CAULFIELD SOUTH, Australia — When Eloise Shepherd was pregnant with her three children, she had a decision to make each time: She could deliver at a public facility, which meant government-provided insurance would pay for most of the cost of delivery; or she could go to a private hospital and pay through the private insurance she carried.

All three times, she opted for the public route.

It wasn’t glamorous. For her second baby, Shepherd remembers being in a hospital room with three other women, only curtains between their beds. She could hear one of her roommates Skyping with her family through the night. She describes the food as “slop in a trough.”

But it was adequate — and it was cheap. Delivery and her epidurals at the public facilities were free. She paid a couple hundred bucks for a prenatal genetic test when she was pregnant at age 37, the one thing she opted to get done outside the public system, but that was about it aside from copays for her prenatal appointments.

Her sister Madeleine Campbell went the other way in fall 2018, when she was expecting her first child. She wanted to deliver at a private hospital, not a public hospital like her sister, with an obstetrician of her choice, who would see her from her first prenatal appointment all the way to labor. Shepherd, on the other hand, says she saw a different midwife or obstetrician on every visit to the public hospital.

“I like to know what’s happening,” Campbell says, “and I like things to be organized and orderly.”

When Campbell had a brief scare with detecting her baby’s heartbeat, she was able to call her obstetrician’s office from her car and see him on the spot, a luxury Shepherd never had. At the private hospital where she delivered, Campbell was moved from an inpatient room to a nice suite in a hotel after the first night. The food was, as she recalls, “excellent”; she had poached eggs on toast and smoked salmon one morning.

Campbell got exactly the experience she wanted for herself and her newborn daughter. But it cost her $5,000 Australian.

When I met the two sisters at Campbell’s home in a Melbourne suburb on a warm October afternoon, they wore matching polka-dot sundresses. They look alike, and even sound alike. But they made different choices when it came time to deliver their babies, and the diverging paths they took offer an intriguing look at Australia’s hybrid health system.

The country’s health care system is perched precariously between two principles: universal coverage and personal choice. Australians generally believe everybody should be able to get care, affordably. At the same time, they believe that people who can pay more should be able to get more.

But those two tiers bring inequities. There can be long wait times for elective surgeries at public hospitals. The emergency and ICU departments get crowded, especially in a public health crisis (Australia has had particularly bad outbreaks of flu in recent years). Patients can occasionally get hit with unexpectedly big bills after a visit to a specialist.

The private care experience, as Campbell found, is smoother. You choose your doctor and you get more time with them. You can pick the day and time for your knee surgery. You have choices — but it will cost you.

Vox is looking abroad for lessons about how to achieve universal and affordable health care. We wanted to understand the choices other countries made and the consequences of those decisions. No health care system is perfect. But America’s economic peers have figured out a way to deliver truly universal coverage and quality care. Our project, Everybody Covered, was made possible by a grant from The Commonwealth Fund.

Every decision has trade-offs. Australia is still figuring out what role private health insurance should serve alongside its universal public system. Over the past 45 years, it’s been a pendulum swinging back and forth: Conservative governments try to strengthen the private sector, pushing for the public system to act as more of a safety net, while the liberal governments focus on investing in and strengthening the public system.

And a reckoning is coming. Experts warn that the private insurance industry is heading toward a death spiral, with premiums rising steadily and healthier people dropping private coverage and relying instead on the public system. The crisis is forcing Australia to ask fundamental questions about how the country distributes its health care resources, and whether to continue to prop up the private market or invest more in public providers and public coverage.

It all amounts to a health system that has huge ambitions — to cover everyone, to give everyone a choice — and that largely has been able to deliver. Australia’s system rates highly compared to other countries’ systems in its quality and costs, and the people, for the most part, have been happy.

But decades later, the carefully balanced health care system feels like it’s nearing the brink. Australia is staring down a difficult choice: Can the country keep delivering on the promise of universal coverage even as it diverts resources to preserve a struggling private option?

Australia has set up one version of a “Medicare-for-all” program

Australia has something very important that the United States does not: a national health insurance program.

It’s what Eloise Shepherd availed herself of when she had her babies. “I trust in the system, I guess,” she told me.

