Australian and American Healthcare Systems

Australian and American Healthcare Systems


As Eike-Henner (2007) rightly observed, almost every country realises that a proper and effective healthcare system is crucial to the ‘maximisation of individual human potential’ and as a result, finding the right channel to deliver healthcare is a vital key in ensuring individual and social well-being. This fact derives from the understanding that healthy people are productive people and productive people make for a happy, healthy, harmonious and successful society (Eike-Henner, 2007).

Beside this fact, the importance of health to any society or country or derives from the fact that health is a major determinant of whether an individual “can compete on an equal footing with everyone else for the opportunities that exist within that society” (Eike-Henner, 2007). However, despite the universal acceptance of this importance of health, different countries structure their healthcare system along different paths, largely dependent on the country’s ethical orientation.

Eike-Henner identified three different ethical orientations that defines or determines the structure of any country’s healthcare system. The author observed that a country that takes as fundamental to its moral framework, the principles enshrined in the ‘Universal Declaration of Human Rights’, will structure  its healthcare system differently from a country that “considers utility and efficiency as primary values and whose ethical perspective is driven by the principle of the greatest good for the greatest number”.

As rightly argued by Leeder (2003) it is apparent that Australia’s healthcare system typifies the first society mentioned above, while the United States system falls in the second class. The Australian’s universal healthcare system is based on the principles of fundamental rights of equity and equality of access to healthcare, while the American system is more biased towards the greatest good for those that can afford it. The rest of this paper will further present this argument. The next section will briefly discuss the American healthcare system, followed by the Australian system. Comparisons will be made and inferences drawn.

The American Healthcare System

The United States Healthcare system has been described as the most expensive in the world, despite its poor performance, relative to other developed countries (Davis, 2007). Ginsburg and colleagues observed that high quality health care, without long waits, is readily accessible in the United States, but only for those who can afford it. There is no health insurance that covers everyone in the country. The country operates a public/private health insurance system. The public health systems, such as Medicare and Medicaid are financed by the federal and state government, while employers cover much of the private health insurance costs (Ginsburg, 2008).

 However, costs is the single greatest restricting factor in the American healthcare system, Families USA reported that the uninsured and underinsured population, primarily the poor and members of minority groups often have poor access to healthcare and poor health outcomes.

Generally, approximately 84 percent or 250 million Americans have one form of health insurance cover or the other. An estimated 15 percent of Americans do not have any healthcare coverage during any one-year period. The Centers for Disease Control and Prevention reports that an estimated 43.6 million were uninsured in 2006. Despite the large population of the uninsured in the country, it is estimated that about 16 million of those insured are underinsured i.e. their coverage does not include a host medical situations and medications.

Analysing the healthcare situation in the United States, Ginsburg et al noted that while people with health insurance, especially the wealthy that are covered through private health insurance, have ready access to quality healthcare; people without health coverage are much less likely to receive ‘recommended preventive services and medications, are less likely to have access to regular care by a personal physician, and are less able to obtain needed health care services’ (Ginsburg et al., 2008). The result is that while some part of the population are guaranteed prevention from preventable diseases, speedy treatment for chronic conditions and a long and health life, the other half of the population fall prey to preventable diseases, suffer complications arising from chronic conditions and are more likely to live a short and painful life (Ayanian, 2000; McWilliams, 2007).

Further compounding the selective nature of the American healthcare system is the fact that, even within the insured, and those that can afford healthcare delivery, wide variations exist with regards to cost, utilization, quality, and access to health care services. For example, Ginsburg and colleagues noted that “Medicare spending per capita in 1996 was $8414 per enrolee in the Miami, Florida, region compared with $3341 in the Minneapolis, Minnesota, region” (p.55). They noted that the much of these differences relates to variation in the quantity of services provided per capita. In sum, the author concluded that clear variations exist in the US healthcare delivery system based on race, ethnicity and socioeconomic status. Without doubt, this buttresses Leeder’s contention that the American healthcare system is based on the principles of opportunity.

The Australian Healthcare System

The Australian healthcare system has several similarities with the American system; the most important being the presence of the public/private mix in health financing and coverage and the other being the presence of a strong and visible private physician and private insurance interests in the presence of an enduring public healthcare system (Oklahoma Medical Research Foundation, 1992; Hall, 1999). But that is where the similarities seem to end.

In contrast to the American system, in the Australia, the publicly financed health coverage is the dominant health system, while the private coverage, serves majorly as an alternative for those who desire additional service. Again, unlike what is obtainable in the United States, the Australian health care system ensures basic health care for everyone, irrespective of socioeconomic status or ability to pay. All permanent residents have the right to public hospital treatment at no charge (Hall, 1999). Public hospitals that provide the required universal health care delivery and funded through a combination of state/territory and federal (commonwealth) revenues. As a result, patients enjoy free choice of providers, especially in primary care.

