. However, conservative Prime Minister John Howard has recently announced his Government's intention to reform Medicare, including the restriction of bulk-billing to patients on low incomes and incentives for doctors to practice in rural areas suffering from shortages of doctors. Critics on the left of Australia's political scene believe these reforms will create a two-tier system of health care and reduce the universality of Medicare coverage.
There are several related services for other government-managed aspects of the health system, such as the Pharmaceutical Benefits Scheme, which provides prescription drugs at heavily subsidised rates. State and Territory Governments also sometimes administer peripheral health programmes, such as free dentistry for school students and community sexual health programmes.