Every Australian is eligible for Medicare — the country’s national universal health care program — and can receive medical care at public hospitals and other health care providers, usually with no out-of-pocket costs except for outpatient prescription drugs and some auxiliary services.

Medicare in Australia provides pretty inexpensive coverage. As recently as 2016, total copays for medications were limited to about AU$372 (about $250 in US dollars) annually for low-wage earners. For those with higher incomes, medicines are a bit more expensive, but not much, capping at AU$41 per prescription in 2019. This pharmaceutical benefit has created a highly regarded system for evaluating prescription drugs: An independent advisory board of doctors, academics, and patient advocates makes recommendations to the government about covering drugs, based on their cost-effectiveness.

Australia’s Medicare is funded by a levy — 2 percent of personal taxable income; low-income workers making less than AU$22,398 (about $15,000) are exempted — and other tax revenues. Public hospitals, where people with Medicare go to get care, are funded primarily by the states, territories, and government. Those facilities provide every kind of care, but they take on the bulk of the emergency work; out of their 6.7 million total episodes in 2017-18, 2.8 million of them were emergency cases that were subsequently admitted to the hospital.

Grafted on top of this public program is a private health system. About half of Australians, predominantly people in higher income brackets like Eloise Shepherd and Madeleine Campbell, purchase private insurance that gives them access to private hospitals and other services, like dental and vision care, that are not covered by Medicare. (Lower-income people can get private coverage if they want, and receive a tax rebate, but compared to other Australians, few of them do.) Private health facilities focus primarily on elective procedures: Of 4.4 million episodes in 2016 and 2017, just 230,000 were emergencies.

Middle-class and wealthy people, with annual incomes above AU$90,000 (about $62,000) for individuals or AU$180,000 (about $124,000) for families, get strong prodding from the federal government to take out private coverage. They have to pay a tax if they don’t, and depending on the policy, the fee is set high enough that it’s about the same as what you pay to buy insurance. They are urged to sign up for private insurance before they turn 30; otherwise, they can be charged higher premiums for up to 10 years.

In the aggregate, the system works very well. Australia has world-class health care by advanced metrics. It scores appreciably better than the United States on the Healthcare Access and Quality Index, which measures deaths that should be preventable with accessible health care. Australia is among the best in the world at 95.9 (out of 100), while the United States trails the Aussies, Scandinavia, and much of Western Europe at 88. Health care in Australia is also much cheaper: Per the Organization for Economic Cooperation and Development, the country spends less than half as much money per capita annually on health care (US$5,000) as the United States ($10,586).

But the country is still struggling to find the right balance between its private and public systems.

The hybrid system is partly the result of a long-running political tug-of-war. Conservatives argue the public system should function as a safety net, and warn it would be overwhelmed without the private sector there to relieve some of the pressure. The left-leaning Labor Party believes funding the public system sufficiently should be the priority and seems more content to let private insurance coexist with Medicare. Even at the system’s lowest point, in the mid-1990s, 30 percent of Australians were buying private insurance. The current share is well above that.

Australia has oscillated dramatically between public and private health care over the past few decades. After World War II, it had predominantly private health care. The first universal scheme was set up in the 1970s but was scrapped after conservatives took control of the government. The public-private hybrid of today started to emerge in the 1980s, when Medicare was set up by a left-leaning government, and then fully formed in the 1990s, when center-right governments introduced more incentives for people to buy private health insurance.

Change has been the only constant for Australian health care; even experts who follow the ebbs and flows closely say it feels like the system changes every year or two.

“Since the mid-1990s, every 18 months or so, there’s a new policy which comes in as an attempt to prop up private health insurance,” Stephen Duckett, a health economist at the nonpartisan Grattan Institute, says.

Australia has tried to achieve both universal access and personal choice. Aussies expect everybody to be covered. But the people who can afford private health care enjoy their perks too — as do their doctors.

There are differences, big and small, between public and private health care in Australia

Dr. John Cunningham articulates well the tension in the Australian system. He practices at both the private Epworth Richmond Hospital and the public Royal Melbourne Hospital, two very different facilities just a few miles apart.

