Health spending proportion of GDP holds steady

Spending on health services in Australia as a proportion of Gross Domestic Product (GDP) remains steady, confirming preliminary figures released by the Australian Institute of Health and Welfare earlier this year.

Health Expenditure Bulletin No. 14, released today by the AIHW, shows that Australia as a nation spent $43.2 billion, or 8.4%of Gross Domestic Product (GDP) on health services during 1996-97. This proportion has remained the same since 1994-95 and was similar to levels recorded in 1992-93 and 1993-94.

The Bulletin's author, Mr Tony Hynes, said that health prices in Australia appeared to be under control.

'It is possible for health price increases to push health expenditure growth to unsustainable levels, but the 2.3% increase in overall health prices per year from 1989-90 to 1996-97 was lower than the general level of inflation of 2.7% over the same period,' he said.

According to the Bulletin, State and Territory Governments' outlays on public acute care hospitals was higher, as a proportion of total government outlays, in 1995-96 than in 1994-95.

'This is due to the State growth in funding of public hospitals being higher than growth in funding from privately insured patients and the Commonwealth government,' Mr Hynes said.

'Part of the change in the relative share of funding between the Commonwealth and the States occurred when the Department of Veterans' Affairs switched some of its funding for veterans from public to private hospitals.'

Other findings in the Bulletin include:

  • The government sector funded 68.7% of total health services expenditure in 1996-97, with the remaining 31.3% funded by the non-government sector. The Commonwealth Government funded two-thirds of the $29.7 billion provided by the government sector.
  • Expenditure by health insurance funds accounted for 10.9% of total expenditure on health services in 1996-97, compared to 10.7% in the previous year. Of the major areas of expenditure, pharmaceuticals and private hospitals had the fastest growth between 1989-90 and 1995-96 at 8.2% and 8.4% per year respectively, with medical services growing at 5.5% per year.
  • Expenditure on recognised public hospitals increased on average by 2.9% per year from 1989-90 to 1995-96, nursing homes by 2.3% per year, and other professional services by 2.6% per year.
  • Recognised public hospitals had the largest share of total recurrent expenditure in 1995-96 at 28.9%. This has decreased from 30.6% in 1989-90. Funding for medical services represented 20.2% of total expenditure in 1995-96, while expenditure on pharmaceuticals was 12.0% of the total.

Note: Previous figures released by the AIHW in Australia's Health 1998 showed the health proportion of GDP for 1996-97 at 8.5%. Although the health expenditure estimate has not changed, the health proportion of GDP changed due to a revision of GDP estimates by the Australian Bureau of Statistics.

19 November 1998

Further information: Tony Hynes, ph. 02 6244 1160.
For media copies of the report: Lena Searle, ph. 02 6244 1032.
Availability: Check the AIHW for details.