A new healthcare advocacy group says Australia's healthcare system is failing, with patients paying some of the highest out-of-pocket expenses in the world.

New research from the Consumers Health Forum shows Australians are paying more than $1,000 each per year to cover the gap left by Medicare and private health insurance.

The forum's chief executive Carol Bennett says it is time for an overhaul of the system.

"I think we've got a 40-year-old Medicare system that no longer meets the needs of those who use and pay for healthcare," Ms Bennet said.

Ms Bennett says Australians pay twice as much for healthcare as people in the United Kingdom and France.

She says the high costs are leading to a two-tiered health system, and an increasing number of Australians are delaying or cancelling health appointments.

"The average cost is around $1,000 a year, now for families that's a lot of money to find," she said.

"That's well above the average of the OECD [Organisation for Economic Co-operation and Development], but for people who have chronic health diseases, it can be many thousands of dollars more than that."

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