Australia: #9 in the 2024 World Index of Healthcare Innovation

Introduction

In the 2024 World Index of Health Innovation, Australia secured the 9th position overall, a decline from 5th place in 2022. This ranking highlights Australia’s strengths in Quality and Choice, where it stands 6th and 3rd respectively. These rankings reflect the effectiveness of Australia’s unique dual-tiered public-private health system. However, the country faces challenges in Science & Technology and Fiscal Sustainability, ranking 16th and 20th in these areas, respectively.

Background

Australia’s healthcare system operates as a public-private hybrid, analogous to the dual-tier educational systems in countries like the United States. All Australian citizens fund the public healthcare system through taxes, even those who choose to utilize private services. This public system, known as Medicare, offers universal coverage to all Australian citizens, permanent residents, and New Zealand citizens residing in Australia.

As of 2024, Medicare includes several key programs: the Original Medicare Safety Net, which caps individual out-of-pocket expenses for non-hospital services at $467 AUD ($302 USD) annually; the Extended Medicare Safety Net, which covers 80 percent of additional out-of-pocket costs above a threshold of $678 AUD ($439 USD); and the Greatest Permissible Gap, limiting charges per out-of-hospital service to $83 AUD ($54 USD).

Despite the comprehensive coverage provided by Medicare, private health insurance remains popular, with uptake increasing to 47 percent of the population. This is attributed to the enhanced choice and reduced waiting times for elective procedures offered by the private sector. The government supports this dual system by offering tax rebates for private insurance enrollees and imposing a Medicare levy surcharge on higher-income individuals without private coverage.

The Australian health system is designed to balance public and private sectors, ensuring no single model predominates. This setup promotes both competition and efficiency, regulated to uphold high standards of care. In 2024, the healthcare expenditure represents approximately 9.8 percent of the GDP, slightly above the OECD average of 8.8 percent.

However, the system faces ongoing challenges, particularly in bridging the health service gaps between urban and rural areas and among various demographic groups. Notably, the Aboriginal and Torres Strait Islander populations experience significant disparities in health outcomes, with chronic disease rates approximately 40 percent higher than those of other Australians.

Efforts to mitigate these disparities are central to ongoing health policy reforms, which aim to enhance equity and accessibility across the healthcare system. These reforms are driven by data showing that rural areas have around 20 percent fewer medical professionals per capita compared to urban centers.

Dimension Performance

Quality

The Australian health system provides very good care to its patients. Accordingly, Australia ranked 6th in Quality. In particular, Australia ranked 7th in infrastructure and 7th in patient-centered care. It also ranked above the median in disease prevention (16th) and took the top spot in the Index for pandemic preparedness and response, not only because of its solid COVID-19 performance but because the country is more prepared than most for the next pandemic.

Choice

The Australian health system also provides an exceptional amount of choice to its patients. Australia maintains its ranking from 2022 for Choice (3rd). The elements bolstering this higher ranking were affordability of health coverage (8th), access to new treatments (8th), and freedom to choose healthcare services (3rd). Overall, Australia offers a wide variety of private insurance options while limiting exposure to catastrophic health costs, in part by emphasizing the use of lower cost generics.

Science and Technology

Australia remains near the median in the Index for Science and Technology, securing the 16th position overall. The country lags behind in medical advances, now ranked 26th, but holds its own for scientific discoveries, achieving the 12th spot. Australia continues to face challenges in health digitization, ranking 24th due to slow adoption of electronic health records.

Fiscal Sustainability

Australia ranked 20th for Fiscal Sustainability. Australia’s strong economy drove its debt-to-GDP ratio lower in 2022, helping it reach 14th in national solvency. However, its rising healthcare costs in the public sector contributed to lower rankings in growth in public health spending (22nd) and public healthcare spending (21st).