I hate that I'm falling for this[0]

For the poor, (i.e those that earn < 28k in Australia)... they pay no tax. Thus Healthcare for them, is in every sense of the word: free.

For those that earn > 28k, they pay tax, which a portion of goes to healthcare. So from 28k to probably (random guess) about 70-100k, healthcare is heavily subsidised. For 100k - 200k healthcare costs probably about as much as it would if they just paid for it themselves (given the wealthier tend to be healthier). The 200k+ they are probably paying more for it than they use.

But those who need it most (i.e the poor/poorer) get it free/subsidised.

This is called a progressive tax system. If your care about the majority of your society (keeping in mind, in australia the mean wage is around the 50k mark), then it is without a doubt a better (utilitarian) solution.

[0] http://xkcd.com/386/

Only a distorted, rightist mindset interprets ``free healthcare'' as meaning ``healthcare magically appears from the sky'' rather than ``you can walk into a hospital and get treatment without having to pay a bill afterwards''.