'Steady as she goes' for health spending proportion of GDP

Spending on health services in Australia as a proportion of Gross Domestic Product (GDP) has remained the same for the third consecutive year, according to figures released today by the Australian Institute of Health and Welfare.

Health Expenditure Bulletin No. 13 shows that Australia as a nation spent $41.7 billion, or 8.5% of Gross Domestic Product, on health services during 1995-96.

Average spending on health services per Australian was $2,294 in 1995-96, an increase of $126 over the 1994-95 level, or 4.0% in real terms.

The Institute's health economist, Mr John Goss, said that there was a 5.3% increase in real terms in total health services expenditure between 1994-95 and 1995-96. This compared with real GDP growth of 3.9%.

'Preliminary indications are that growth in 1996-97 will be lower than in previous years largely due to real expenditure growth by the Commonwealth being only about 0.5% compared with 6.4% in 1995-96.'

Proportions of funding for health services expenditure from the government and non-government sectors have remained steady since 1988-89, with government sectors accounting for about two-thirds of total spending and non-government sectors accounting for one-third.

In the two years 1994-95 and 1995-96, total expenditure funded by State, Territory and local governments grew much faster than previously: 7.3% in 1994-95 and 6.3% in 1995-96 after a decline in 1993-94 of 3.9%.

Other findings of the study include:

  • Commonwealth Government spending on health services grew at an annual average of 5.0% between 1989-90 and 1995-96. State, Territory, and local government expenditure grew by an average of 1.6% over the same period.
  • Between 1993-94 and 1995-96 health price increases averaged 1.6% per year while price increases in the rest of the economy averaged 2.1% per year.
  • Of the major areas of expenditure, pharmaceuticals and private hospitals had the fastest growth between 1989-90 and 1994-95 at 8.0% and 8.3% per year respectively.


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