Funding, sustainability, access and equity of the Australian health system for VCE Health and Human Development Unit 3 AoS 2

What this dot point is asking

This dot point asks you to define and apply the four values, and to judge how well the system promotes health and wellbeing through them. The 2025 VCAA exam asked students to analyse Medicare in terms of sustainability and equity, so you must show cause and effect: a feature of the system, how it delivers the value, and the resulting health outcome. The detail of each program is on the Australian health system.

The numbers that frame the debate

Funding

Funding refers to how the health system raises and allocates the money needed to provide services.

Sources of funds:

• Australian Government: general taxation and the Medicare levy (2 per cent of taxable income), funding Medicare, the PBS, a large share of public hospital costs, aged care and the NDIS (with the states).
• State and territory governments: run and part-fund public hospitals, ambulance services and community health.
• Private health insurance premiums, supported by the income-tested rebate; the Medicare levy surcharge (1 to 1.5 per cent) encourages higher earners to take out hospital cover.
• Individuals' out-of-pocket costs: gap fees, PBS co-payments (up to $25 from 1 January 2026), dental and allied health not covered by Medicare.

How funding promotes health and wellbeing. Pooling costs through taxation means people receive care based on need rather than ability to pay at the time, reducing financial stress (mental health and wellbeing) and allowing illness to be treated early (physical health and wellbeing). The levy is linked to income, so those who earn more contribute more.

Sustainability

Sustainability is the capacity of the health system to provide the services people need into the future, including financial, workforce and infrastructure capacity.

Pressures:

• Ageing population: older people use more health services; the 2023 Intergenerational Report projects Australian Government health spending rising from 4.2 to 6.2 per cent of GDP by 2062-63, with population ageing a major driver.
• Chronic disease: overweight and obesity (the leading risk factor in the 2024 burden of disease study) and other chronic conditions require long-term care.
• New technologies and medicines: effective but expensive.
• Workforce shortages, particularly GPs and nurses in rural and remote areas.

How the system promotes sustainability:

• Prevention and health promotion (tobacco control, immunisation, screening) reduce future demand.
• Primary care instead of hospital care where appropriate: Medicare Urgent Care Clinics treat urgent but not life-threatening conditions, taking pressure off emergency departments.
• PBS cost controls: the Pharmaceutical Benefits Advisory Committee lists medicines only if they are cost-effective, and prices are negotiated.
• Private health insurance shares costs and reduces demand on public hospitals.
• Reforms to the NDIS (2024 legislation) to slow cost growth.
• The Medicare levy, which grows with incomes.

Access

Access means people can obtain the health services they need, when and where they need them, regardless of income, location or background.

How the system promotes access:

• Medicare covers all citizens and permanent residents; bulk billing removes up-front costs. After the bulk billing incentive was extended to every Medicare card holder from 1 November 2025, the GP bulk billing rate averaged 81.4 per cent over November 2025 to January 2026.
• Medicare Urgent Care Clinics (137 planned by June 2026) offer bulk-billed, walk-in care with extended hours.
• Telehealth items in Medicare (made permanent in 2022) allow consultations by phone or video, especially valuable in rural and remote areas.
• The PBS makes medicines affordable; 60-day dispensing reduces costs and pharmacy visits for many people on long-term medicines.
• The NDIS funds supports that let people with disability access services and participate in the community.

Limitations: fewer doctors and specialists in rural and remote areas, long waits for some public hospital elective surgery, gaps for specialists and allied health, and dental care largely outside Medicare.

Equity

Equity means allocating resources according to need, so that groups experiencing disadvantage receive extra support to achieve health outcomes similar to the rest of the population. Equity is not giving everyone the same.

How the system promotes equity:

• Progressive funding: the Medicare levy and surcharge mean higher earners contribute more.
• Concessions: PBS concession co-payments ($7.70, frozen until 2030) and lower Safety Net thresholds; bulk billing incentives.
• Safety nets: the Medicare and PBS safety nets protect people with high ongoing costs.
• Targeted services: Aboriginal community controlled health organisations and Closing the Gap programs; rural health programs; the NDIS for people with disability.
• Income-tested private health insurance rebate, larger for lower incomes.

Limitations: out-of-pocket costs still deter some people on low incomes; private health insurance mainly benefits higher-income people; health outcomes remain worse for First Nations people, people in remote areas and people in the lowest socioeconomic areas (see Closing the Gap).

One system, four values: a quick matrix

How this dot point appears in the VCE exam

• Define or distinguish (1 to 4 marks): access versus equity, or what sustainability means.
• Analyse or explain (3 to 6 marks): how Medicare, the PBS, the NDIS or private health insurance promotes one or two values, with links to health outcomes.
• Evaluate (5 to 8 marks): how well the system promotes the values, using stimulus data and a judgement.