Expenditure

Summary

Key points

  • $11.0 billion, or $431 per person, was spent on mental health-related services in Australia during 2019–20, a real increase from $409 per person in 2015–16.
  • 1.3% annual average increase in the real per capita spending on mental health-related services from 2015–16 to 2019–20.
  • 7.6% of government health expenditure was spent on mental health-related services in 2019–20, consistent with that for 2015–16 (7.6%).
  • $6.7 billion was spent on state/territory mental health services in 2019–20; $2.9b on public hospital services; $2.6b on community services.
  • $1.4 billion, or $53 per Australian, was spent by the Australian Government on benefits for Medicare-subsidised mental health-specific services in 2019–20.
  • $566 million, or $22 per Australian, was spent by the Australian Government on subsidised mental health-related prescriptions under the PBS/RPBS during 2019–20.

This section reviews the available information on recurrent expenditure (running costs) for mental health-related services in Australia. Health expenditure (what was spent) and health funding (funding provided and who provided the funds) are distinct but related concepts essential to understanding the financial resources used by the health system. Data on expenditure and funding, calculated in both current and constant prices, are derived from a variety of sources, as outlined in the data source section.

Overview

In 2019–20, the national recurrent spending on mental health-related services was estimated to be $11.0 billion. This represents an annual average increase of 3.0% since 2015–16, in real terms (i.e. adjusted for inflation). Overall, national expenditure on mental health-related services increased from $409 per Australian in 2015–16 to $431 per person during 2019–20; an average annual increase of 1.3% in real terms.

Of the $11.0 billion spent nationally in 2019–20, state and territory governments spent 60.0% ($6.6 billion), the Australian Government 34.7% ($3.8 billion), and private health insurance funds and other third party insurers 5.3% ($584 million). These proportions have remained relatively stable over time, with 60.4% of national spending coming from state and territory governments, 34.4% from the Australian Government, and 5.2% from private health insurance funds and other insurers in 2015–16.

Government spending on mental health-related services in 2019–20 was estimated to be around 7.6% of total government health expenditure, in line with 2015–16 (7.6%) and up from 7.3% in 1992–93 when data collection began.

Spending by the Australian Government for mental health-related services (adjusted for inflation) has increased by an average annual rate of 3.2% over the period 2015–16 to 2019–20, while spending by state and territory governments increased by an average annual rate of 2.8%.

Specialised mental health services expenditure

Around $6.7 billion was spent on state and territory specialised mental health services in 2019–20. The largest proportion of this spending was on public hospital services for admitted patients ($2.9b), comprising of public acute hospitals with a specialist psychiatric unit or ward ($2.3b) and public psychiatric hospitals ($0.6b). This was closely followed by spending on community mental health care services totalling almost $2.6b.

Per capita spending on specialised mental health services ranged from $247 per person in Queensland to $328 per person in the Northern Territory, compared to a national average of $260 per person during 2019–20.

Per capita spending on state and territory specialised mental health services increased in real terms by an average annual rate of 1.0% between 2015–16 and 2019–20. This equates to an increase of about $10 per person, from about $250 in 2015–16 to about $260 in 2019–20.

Detailed spending data are available covering more than 25 years to 2019–20. Figure EXP.1 shows the changes in state and territory spending patterns, for example, increased investment in community mental health care services, reflecting changes to the state and territory specialised mental health service profile mix over this time. Further information can be found in the Specialised mental health care facilities section.

Figure EXP.1: Recurrent spending ($) per capita on state and territory specialised mental health services, constant prices, 1992–93 to 2019–20

Stacked area chart showing the per capita spending on specialised mental health services from 1992–93 to 2019–20. Public psychiatric hospital spending has decreased over the period. Spending increased for specialised psychiatric units of wards in public hospitals, community mental health care services, residential mental health services, grants to non-government-organisations and other indirect expenditure. Refer to Table EXP.4.

Sources: Australian Government Department of Health, National Survey of Mental Health Services Database (1992–93 to 2004–05), National Mental Health Establishments Database (2005–06 onwards); Table EXP.4.

