Health spending growth slowest since the 1980s

Spending on health in 2012-13 slowed to record low levels according to a new report from the Australian Institute of Health and Welfare (AIHW).

The report, Health expenditure Australia 2012-13, shows total spending on health goods and services in Australia was estimated at $147.4 billion in 2012-13 (9.67% of GDP). This was just 1.5% higher than in 2011-12.

'This is the lowest growth the AIHW has recorded since it began the Health expenditure Australia series in the mid-1980s, and more than three times lower than the average growth over the last decade (5.1%),' said AIHW Director and CEO David Kalisch.

The report shows government spending on health overall fell by 0.9% in 2012-13. This was largely due to a fall of 2.4% in the Australian Government's funding. During the previous decade, Australian Government spending had experienced average annual growth of 4.4%.

The main drivers of the decrease in Australian Government spending were reductions in spending on the Pharmaceutical Benefits Scheme, public health, dental services and e-health. Spending also fell in the categories of health insurance premium rebates, Department of Veterans' Affairs funding and the medical expenses tax rebate in 2012-13.

The report also shows that growth in state and territory government funding of health expenditure was relatively low. State and territory health spending grew by just 1.4% in 2012-13, 4.2 percentage points lower than the average growth for the decade.

In 2012-13, governments funded $100.8 billion or 68.3% of total health expenditure in Australia. This was 1.6 percentage points lower than in 2011-12, the largest reduction of the decade. The Australian Government's contribution was $61.0 billion (41.4% of total funding) and state and territory governments contributed $39.8 billion (26.9%).

Non-government funding sources provided the remaining $46.6 billion (31.6%). The share contributed by non-government sources rose by 1.6 percentage points, with individuals contributing just over half of the increase (0.9 percentage points).

'In contrast to government funding, growth in non-government funding was relatively strong. It grew by 7.2% in 2012-13 compared to the average of 5.4% for the decade,' Mr Kalisch said.  

In 2012-13, estimated spending per person on health averaged $6,430, which was $17 less per person than in the previous year.

'This small reduction meant that expenditure essentially grew in proportion to-rather than faster than-population growth for the first time in the decade,' Mr Kalisch said.

The AIHW is a major national agency set up by the Australian Government to provide reliable, regular and relevant information and statistics on Australia's health and welfare.

Canberra, 23 September 2014