Cunningham believes in a shared responsibility to care for everyone. He speaks of a sense of duty — he was named for an uncle who died in World War II — and he has loved the “buzz” he feels at the public hospital when he doesn’t know what patient he’s going to operate on next.

But he admits to feeling a little less enthusiastic lately about the experience in public hospitals. “I must say, as I’m getting older, the buzz is starting to drain a little,” the father of three says with a wry laugh.

The contrast between public and private is considerable. Cunningham has more time with his patients at Epworth Richmond, in a suburb east of Melbourne’s city center. He spent a year working with a man with a collapsed disk who eventually, after delaying as long as possible, decided to have surgery. By the time of the operation, Cunningham had had time to prepare the patient for exactly what to expect.

At the public hospital, he might meet his patient five minutes before surgery. “You have a little more time” at Epworth, he says, “versus sort of the organized chaos of Royal Melbourne, where you have people coming in with bullet wounds on top of fractures.”

At Epworth Richmond, the hallways are quiet and bright. It’s a little like walking into an Apple store. The boutique eatery near the main entrance serves tandoori chicken wraps, eggplant focaccia, and Brussel sprout salads.

Epworth Richmond’s emergency department is sparsely populated on an October afternoon. If any patients do come in, they have warm blankets waiting by the doors inside the ambulance bay, and a few select rooms have fully sealed doors for enhanced privacy — not the typical curtains.

Bill Nimorakiotakis, the deputy ER director, says they occasionally host VIPs (pop stars, Australian football players and mixed martial arts fighters) and their entourages. They also get public patients sometimes: If somebody walks through their doors without checking whether Epworth is public or private, they’ll talk about payment while considering treatment options .

They tend to see a lot of broken bones here, not major trauma like the public hospital does. There are little touches to spruce up the setting; the room with a CT scanner has a window stained with tranquil clouds on the ceiling. That makes it just a little more pleasant, Nimorakiotakis reasons.

Three miles to the west is Royal Melbourne Hospital, a maze of massive steel buildings that houses one of the largest public health care facilities in the state of Victoria.

The first thing I notice about Royal Melbourne is the scale: The hospital is huge compared to Epworth and serves many more people on a given day. It feels more like what you’d expect from a major trauma center in an American metropolis.

Most of the seats in the emergency department’s waiting room are taken. A large digital monitor mounted by the entrance tells the ER staff when ambulances are en route and what kind of emergency they are bringing. A few gurneys line one hallway, waiting for a room to open up.

In the hospital’s sprawling intensive care unit, cleaning staff can turn over a room in 45 minutes or less for a new occupant. After surgeries, about two dozen patients are all put in the same open space, side by side with half a curtain between them, until they can be moved to a private room.

Epworth Richmond has a gourmet kitchen with a burger named after the hospital: spicy mayo, bacon, and fried egg. You can order food at any time. Royal Melbourne, on the other hand, contracts with an outside catering service, and meals are served on a more limited schedule.

People who can afford places like Epworth seem to like having the choice. The ICU director at Royal Melbourne told me his kids were born in a private hospital.

Shepherd, though, says she was happy to give birth in public hospitals. She did use her private coverage to pay for the surgeries her oldest son needs for the rare bone disorder Perthes disease, a life-altering diagnosis, at a private hospital. She says she really appreciated that option in a crisis.

“The fact that we had the insurance and could pick our surgeon and weren’t on a waitlist, it made it easier,” Shepherd says. “We don’t know what’s around the corner. He might need more surgeries.”

Private health insurance in Australia is at risk of a “death spiral”

But the private sector has struggled to stay viable on top of a universal, low-cost public alternative.

A report released last summer by Stephen Duckett and his Grattan Institute colleague Kristina Nemet sums up well the challenge the private system is facing. (The report opens: “Australians are dissatisfied with private health insurance.”)

What Duckett and Nemet describe is the start of a death spiral.

Premiums keep going up, with no sign of abatement, and people are starting to drop private insurance, according to the data presented by the authors. Young people especially are forgoing private coverage, not seeing a reason to pay for it when they are unlikely to need much medical care and can get free care in the public setting. Some are even willing to pay the levy charged by the government for skipping private coverage.

