In a global first, Australian insurer Medibank has announced it will offer coverage for psilocybin-assisted therapy, signalling a new phase in the long path towards normalising psychedelic treatment. The move comes after Canada-based Optimi Health confirmed that its psilocybin capsules have been selected for use in Medibank’s new insurance-backed programme for eligible patients.
The announcement marks a significant milestone for accessibility. While psychedelic-assisted therapy has shown strong clinical results in treating conditions such as depression and post-traumatic stress disorder (PTSD), cost remains one of the main barriers to entry. Medibank’s policy could signal the beginning of a wider shift in how insurers approach these novel treatments — both in Australia and beyond.
In the announcement, Dane Stevens, Chief Executive Officer of Optimi, said: “The inclusion of our psilocybin capsules in Medibank’s insurance-backed program for treatment-resistant depression reflects the growing role of standardised psychedelic medicines in insured mental health care.”
The price problem
Since July 2023, Australia has allowed authorised psychiatrists to prescribe MDMA- and psilocybin-assisted therapy for specific mental health conditions. The approval, granted by the Therapeutic Goods Administration (TGA), made Australia the first country in the world to reclassify these substances for therapeutic use. However, the change was not accompanied by public funding; despite regulatory change, patient access remained very low for the first few months.
This is influenced by prohibitively high treatment costs — often ranging between AUS$20,000 and AUS$30,000 per course of therapy, according to the Australian Multidisciplinary Association for Psychedelic Practitioners (AMAPP). These figures reflect the intensive nature of psychedelic therapy, which typically includes multiple preparation sessions, supervised dosing under clinical conditions, and post-treatment integration work.
For many, this financial hurdle has prevented the therapy’s potential from being realised.
“The biggest challenge for most people has been the cost,” AMAPP president Nigel Strauss told ABC News earlier this year. “Without insurance or government subsidies, it’s simply out of reach for most Australians.”
Medibank’s insurance is therefore a crucial intervention. While full details of the coverage are yet to be disclosed, the insurer has confirmed that it will initially cover psychedelic treatments delivered under approved clinical supervision, such as those offered by Mind Medicine Australia’s treatment network.
“It’s wonderful to see Australia leading the way, and we are inspired to be developing an ecosystem that is providing increasing access to these transformational treatments,” Tania de Jong AM, Executive Director of psychedelic advocacy organisation Mind Medicine Australia, said in a release.
Broader horizons
Australia’s insurance breakthrough comes amid a growing global conversation about how psychedelic therapy can be integrated into existing healthcare systems. In most countries, the legal and regulatory frameworks are still evolving — and where treatment is available, it often remains confined to private clinics accessible only to the wealthy.
In Canada, for instance, psychedelic-assisted therapy can be accessed under Health Canada’s Special Access Program (SAP), which allows physicians to request permission for patients with treatment-resistant conditions. However, these therapies are not covered by public health insurance, costing patients several thousands of dollars per session.
Private providers are beginning to explore insurance integration. Canadian firms such as Field Trip Health and Numinus Wellness have established relationships with insurers to cover certain parts of treatment, such as clinical consultations or preparatory therapy. However, the psychedelic component itself remains uncovered.
Additionally, Numinus has partnered with Field Trip Health to expand access to psychedelic-assisted therapy. This collaboration includes training programmes and the potential for therapists to transition between the two organisations, aiming to enhance the delivery of these therapies across Canada.
In the United States, where ketamine-assisted therapy is legal at the federal level, partial coverage exists but remains inconsistent. Some major insurers, including Aetna and Cigna, have reimbursed the psychotherapy portions of ketamine-assisted treatment, but not the drug administration itself. Psilocybin and MDMA therapies are still awaiting approval by the U.S. Food and Drug Administration (FDA) — although clinical trials led by MAPS PBC and Compass Pathways have brought both substances close to potential medical authorisation.
Meanwhile, European countries are watching these developments closely. In Switzerland, psychedelic-assisted therapy remains tightly regulated, but limited access is permitted under compassionate use provisions. German insurers are reportedly exploring pilot projects linked to MDMA therapy trials, while Czechia, which recently legalised the use of psilocybin and MDMA for medical research, is preparing a framework that may include insurance reimbursement once treatments are formally approved.
Cost, access, equity
Despite the growing optimism, significant disparities remain in who can access psychedelic therapy. Without insurance or public funding, treatment remains confined to those who can afford it — undermining one of the field’s stated goals: to make transformative mental health care available to those most in need.
In Australia, the gap is particularly stark. A 2024 analysis by the University of Sydney’s Lambert Initiative for Cannabinoid Therapeutics found that while up to 200 psychiatrists had applied for authorisation to prescribe psychedelics, only a small number of patients were receiving treatment, with access limited due to high costs.
Similar pricing limitations are happening worldwide. In Canada, patient advocates have warned that without insurance integration, psychedelic therapies risk only being for wealthy clients. In the United States, ketamine clinics have faced criticism for high prices and limited regulation, while veterans’ groups have lobbied for public reimbursement for psychedelic-assisted PTSD treatments.
According to the Multidisciplinary Association for Psychedelic Studies, “Without deliberate planning, these treatments risk becoming boutique therapies for the affluent rather than transformative public health interventions.”
Life insurers
The discussion about insuring psychedelics is not just about economics; it’s about redefining how societies approach mental health and drug policy. Insurance coverage — by distributing risk and reducing cost — is a necessary building block to effectively normalise the use of once-prohibited substances within healthcare frameworks.
For harm reduction advocates, this is a significant development. Psychedelic-assisted therapy, when properly regulated and clinically supervised, could represent a safer, comprehensive and controlled alternative to self-medication or unregulated use. Expanding insurance coverage could reduce some of the harms associated with unlicensed and unscrupulous practitioners that have proliferated as demand outpaces regulation.
This transition will take time. Even in Australia, Medibank’s programme currently applies only to specific, approved clinical settings; the broader inclusion of psychedelics in public health funding remains slow and politically sensitive. But as more data accumulates and more insurers participate, the logic for coverage will strengthen.
Shifting tides
For now, Australia’s experiment with insured psychedelic therapy stands as a test case for the rest of the world. If successful, it may set the precedent for insurers elsewhere to follow suit — first with pilot programmes, then broader inclusion.
In the longer term, widespread insurance coverage could represent the decisive step needed to bring psychedelic medicine from clinical trials into mainstream mental healthcare. And in doing so, it may help realise a long-standing goal shared by both medical researchers and harm reduction advocates: making effective, evidence-based psychedelic care accessible to all who need it, not just those who can afford it.
According to MAPS, “perhaps the most important economic question is not whether psychedelic therapies are cost-effective, but how to ensure equitable access.”