Funding

The majority (96.5% or $6.4 billion of the $6.7 billion total cost) of funding for state and territory specialised mental health services was provided by state or territory governments in 2019–20. However, this estimate does not take into account the Australian Government payments to jurisdictions for the running of public hospital services which includes the community-based clinical services managed by public hospitals. Refer to the data source section for technical information regarding Australian Government expenditure.

Public sector specialised mental health hospital services

The $2.9 billion of recurrent expenditure for public sector specialised mental health hospital services during 2019–20 equates to an average cost per patient day of $1,277. The Northern Territory ($1,674) had the highest average cost per patient day and Queensland ($1,093) was the lowest.

Recurrent expenditure on public sector specialised mental health hospital services can be further described using target population (General, Child and adolescent, Youth, Older person and Forensic target groups), program type (acute and non-acute) or a combination of these.

Private hospital specialised mental health services

Total spending on specialised mental health private hospital services was $805 million in 2019–20, and the non-Commonwealth sourced component of this revenue was $584m. Adjusted for inflation, these represent annual average increases from 2015–16 of 3.5% and 3.2% per year respectively. Spending on specialised mental health services in private hospitals has not been available since 2017–18 due to changes in how the data is collected.

Australian Government expenditure on mental health-related services

Australian Government spending on mental health-related services was estimated to be $3.8 billion in 2019–20. However, as noted previously and detailed in the data source section of this report, there are other known Australian government outlays attributable to supporting mental health issues which are not included in this estimate.

Australian Government spending on mental health-related services, in real terms, increased by an average annual rate of 3.2% between 2015–16 and 2019–20. This equates to an annual average increase of 1.6% in real terms, from $141 per person in 2015–16 to $150 in 2019–20. Changes in PBS/RPBS spending impacted the overall change, declining by around $3 per person over this time frame, specifically due to spending on antipsychotics and antidepressants declining by about $2 per capita respectively. This was likely the result of a decrease in the subsidised cost of some medications, partly due to some medications no longer being under patent.

Spending on MBS-subsidised mental health-specific services and mental health-related medications provided through the PBS accounted for 50.0% of the total Australian Government spending on mental health-related services in 2019–20 (Figure EXP.2). This was followed by:

  • spending on National programs and initiatives managed by the Australian Government Department of Health (24.6%)
  • the Department of Veterans’ Affairs (6.8%)
  • the Department of Social Services (6.5%), and
  • Private Health Insurance Premium Rebates (4.7%).

Figure EXP.2: Australian Government spending ($) per capita, on mental health-related services, constant prices, 2009-10 to 2019-20

Stacked vertical bar chart showing the per capita spending by the Australian Government on specialised mental health services between 2009–10 and 2019–20. Expenditure increased for Mental health specific payments to states and territories, National programs and initiatives, the National Mental Health Commission and private health insurance premium rebates. Expenditure decreased for the Pharmaceuticals Benefit Scheme and research. Refer to Table EXP.31.

Note: National programs and initiatives includes: programs managed by DoH, programs managed by DSS, programs managed by DVA, DoD funded programs, Indigenous social and emotional wellbeing programs, National Suicide Prevention Program.

Source: Australian Government Department of Health (unpublished); Table EXP.31

Australian Government spending on Department of Defence funded mental health programs has increased by an average of 2.0% per year for the period 2015–16 ($50.2 million) to 2019–20 ($54.3m), in real terms. The spending covers a range of mental health programs and services delivered to Australian Defence Force (ADF) personnel. When the number of permanent ADF personnel is taken into consideration (59,760 people; Department of Defence 2020) this equates to $909 per permanent ADF member in 2019–20.

Australian Government expenditure on Medicare-subsidised mental health-specific services

Medicare-subsidised mental health-specific services refers to the mental health-specific services subsidised by the Australian Government through the Medicare Benefits Schedule (MBS). These services include mental health-specific services provided by psychiatrists, general practitioners (GPs), psychologists (both clinical and other) and other allied health professionals and are defined in the MBS. Refer to the data source section for further information on the estimation of GP spending prior to 2007–08.

