Health spending passes $100 billion

Australia's spending on health goods and services is now in excess of $100 billion a year, according to a report released today by the Australian Institute of Health and Welfare.

The report, Health expenditure Australia 2007-08, shows total health expenditure in Australia was $104 billion in 2007-08, and was 9.1% of gross domestic product (GDP). This was the same percentage of GDP as the previous year.

'This was an $8.6 billion, or $328 per person, increase from 2006-07,' said Head of the Institute's Expenditure and Economics Unit, Mr John Goss.

Compared with other Organisation for Economic Co-operation and Development (OECD) countries in 2007, Australia's health spending as a proportion of GDP was similar to Italy, Norway, Sweden and New Zealand. It spent more than the United Kingdom, but considerably less than the USA where health spending accounted for 16% of GDP.

The report examines Australia's health spending from 1997-98 to 2007-08, and shows the average annual growth in health expenditure for the decade was 5.2% compared with an average growth in GDP of 3.5% per year.

'Health prices increased at a slower rate than prices in the general economy in the three years from 2004-05 to 2007-08,' Mr Goss said. 'Up to 2004-05, health prices had generally increased more rapidly than other prices.'

Almost 70% of health expenditure in Australia was funded by governments, with the Australian Government contributing $45 billion (43%), and state, territory and local governments contributing $26 billion (26%). The remaining $32 billion (31%) was funded by individuals, private health insurers, and other non-government sources.

The Australian Government's share of public hospital funding was 42.5% in 1997-98 and 38.6% in 2006-07. In 2007-08 this rose to 39.2%.

The highest area of growth in real health expenditure was in public health/preventive activities, which grew by 20.7% in 2007-08, and was largely attributable to a 56% increase in spending on organised immunisation programs.

Much of that high growth was due to the costs associated with the implementation of the national cervical cancer vaccine (human papillomavirus or HPV) program.

Health research had the second highest growth, up 12% in 2007-08.

'Increased spending on public hospital services accounted for almost one-third (32.5%) of the $8.6 billion increase in health expenditure in 2007-08,' Mr Goss said.

Total recurrent health expenditure per person was highest in the Northern Territory at $5,981 per person, compared to the national average of $4,613. The highest expenditure growth rates per person over the last 10 years were in South Australia and the Northern Territory, with average annual growth rates of 4.9% and 4.4% respectively.

Wednesday 30 September 2009

Further information: Mr John Goss, AIHW, tel. 02 6244 1151, mob. 0407 915 851 or Rebecca Bennetts, AIHW, tel. 02 6244 1187

For media copies of the report: Publications Officer, AIHW, tel. (02) 6244 1032