“The reality is we’ve got a very good public health system and people accept that this is a wonderful public health system. So the product of private hospitals and private health insurance has to be so much better and has to keep on getting better for people to be prepared to pay for it, because it’s voluntary,” Duckett told me. “They’re increasingly saying, ‘Eh, we’re not getting enough for it.’”

Eloise Shepherd and Madeleine Campbell are among those who have at least started to reconsider whether private insurance is a worthwhile investment. They both said they could imagine a situation, if they lost some income or if premiums keep going up, where they’d drop their private coverage and pay the penalty instead.

“If circumstances changed and we suddenly didn’t have an income coming in or if we had another unexpected outlay, then it’s definitely something that you’d look at,” Shepherd says after considering it a moment. “Because after the mortgage, I think it’s the second-biggest stack.”

Better-off and usually older people who need expensive medical care will hold on to it, though, because they are more likely to use it. From 2016 to 2018, the number of 20- to 29-year-olds carrying private coverage dropped by nearly 8 percent, while the number of 70-plus-year-olds with coverage increased.

This is classic adverse selection: Covering older and sicker people drives up costs for insurers, who then raise premiums or cut benefits. More people decide to drop out. The market spirals.

Insurers acknowledge the fundamental problem, even if they quibble on the timeline.

“The debate’s really about the time frame for the death spiral. I mean, nothing’s going to die immediately. We call it the slow-boiling frog syndrome,” says Dwayne Crombie, a senior executive at Bupa, one of Australia’s largest health insurers. “So it might be three years and it might be five years, it might be seven years, but ultimately that’s what’s happening.”

In response, the Australian government has kept funneling money into the system, attempting to stave off the spiral. The government’s subsidy for private insurance has risen from an estimated $1 billion in its first year, 1999-2000, to AU$6 billion (about $4.1 billion) now.

For individuals under 65 making up to AU$90,000 a year or families with a household income below AU$180,000, the government will subsidize almost one-fourth of their private insurance premium. Older people get a more generous subsidy. The tax rebate starts to taper off above that threshold, cutting out completely for individuals making more than AU$140,000 a year and families making more than AU$240,000.

The sweet spot in this tax subsidy structure is middle-class families with incomes high enough that they must take out coverage or pay a levy, but low enough that they receive a tax rebate. People with higher incomes are still expected to buy coverage (or pay a penalty), but they don’t get any assistance.

All this has prompted some rethinking about whether the Australian hybrid system still makes sense. Duckett and Hemet lay out the questions Australia must answer: Is the country spending its health care dollars wisely? Is it worth spending billions to subsidize insurance for the middle class and prop up a private insurance industry spiraling toward death? Or would that money be better spent differently — say, by sending more of it to public hospitals or by paying private hospitals directly to take on the elective cases they already handle?

Duckett’s fundamental point is that Australia has failed to define a clear role for private health care alongside its universal public system. He argues that if private health care is meant to replace public health care for many people, and provide relief to the public sector by absorbing some of the patient load, then spending such vast sums on the subsidy is justified. But if private care is rather meant to supplement public care, giving perks to those who can afford it for select services, then the case for a subsidy is weaker.

In practice, it’s proven somewhat difficult for the private sector to compete as a replacement to a universal public system.

“People say, ‘Well, why do we bother to have it? It’s quite expensive, and now it’s going up faster than inflation. Wages are not going up. I need to drop something,’” Duckett says. “Health insurance is something I can drop, because the public system exists and I can get access to the public system.”

People like Campbell and Shepherd have found value in their private coverage when they had a serious medical situation. But others are taking out more limited private coverage and relying on the public system in a crisis.

That was the story for Janet Feldman when she received the worst kind of news.

Feldman is a 48-year-old teacher. She has held private insurance for a long time; her kids were born at a private hospital.

Twelve years ago, she noticed a lump under her arm and went to see a doctor, who ran some tests. When her doctor sat her down to give her the bad news — she was diagnosed with breast cancer — her mom asked which private hospital she should go to for treatment.

No, her oncologist told her. You should use the public hospital. It’ll be easier to coordinate your care across the many people you’ll need to see: oncologists, radiologists, nutritionists. And it will be very inexpensive.

