There are two main types of private health insurance cover available - hospital cover and ancillary cover. Ancillary cover provides benefits for services such as physiotherapy and dental and optical treatment.
Under Medicare you can be treated as a public patient in a public hospital at no charge by a doctor appointed by the hospital. When you have private health insurance (hospital cover) this gives you cover (often called fund benefits) towards the cost of treatment as a private patient in a public or private hospital.
For more information go to:
http://www.health.gov.au/pubs/circfinl/hot/facts.htm