Plenty of Australians pay for private health cover without being able to say what it buys them that Medicare wouldn't. Plenty of others skip it on principle, then meet a tax bill they never saw coming.
Both groups would do better starting somewhere less ideological: what would you be buying, and what does Medicare already pay for?
What private cover actually buys
Mostly, it buys choice of doctor. A public patient can't pick one, while a private patient can.
It doesn't always buy speed, since a private patient in a public hospital still faces public waiting lists. Nor does it buy a bill of zero: if your policy restricts a benefit, you pay the difference.
Hospital policies come in gold, silver, bronze and basic tiers, and the distance between them can be the distance between a claim and a shrug. That spread is why a price-only search misleads and why any decent guide to comparing private health insurance in Australia asks about cover level, waiting periods and gap fees before it gets to the premium.
What Medicare already gives you
Medicare is more generous than the sales pitch for private cover tends to suggest. Under the rules set out on the Federal Government's private health portal, you can be treated as a public patient in a public hospital at no charge.
It also reimburses 100% of the Medicare Benefits Schedule (MBS) fee for a GP and 85% for a specialist. The catch sits in that word "fee", because the schedule is the government's number rather than your doctor's and any difference lands on you.
The exclusions are just as specific: most dental work, most physiotherapy, glasses, contact lenses, hearing aids and ambulance services all sit outside Medicare.
Those bills add up. Francesco Paolucci and Josefa Henriquez, writing here in 2022 on why patient access to healthcare in Australia is so unfair, put the out-of-pocket share of health spending at up to about 20%, against roughly 8.2% funded by private insurers.
The questions worth asking
Would the tax system charge you anyway? For 2026-27, the Medicare Levy Surcharge (MLS) applies to singles with an income for MLS purposes above $105,000 and to couples or families above $210,000, at between 1% and 1.5% of that income.
Only hospital cover gets you out of it. Extras cover alone doesn't count and a qualifying policy can't carry an excess above $750 for a single or $1,500 for a couple or family.
How old are you? Lifetime Health Cover (LHC) loading adds 2% to your hospital premium for every year you're over 30 when you join, up to 70%. It drops off after 10 years of continuous cover, so joining at 40 means paying 20% more for a decade.
What would you realistically use? Hospital cover and extras cover solve different problems and people often buy them as a bundle without pricing either one. Someone with a dental plan already in motion is doing different arithmetic from someone who sees a GP twice a year, so add up what you spent last year before you look at a single policy.
Extras deserves its own audit, because each service usually carries its own annual limit. Set a year of premiums against what the policy paid back and you'll soon know whether you hold insurance or a prepaid dental plan with a margin on top.
Could you live with the public queue? For many people and many conditions, the answer is yes. A public waiting list and an unchosen doctor are real costs, but they're yours to weigh, and they don't land the same way on everyone.
What would your own bill look like? Before any planned procedure, ask the doctor for the fee in writing and ask your fund what it'll pay against that fee. The gap between those two answers is the number most people only learn afterwards.
The argument above the household budget
None of this settles whether Australia's split between public and private makes sense. Paolucci and Henriquez went as far as proposing, in Medicare reform requires radical thinking', that private insurers cover all GP and primary care costs, an idea plenty of Medicare's defenders would resist.
That debate matters and it won't be finished before your next tax return. Until it is, the sensible position is to treat private cover as a purchase rather than a badge: price the surcharge, the loading and your likely use, then decide with the numbers in front of you.
This is general information only, not personal financial or tax advice, so check your own circumstances with a registered tax agent before acting on it.