So that’s the route Feldman chose. She still has her private coverage (because with the fines she’d face and the rebate she receives, why not get something?), but she depended on the public sector for the most important medical care of her life.

A decade and several relapses (and the spread of cancer to her brain) later, Feldman is still using the public system and seems very happy to have done so. She has paid very little money out of pocket for her care, just small payments for her chemo drugs.

“I know people who get breast cancer treatment at private hospitals, and they pay for this and they pay for that. They pay each time,” she says. “Whereas the only thing I really pay for is my medication now.”

Feldman, a patient carrying private insurance but getting expensive medical care for free through public hospitals, is an example of Australia’s struggle to decide what private health care is supposed to be. According to a recent survey, the approximate cost to breast cancer patients with private insurance was twice as much out of pocket as for those who used the public service.

Whatever happens, the status quo seems unsustainable. Another swing of the pendulum between public and private could be coming.

Australia covers everybody, but the country still has some big inequities in health care

The Australian commitment to choice comes at a cost. Even with the universal Medicare program, health inequities persist in Australia. Addressing them will require resources — resources that are also being used to shore up the private system.

One place where you can see those inequities is with Australia’s indigenous population, which faces a unique set of health care challenges. Indigenous Australians don’t live as long as the white majority. They die at much higher rates of respiratory and cardiovascular diseases, as well as cancer. They have high rates of mental health disorders such as depression and substance abuse, a reflection of the intergenerational trauma they have endured.

Indigenous Australians have strived to take control of their medical care, hoping to regain aspects of self-determination after the days when they were forcibly expelled to outer lands. They’ve established clinics to take care of their people. Medicare covers the patients, but the clinics — unlike other public facilities — are not fully funded by the states and federal government. Raising money to maintain these facilities remains a struggle.

Gavin Brown, a senior staff member at the Victoria Aboriginal Health Service north of Melbourne’s city center, tells me the health service has recently pleaded with state and federal health officials for AU$1 million to set up a new clinic in an exurb where indigenous Australians are starting to move. But he says the government told them no, so they had to raise the money themselves.

“It is unfair,” Brown says. “I don’t think aboriginal health can maintain itself. It actually needs to be supported by the government. It needs to be directly funded adequately in order to be able to improve the services. Obviously we do what we can, but it’s always short.”

It’s not just indigenous communities that are getting left behind by the system. As in the US, rural communities face significant barriers to getting medical treatment. One in five Australians 45 and older living in remote areas say there is no primary care near where they live, and nearly 60 percent say there are no specialists nearby.

Patients in less populated areas have much higher rates of potentially preventable hospitalizations, indicating a lack of access to the kind of preventive medicine and disease management patients should receive in a primary care setting. More money for Medicare could be used to expand a program that encourages doctors to practice in rural settings, for example, or to build new health care facilities.

There’s also the broader question of whether the private system ends up drawing doctors away from a public system that needs more of them. “Subsidising private health care may divert medical professionals away from the public system, reducing its capacity to meet patient needs,” Duckett and Nemet wrote in their recent report. “When doctors work more hours in the private sector, they are available to work fewer hours in the public sector.”

Policy experts have floated alternative arrangements, like having the federal government make direct payments to private hospitals or having public hospitals contract with private hospitals for certain elective procedures. That would cut out the private insurance middlemen while still alleviating some of the pressure on the public system through private providers.

The thread running through these dilemmas is the choice Australians made a few decades ago: to build a hybrid health care system. Can a country find a balance between universal coverage for all and private choice for some who can afford it?

Eloise Shepherd stresses that Aussies are “fiercely proud” of their universal public insurance program. Medicare continues to enjoy robust approval from the public. But support for private insurance also remains strong (if not as strong as for Medicare).

Australia is trying to keep both systems running. But as the problems start to pile up, it may be forced to choose one day.

Correction: This story originally stated that Eloise’s second baby was born in December 2018. He was born in June 2016.

Byrd Pinkerton contributed reporting to this story.

Anne Moffat is an editorial and commercial photographer based in Melbourne, Australia.

The Everybody Covered project can be found at vox.com/covered. This series was made possible by a grant from The Commonwealth Fund. All content is editorially independent and produced by our journalists.