The Australian Health Care System

Are the Incentives Down Under Right Side Up?

Published In: JAMA, The Journal of the American Medical Association, v. 276, no. 24, Dec. 25, 1996, p. 1944-1950

Posted on RAND.org on January 01, 1996

by John Peabody, Steven Bickel, James S. Lawson

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Describes Australia's universal coverage, which is financed by public and private sources and regulates costs by global hospital budgets, strict fee schedules, and restrictions on technology. Private insurance buys private hospital care (everyone is entitled to public hospital care) with community rating and a fixed set of benefits, forbidding, for example, any coverage of out-of-hospital services or balance billing. Most physicians accept assignment to avoid having to collect reimbursement, and are paid by a fee schedule, ending up with on average much less than American doctors. New technology and drugs are evaluated before being paid for. Australia has established a stable two-tier system that is popular with patients, but not with doctors.

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