Health Insurance

In Australia, individuals who earn more than $A75k a year and households who earn more than $A150k per year need to pay an extra 1% of tax on their total income if they don't have private health insurance. Assuming my new job all works out as planned we'll need the insurance to avoid about $A2,200 in extra tax (1% of our joint income). I'm thinking about this already because the new financial year here is about to start on 1 July. I quickly looked up a quote calculator online and found that taking into account the 30% rebate offered by the Federal Government we could get health insurance for $A1,800 year though it doesn't cover much. For example, if you need to go to hospital you have to pay $A500 out of pocket. I need to understand a bit more about how this works and how it interacts with the government's Medicare service. Does this really pay off? Or does it add more complications for not much gain? Or would it be worth it even if it cost more than $A2,200? I don't know the answers at this stage.