In 2019–20, $1.4 billion was paid in benefits for Medicare-subsidised mental health-specific services, equating to 5.4% of total MBS spending ($25.0b - including Dental Benefits Schedule and the Child Dental Benefits Schedule) (SA 2020). Spending for services provided by psychologists ($609 million or 45.0%) made up the largest proportion, comprising mostly Psychological Therapy Services (clinical psychologists; $334m) and Focused Psychological Strategies (other psychologists; $275m). Spending on services provided by psychiatrists was the next largest group ($389m or 28.8%). GP spending comprised $317m (23.4%) of total Medicare-subsidised mental health-related benefits.

Nationally, benefits paid for Medicare-subsidised mental health-related services averaged $53 per person in 2019–20, a small increase on the $51 per person in 2018–19 (in real terms compared to 2018–19 prices) (Figure EXP.3). The average benefits paid per person was highest in Victoria ($58 per person, in real terms), and lowest in the Northern Territory ($17 per person).

Figure EXP.3: Australian Government spending ($) per capita Medicare-subsidised mental health-specific services, by provider type, states and territories, 2019-20

Stacked vertical bar chart showing the Australian Government per capita expenditure on Medicare-subsidised mental health-specific services by provider type and states and territories in 2019–20. There was no consistent trend across the states and territories as to which provider had the highest per capita expenditure, with psychiatrists, clinical psychologists and general practitioners all having the highest per capita expenditure in at least one state or territory. Per capita expenditure for Other allied health was the lowest of all providers in every state and territory.

Note: ‘Clinical psychologist’ refers to psychological therapy services provided by a clinical psychologist, and ‘Other psychologist’ includes other psychology services involving clinical psychologists and other psychologists.

Source: Medicare Benefits Schedule data; Table EXP.20.

There was an average annual increase of 3.6% in the total spending on Medicare-subsidised mental health-specific services (adjusted for inflation) between 2015–16 and 2019–20. This change equates to an average annual increase (per person) in spending of 2.0%, in real terms, from $48 in 2015–16 to $52 in 2019–20.

Australian Government expenditure on mental health related subsidised prescriptions

Australian Government spending on mental health-related subsidised prescriptions under the PBS and RPBS was $566 million, or $22 per person in the Australian population, in 2019–20. This was equivalent to 4.4% of all PBS and RPBS subsidies ($13.0 billion) (SA 2020). Prescriptions for antipsychotics (48.1%) and antidepressants (32.5%) accounted for the majority of mental health-related PBS and RPBS spending in 2019–20, followed by prescriptions for psychostimulants, agents used for Attention-deficit hyperactivity disorder (ADHD) and nootropics (13.1%), anxiolytics (4.1%) and hypnotics and sedatives (2.2%).

In 2019–20, Tasmania ($28 per person) had the highest per capita cost of PBS/RPBS medications, and the Northern Territory ($14) the lowest, compared with the national per capita cost of $22 (Figure EXP.4). For most states and territories, the cost of antipsychotics was the largest proportion of PBS/RPBS costs, followed by antidepressants, except for Tasmania where the cost of antidepressants was slightly more than antipsychotics.

Figure EXP.4: Australian Government spending ($) per capita, mental health-related medications subsidised under the PBS/RPBS, by type of medication prescribed (ATC group), states and territories, 2019–20

Stacked vertical bar chart showing the Australian Government per capita expenditure on mental health-related medications subsidised under the PBS/RPBS by type of medication prescribed and states and territories in 2019–20. The highest per capita spend was on Antipsychotics in all states and territories, except for Tasmania where Antidepressants was the highest. Hypnotics and sedatives had the lowest per capita spend across all states and territories. Refer to Table EXP.28.

Source: Pharmaceutical Benefits Scheme data; Table EXP.28.

Over two-thirds (69.3% or $375 million) of the spending on mental health-related subsidised prescriptions was for prescriptions issued by GPs. This was followed by prescriptions written by psychiatrists (16.3% or $88m), with non-psychiatrist specialists’ prescriptions accounting for 9.2% ($50m).

Real expenditure (constant prices) for mental health-related prescriptions declined between 2014–15 and 2019–20, from $708m to $541m. This was the result of a decrease in the subsided cost of some medications rather than a reduction in prescribing. The subsidised and total number of mental health-related prescriptions grew at annual average rates of 0.4% and 3.2% per year respectively over this period (see table PBS.7). Medication prices can reduce for a variety of reasons (for example, Price Disclosure); refer to the Mental health-related prescriptions section for more information.

