Health spending rises

Figures released today by the Australian Institute of Health and Welfare show that between 1996-97 and 1997-98 spending on health services in Australia rose by $3.0 billion to $47.3 billion, a real growth rate of 5.1%, and higher than the average real growth rate of 4.1% per year since 1989-90.

Health Expenditure Bulletin No. 15: Australias Health Services Expenditure to 1997-98 shows that the higher growth was partly due to high health capital expenditure growth of 12.6% in 1997-98. This was driven by a 23% increase in State government funding of capital expenditure (Table 15). High real expenditure growth in public non-psychiatric hospitals expenditure of 6.6% in 1997-98 (Table 8) also contributed to the higher growth rate.

Between 1991-92 and 1997-98, real growth in spending on health services (4.6% per year) was higher than the average real growth rate for Gross Domestic Product of 4.1% per year. This led to the health services expenditure to GDP ratio rising from 8.2% in 1991-92 to 8.4% in 1997-98.

The non-government sectors contribution fell from 32.8% of funding in 1996-97 to 30.9% in 1997-98 (Table 5). Principal economist with the AIHW, Mr John Goss, said Another interesting finding is the decrease in the proportion of funding by the non-government sector between 1996-97 and 1997-98. This is partly due to the impact of the Private Health Insurance Incentives Scheme. It effectively transferred responsibility for $419 million of funding from the non-government sector to the Commonwealth during 1997-98. The scheme provided an income-tested financial incentive to take out and maintain private health insurance.

Mr Goss also said that low capital expenditure growth in the non-government sector was a factor in the fall in the non-government share (Table 15).

Health Expenditure Bulletin No. 15 shows that the Commonwealth Governments funding of health expenditure increased from 44.8% to 45.5%, while the State and local governments proportion increased from 22.5% to 23.6%.

Government spending on public non-psychiatric hospitals, after adjustment for inflation, increased by 4.1% per year between 1992-93 and 1997-98, during the last Medicare Agreement, with Commonwealth expenditure increasing by 2.2% per year on average, and State and Territory expenditure by 6.2% per year on average.

Topics covered in Health Expenditure Bulletin No. 15: Australias Health Services Expenditure to 1997-98 include expenditure per person, types of expenditure, health prices, and funding of health services expenditure.

2 July 1999

Further information: Mr John Goss, ph. 02 6244 1151 (bh) or 02 6258 9328 (ah), or Mr Tony Hynes, ph. 02 6244 1160 (bh).
For media copies of the report: Lena Searle, ph. 02 6244 1032.
Availability: Check the AIHW for details.