Please note throughout this section, all health expenditure (unless otherwise specified) utilises constant prices, also referred to as ‘in real terms’. Constant price estimates are derived by adjusting the current price to remove the effects of inflation and allows for spending in different years to be compared and for changes in spending to reflect changes in the volume of health goods and services
This section reviews the available information on recurrent expenditure (running costs) health expenditure (what was spent) and health funding (funding provided and who provided the funds) for mental health-related services in Australia. These are distinct but related concepts essential to understanding the financial management of the health system.
The COVID-19 pandemic has had a number of impacts on the Australian health system, including increasing expenditure both in the system overall and specifically for mental health related care. Overall, the mental health proportion of total health expenditure decreased in 2020–21 (7% in 2020–21 from 8% in 2019–20) despite mental health-related expenditure increasing from about $10.5 billion in 2019–20 to about $11 billion in 2020–21. Health system responses, such as increased use of personal protective equipment, increased cleaning schedules and expansion of telehealth arrangements have also impacted expenditure. For example, the Australian Government introduced a wide range of additions to the Medicare Benefit Schedule (MBS) to support the provision of care via telehealth, expanding the items included in the MBS and increasing the expenditure from about $1.4 billion in 2019–20 to about $1.6 billion in 2020–21. Caution should be exercised when making time series analysis that include the 2020–21 period.
In 2020–21, national recurrent spending on mental health-related services was estimated to be $11.6 billion; an annual average increase of almost 6% since 2016–17, in real terms (i.e. adjusted for inflation). Overall, national spending increased from $418 per person in 2016–17 to $451 per person during 2020–21; an average annual increase of 2%, in real terms.
In 2020–21 state and territory governments spent 60% ($7 billion), the Australian Government 35% ($4 billion), and private health insurance funds and other third-party insurers 5% ($0.6 billion) of recurrent expenditure.
Australian Government spending increased by an average annual rate of 4% between 2016–17 and 2020–21, state and territory government spending increased by an average annual rate of 3% in real terms. 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.