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Total health expenditure in Australia grew by over 7% between
2004-05 and 2005-06 to $87 billion or $4,200 per person according
to a new report by the Australian Institute of Health and Welfare
Head of the Institute's Expenditure and Economics Unit, Mr John
Goss, said health expenditure as a proportion of gross domestic
product (GDP) was 9.0%, down slightly from 9.05% the previous year,
and up from 7.5% in 1995-96.
'Our health to GDP ratio is comparable to New Zealand, is more
than the UK, and is considerably lower than the USA, which in 2005
was 15.3% of GDP,' Mr Goss said.
The report, Health expenditure Australia 2005-06, shows
that after adjusting for inflation, total health expenditure
increased 3.1% in 2005-06, compared to annual average growth in the
decade to 2005-06 of 5.1%.
The areas of expenditure that showed relatively high real
increases (after allowing for inflation) were research (7%), public
hospital services (6%), community health (5%), aids and appliances
and other health practitioners (4% each).
The most noticeable slowing in real expenditure growth was in
medications. This increased by just 1.6% in 2005-06, against an
annual average real increase of 8.6% over the last decade.
The report showed the majority of spending in health was funded
by governments (68%), with the Australian Government contributing
43%. State, territory and local governments contributed 25%. The
non-government sector (individuals, private health insurance and
other non-government) funded the remaining 32%.
In real terms, the Australian Government's funding grew by 0.7%
in 2005-06. State, territory and local governments funding grew by
7.6% and non-government funding by 2.9%.
Key drivers for this change were the high increase in
expenditure on public hospitals, which was largely borne by state
and territory governments, and the slowing of expenditure in
medications, which is primarily funded by the Australian
Between 1995-96 and 2005-06, the Australian Government share of
public hospital funding decreased from 45% to 41%. State and
territory government funding during this period increased from 46%
In 2005-06, individuals spent an estimated $15.4 billion on
health goods and services (17% of total health expenditure): $5
billion for medications; $4 billion for dental services, $2 billion
for aids and appliances and $1.7 billion on medical services.
Real growth in expenditure by individuals between 1995-96 and
2005-06 was 6.0% per year, 1.2 percentage points above the real
growth in recurrent health expenditure (4.8%).
In previous editions of Health Expenditure Australia, high-level
residential care expenditure was included as health
This expenditure has been reclassified to welfare services,
which reduces the health expenditure to GDP ratio by 0.6 percentage
points to 9.0% of GDP, and correspondingly increases the welfare
services expenditure to GDP ratio.
5 October 2007
Further information: Mr John Goss, AIHW, tel.
02 6244 1151 or mob. 0402 346 379 or Ms Gail Brien, AIHW, tel. 02
For media copies of the report: Publications
Officer, AIHW, tel. 61 2 6244 1032.
Availability: Check the AIHW Publications
Catalogue for availability of Health expenditure