Significant shortfalls in Medicare rebates are forcing families to sell their homes or use their superannuation to pay medical bills, News Limited reports.
The report claims others are going bankrupt as Medicare rebates fail to keep up with inflation and health funds fail to cover Australians' medical expenses.
While Medicare and health fund systems are counted amongst some of the best in the world, the reports highlights evidence that suggests they are leaving hundreds of thousands of Australians in poverty.
A study by the Menzies Centre for Health Policy discovered 250,000 Australians spend more than 20 per cent of their income on medical expenses.
The government's Private Health Insurance Administration Council says health fund members paid $4.3 billion in out of pocket expenses last financial year.
Research by the George Institute shows 11 per cent of bankruptcies in 2009 listed ill health or absence of health insurance as the primary reason.
A recent survey of National Seniors member also found the cost of prescription medicines is forcing one in five Australians aged between 50 and 64 to skip doses.