Comparing the American and Australian healthcare system, the Oklahoma Medical Research Foundation observed that the primary purpose of the Australian healthcare system is to ensure that each and every Australian is covered by a meaningful health insurance policy and receives basic, quality and accessible health care delivery, as at when needed. Furthermore, the system enables individuals who have the resources, to supplement the public coverage at subsidised rates. This supplementary coverage provides additional convenience and amenities at private hospitals and an expanded menu of covered services.

Also, unlike in America, the Australian healthcare system seeks to control and regulate the growth of the private health coverage. The government essentially achieves this by issuing building permits for private hospitals and setting regional bed capacity limits.  To further strengthen this, the government also adopts two balancing measures that discourage the growth and/or dominance of private health insurance (Hall, 1999).

First, as individual hospitals tend to seek more private patients, the government reduces public revenue accruable to the hospital. This arrangement discourages hospitals from seeking private patients at the detriment of ‘publicly’ patients. Second, there are no incentives for individuals or employers to buy private based health coverage. Private insurance premiums paid by employers are taxed by the government, while private insurance premiums paid by individuals must be paid for through after-tax income. This combination of measures ensures that nobody is treated preferentially, as is the case in the private coverage dominated US healthcare system. In essence, every citizen receives equal access to health care. This fact is buttressed by the fact that when Medicare started in 1985, 65 percent of Australians had supplemental private insurance, four years later in 1989, that figure had dropped to 45 percent. This shows that the healthcare system encourages universal publicly financed coverage for all, instead of the selective privately financed healthcare systems.

Furthermore, unlike in America, Australian hospitals are predominantly public hospitals and are governed by the states. The teaching hospitals and other public hospitals are able to provide quality care and are well funded. To strengthen the hospitals and reduce competition, hospitals are encouraged to to cooperate and collaborate in the use of expensive technology. It is estimated that 70 percent of hospital beds in Australia are in public hospitals and major teaching hospitals. And these hospitals are funded on the basis of services rendered (

The majority of physicians in the Australian health care system (about 77 percent) are paid on fee-for-service system too. The others are salaried. The Medicare program uses a standard fee schedule that applies to all third parties, public or private. Medicare pays 75 percent of the fee for physician services in hospitals and 85 percent of the fees for other physician services. While it is theoretically possible for physicians to set their fees above the standard and balance bill, this is not commonly the case, as patients have been known to resent such practice (Oklahoma Medical Research Foundation, 1992). As a result, physician fees have largely remained standardised and Australian physicians are said to earn, on average, about 2.2 of the average Australian income, unlike in the United States where physicians earn over five times the country’s average income (Hall, 1999).

Australian also has a universally accessible Pharmaceutical Benefit Scheme (PBS) that subsidises the cost of medication for every permanent resident. The only medications exempted from the PBS coverage include drugs like Viagra that are not considered ultimately necessary. Aged pensioners and people on low income are required to pay $3.60 (Australian dollars) out-of-pocket for pharmaceuticals, while others pay $22.40 per prescription. To cut down the expenditures on medication for those with chronic conditions, the PBS has a ‘safety net’ on total expenditure for a patient or family in a year. For example, after 52 prescriptions in a single year, pensioners can receive prescription at no extra charge, while for others, after spending $686.40 within a single year, pay $3.60 for any further prescription throughout the year (

Inferences and Conclusion

From the discussion so far, several conclusions can be drawn. The first is that the United States and Australian healthcare system share some similarity. They are similar in the sense that both systems permit the visible presence and expansion of private health care systems, in the presence of a dominant public health care delivery channels. They are also similar in that, both countries’ public healthcare systems are jointly financed by states and federal governments through revenues accruable from income tax. However, the similarities seem to end here.

As Eike-Henner (2007) pointed out, healthcare systems often reflect the ethical orientation of a society or country. The American healthcare system is advanced technologically and with well trained medical professionals, however, the cost of access to this health care system is very inhibitive, making it only available to those who can afford it. This argument well presented in a statement quoted in Leeder (2003), “In the US, people are less interested in making sure everyone gets care than that those who can get it get great care. They accept not getting care now if they can see the opportunity to improve their position and succeed, so that, when they get the money, they will be able to buy great care the minute they want it”.

But, in contrast, the Australian system is based on the ethical orientation that each and every citizen should access to basic health care, irrespective of socioeconomic or racial status. The system ensures that everyone, everywhere enjoy equal access to the same quality of care. To make the public system functional and competitive, private hospitals are allowed to grow, but the growth is controlled, such that privately financed health care delivery does not become dominant. As such, it is quite clear, as argued by Leeder, that the American health care system is based on opportunities, while that of Australia is based on the principle of equity and fairness to all.


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