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Key concepts

Key concept Description
Average cost per patient day

Average cost per patient day is determined by dividing the total recurrent expenditure of the specialised mental health service by the total number of patient days as presented in the Specialised mental health care facilities section.

Constant price

Constant price estimates are derived by adjusting the current prices to remove the effects of inflation. This allows for expenditures in different years to be compared and for changes in expenditure to reflect changes in the volume of health goods and services. Generally, the constant price estimates have been derived using annually re-weighted chain price indexes produced by the Australian Bureau of Statistics (ABS). In some cases, such indexes are not available, and ABS implicit price deflators have been used instead.

Current price

Current price refers to expenditures reported for a particular year, unadjusted for inflation. Changes in current price expenditure reflect changes in both price and volume.

Health expenditure

Health expenditure is reported in terms of who incurs the expenditure rather than who ultimately provides the funding. In the case of public hospital care, for example, all expenditures (that is, expenditure on medical and surgical supplies, drugs, salaries of doctors and nurses, and so forth) are incurred by the states and territories, but a proportion of those expenditures are funded by transfers from the Australian Government.

Health funding

Health funding is reported in terms of who provides the funds that are used to pay for health expenditure. In the case of public hospital care, for example, the Australian Government and the states and territories together provide over 90% of the funding; these funds are derived ultimately from taxation and other sources of government revenue. Some other funding comes from private health insurers and from individuals who choose to be treated as private patients and pay hospital fees out of their own pockets. The national recurrent expenditure on all mental health-related services can be estimated by combining funding from 3 sources:

  • state and territory contributions to specialised mental health services
  • Australian government expenditure on mental health-related services and contributions to specialised mental health services
  • private health insurance fund component estimated by the Department of Health.
Patient days

Patient days are days of admitted patient care provided to admitted patients in public psychiatric hospitals or specialised psychiatric units or wards in public acute hospitals and in residential mental health services. The total number of patient days is reported by specialised mental health service units. For consistency in data reporting, the following patient day data collection guidelines apply: admission and separation on the same day equals 1 day; all days are counted during a period of admission except for the day of separation; and leave days are excluded from the total. Note that the number of patient days reported to the National Mental Health Establishments Database is not directly comparable with the number of patient days reported either to the National Hospital Morbidity Database (Overnight admitted mental health-related care section) or the number of residential care days reported to the National Residential Mental Health Care Database (Residential mental health care services section)

Program type

Public sector specialised mental health hospital services can be categorised based on program type, which describes the principal purpose(s) of the program rather than the classification of the individual patients. Acute care admitted patient programs involve short‑term treatment for individuals with acute episodes of a mental disorder, characterised by recent onset of severe clinical symptoms that have the potential for prolonged dysfunction or risk to self and/or others. Non‑acute care refers to all other admitted patient programs, including rehabilitation and extended care services.

Recurrent expenditure

Recurrent expenditure refers to expenditure that does not result in the acquisition or enhancement of an asset – for example, salaries and wages expenditure and non‑salary expenditure such as payments to visiting medical officers.

Target population

Some specialised mental health services data are categorised using 5 target population groups (see METeOR identifier:

  • Child and adolescent services focus on those aged under 18 years.
  • Youth services focus on those aged 16–24 years.
  • Older person programs focus on those aged 65 years and over.
  • Forensic health services provide services primarily for people whose health condition has led them to commit, or be suspected of, a criminal offence or make it likely that they will reoffend without adequate treatment or containment.
  • General programs provide services to the adult population, aged 18 to 64, however, these services may also provide assistance to children, adolescents or older people.

Note that, in some states, specialised mental health beds for aged persons are jointly funded by the Australian and state and territory governments. However, not all states or territories report such jointly funded beds through the National Mental Health Establishments Database.

 

Data presented in this section is for the 2019–20 period, constant prices are adjusted to 2019–20 levels. Further information on health spending is also available in Health Expenditure Australia 2019–20.

Data coverage includes the time period 1992–93 to 2019–20. Australian Government Medicare expenditure and mental health-related medications subsidised under the PBS and RPBS expenditure data for 2019–20 in this section were last updated in May 2021.