What Is Medicare?
Medicare is Australia's universal public health insurance scheme, providing eligible residents with access to a wide range of medical services — either free of charge or at a subsidised cost. Established in 1984, Medicare is jointly funded by the Australian Government and Australian taxpayers through the Medicare Levy.
At its core, Medicare aims to ensure that no Australian faces financial hardship simply because they need medical care. Whether you're visiting a GP, getting a blood test, or having an X-ray, Medicare helps cover the costs so that healthcare remains accessible to everyone.
How Is Medicare Funded?
Medicare is primarily funded through two mechanisms:
- The Medicare Levy: Most Australian taxpayers pay a Medicare Levy of 2% of their taxable income each year. This contribution forms a significant part of the Medicare funding pool.
- General government revenue: The remaining funding comes from broader federal government revenue, meaning the Medicare Levy alone doesn't cover the full cost of the scheme.
People on very low incomes may be exempt from the Medicare Levy or pay a reduced amount. The Medicare Levy Surcharge is a separate charge that applies to higher-income earners who don't hold an appropriate level of private hospital cover.
What Does Medicare Cover?
Medicare covers a broad range of health services, primarily through two key programs:
Medicare Benefits Schedule (MBS)
The MBS is a list of medical services that Medicare subsidises. For each listed service, there is a set fee (the Schedule Fee), and Medicare pays a rebate — usually 85% of the Schedule Fee for specialist services and 100% for GP services in bulk-billing arrangements.
Commonly covered MBS services include:
- General practitioner (GP) consultations
- Specialist appointments (with a valid referral)
- Pathology tests (blood tests, urine tests, etc.)
- Diagnostic imaging (X-rays, ultrasounds, CT scans)
- Some surgical and procedural services
- Mental health services under a Mental Health Care Plan
Pharmaceutical Benefits Scheme (PBS)
While technically separate from Medicare, the PBS works alongside it to subsidise the cost of a wide range of prescription medicines. Australians pay a standard co-payment for PBS-listed medicines, with concession card holders paying a reduced amount.
What Medicare Does NOT Cover
It's equally important to understand Medicare's limits. Medicare does not cover:
- Dental care (for most adults)
- Elective cosmetic surgery
- Ambulance services (covered separately by state schemes or private insurance)
- Physiotherapy, occupational therapy, and most allied health (except under specific care plans)
- Glasses and contact lenses
- Private hospital accommodation and associated costs
How Medicare and Bulk Billing Work Together
When a doctor or provider bulk bills, they accept the Medicare rebate as full payment for their service. This means the patient pays nothing out of pocket. Not all providers bulk bill — some charge above the Schedule Fee, leaving patients to pay the difference (known as a "gap" payment).
Who Administers Medicare?
Services Australia (previously the Department of Human Services) administers Medicare on behalf of the Australian Government. You can access Medicare services through myGov, the Express Plus Medicare app, Medicare service centres, or via your healthcare provider directly.
Key Takeaways
- Medicare is Australia's universal health insurance, funded by the Medicare Levy and general revenue.
- It covers GP visits, specialist consultations, pathology, imaging, and more via the MBS.
- Bulk billing means no out-of-pocket costs for the patient.
- Medicare does not cover dental, ambulance, or most allied health services.
- Services Australia manages enrolments, claims, and rebates.
Understanding how Medicare works is the first step to making the most of your entitlements. Explore the other guides on this site to learn about enrolment, claiming rebates, and how private health insurance fits into the picture.