36. Health expenditure on older people

As would be expected, health expenditure per person for older persons is greater than for younger persons. In 1993 - 94, health expenditure per person aged 65 and over was four times greater than for those aged under 65. Although older Australians constitute only 12% of the total population, they used $11 billion (35%) of the $31 billion total expenditure on health services in 1993 - 94.

The increase in per person expenditure with age was greatest for nursing homes and acute hospital services, with older Australians consuming 39% of total expenditure on acute hospital services. Expenditure on pharmaceuticals was 4.7 times higher for over 65 year olds than for those aged under 65. Similarly, per person expenditure for pharmaceuticals was 3.4 times higher for older people than for those aged under 65, while expenditure on medical services was 2.4 times higher and for other health services 2.0 times higher than for younger people.

Overall, health expenditure per person aged 65 and over was 4.0 times higher than the health expenditure for those under 65. In absolute numbers, per person health expenditure for the 65 and over population was $5,169, compared to $1,303 for those under 65 and $1,759 for all ages.

A significant proportion of the costs of nursing home care are not true health costs, but are the costs of food and accommodation. However, all nursing home costs are classified as 'health' costs. Thus, the domination of health costs for the very old by nursing home care is to some extent a statistical illusion.

In the period 1982 - 83 to 1994 - 95, Australian real health expenditure per person grew by 2.9% per year. Only one-fifth of this increase or 0.6% per year was a result of the costs associated with an ageing population.

Total recurrent health expenditure; age by sex, Australia 1993 - 94 ($m)

Age Males Females Persons Percentage of total expenditure (%)
0 - 14 2,014 1,852 3,866 12.3
15 - 24 1,216 1,757 2,973 9.5
25 - 34 1,257 2,422 3,679 11.7
35 - 44 1,343 1,985 3,327 10.6
45 - 54 1,404 1,771 3,175 10.1
55 - 64 1,746 1,744 3,490 11.1
65 - 74 2,383 2,387 4,770 15.2
75 and over 2,158 3,954 6,112 19.5
65 and over 4,541 6,341 10,882 34.7
All ages 13,520 17,872 31,393 100.0

Recurrent health expenditure per person; age by area of expenditure, Australia 1993 - 94 ($)

Age Acute hospital services Medical services Pharma- ceuticals Nursing homes Other health expenditure Total
0 - 14 280 179 123 11 410 1,002
15 - 24 312 211 134 12 427 1,095
25 - 34 492 280 150 25 353 1,300
35 - 44 407 294 167 24 336 1,228
45 - 54 517 354 222 21 370 1,483
55 - 64 881 451 402 82 521 2,338
Total 0 - 64 435 272 177 24 395 1,303
65 - 74 1,596 606 570 265 723 3,760
75 and over 2,765 703 633 2,308 898 7,306
65 and over 2,060 644 595 1,077 793 5,169
All ages 626 316 226 148 442 1,759

References/further reading

Goss J 1992. Health care for the elderly: costs and some institutional issues. In Office of Economic Planning Advisory Committee (EPAC), Economic and social consequences of Australia's ageing population - preparing for the 21st century. Canberra: Australian Government Publishing Service (AGPS).

Goss J, Eckermann S, Pinyopusarerk M, Wen X 1994. Economic perspective on the health impact of the aging of the Australian population in the 21st century. Paper presented at the Seventh National Conference of the Australian Population Association, Australian National University, Canberra, Australia, 23 September.

Data sources

Data presented here are drawn from unpublished data from the 1998 versions of Australian Institute of Health and Welfare Disease Costs and Impact Studies and Health Expenditure databases.

Prepared by the Australian Institute of Health and Welfare (v2:1998).