Health spending proportion of GDP continues to fall

Spending on health services in Australia, as a proportion of Gross Domestic Product (GDP), fell for the second consecutive year during 1994-95, according to figures released today by the Australian Institute of Health and Welfare.

Health Expenditure Bulletin No. 12 shows that Australia as a nation spent $38.5 billion or 8.4% of Gross Domestic Product on health services during 1994-95.

This continues the decline from 1993-94 when health services expenditure, as a proportion of GDP, fell from 8.6% in 1992-93 to 8.5% in 1993-94.

The fall in the health services expenditure to GDP ratio is largely the result of two factors-growth for health expenditure being lower than that for GDP and a period of two years during which health services prices rose at a slower rate than general prices.

Average spending on health services per Australian was $2,145 in 1994-95, an increase of $89 over the 1993-94 level.

The Institute's health economist, Mr John Goss, said that this study showed that 'growth rates in expenditure on institutional services such as public hospitals and nursing homes, where governments have been able to exercise considerable control on prices and expenditure, have been below the overall average.'

'However, growth in expenditure on non-institutional health care such as private medical services and pharmaceuticals continued to exceed the average, as did expenditure on private hospital services.'

'For example, between 1988-89 and 1993-94 growth in real expenditure on both pharmaceuticals and private hospitals averaged 8.2% per year.'

The study also shows that the proportions of funding for health services expenditure from the government and non-government sectors have remained steady since 1988-89, with governments providing about 68% of total funding for health services.

The study compares Australia's health expenditure with that of eight other OECD countries-Canada, France, Germany, Japan, New Zealand, Sweden, the United Kingdom and the United States. Australia was ranked sixth in terms of the proportion of GDP devoted to health services expenditure in 1993-94.

A major factor in Australia's ability to maintain this 'middle ranking' was the capacity of its health system to control health inflation.


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