Health and aged care expenditure on dementia
Australia’s response to dementia requires economic investment across the health, aged care and welfare sectors. This investment includes expenditure associated with: diagnosis, treatment and care of people with dementia (including supporting a workforce of trained professionals); and support services for people with dementia and their informal carers.
The following pages present direct expenditure estimates for caring for people with dementia across the health and aged care sectors in 2018–19. It includes the estimated expenditure on:
- aged care services – including aged care assessments, community-based and residential aged care services
- health services – including hospital services and out–of–hospital medical services such as general practitioner (GP) and other medical specialist services, diagnostic services, allied health services and medications
- dementia support services.
Refer to the Expenditure data tables for the underlying data presented in these pages.
The year 2018–19 is presented as this is the latest year of data available from the AIHW Disease Expenditure Database. In this report we focus on presenting health and aged care expenditure estimates that are directly attributable to dementia (rather than all costs for people with dementia), to avoid including expenditure related to other conditions. Our estimates have been adjusted to reflect the contribution of comorbidities to the costs for treatment and care of people with dementia and do not include estimates of indirect expenditure such as costs arising from the social and economic burden on carers and family, or from lost wages and productivity. More information on the methodology and data sources used to estimate expenditure directly attributable to dementia can be found by expanding the box Information sources and coverage of dementia expenditure estimates.
As there is no single source of data to estimate total expenditure due to dementia, a number of different data sources of varying quality were used. The majority of the aged care estimates presented are based on direct government expenditure. However, non-government expenditure (for example, by individuals, private health insurers and other non-government sources) is included in health expenditure estimates in relation to hospital services, out-of-hospital medical services and prescription medications.
Health-care expenditure estimates are sourced from the AIHW Disease Expenditure Database. In this database, expenditure across the various components of the health system is estimated and then allocated to health conditions based on a range of available diagnostic and service use data.
Aged care expenditure is allocated to dementia using the proportion of care delivered within programs to clients with dementia diagnoses and supplements. For the purposes of this report, spending on community-based respite care for people with dementia (which is part of the Commonwealth Home Support Programme) is shown separately.
Due to data limitations, the dementia expenditure estimates presented in this section do not include expenditure for:
- specialised mental health care services
- state and territory government expenditure on aged care
- government payments to support people with dementia (such as payments made under the National Disability Insurance Scheme) and payments to support carers of people with dementia who are prevented from undertaking substantial paid employment due to their caring role
- indirect expenditure – such as travel costs for patients, the social and economic burden on carers and family, and lost wages and productivity.
The dementia expenditure estimates also exclude government funding for dementia research, which is made largely through grant opportunities provided by the National Health and Medical Research Council (NHMRC). However, over $438 million in direct funding to over 400 dementia research projects has been awarded since 2014. A full list of projects funded through the NHMRC is available at Dementia research NHMRC.
The quality and availability of data on dementia-specific programs, packages and services vary widely, so the ability to estimate expenditure attributable to dementia (as opposed to expenditure on people with dementia) also varies. Further, funding for services provided to the general public to bring awareness to and support dementia in the community (such as the Dementia Friendly Communities program, which is funded under the Australian Government Dementia and Aged Care Services Fund) was not included in the direct expenditure for dementia.
The total estimated direct expenditure for dementia presented in this report should be considered a conservative estimate and interpreted with caution. Refer to the Technical notes for more information on the methodology used to estimate the direct health and aged care expenditure estimates for dementia.
Total estimated expenditure on dementia
It is estimated that almost $3.0 billion of the total direct health and aged care system expenditure in 2018–19 was directly attributable to the diagnosis, treatment and care of people with dementia.
The health and aged care system expenditure directly attributable to dementia was mainly for:
- residential aged care services – $1.7 billion or 56% of the total direct health and aged care system expenditure for dementia
- community-based aged care services – just under $596 million or 20%
- Home Care Packages, Commonwealth Home Support Programme (excluding respite care), Veterans’ Home Care Program and DVA Community Nursing program
- hospital services – almost $383 million or 13%
- public and private admitted patient hospital care, public hospital outpatient clinics and public hospital emergency department care
- community-based and residential respite care – $133 million or 4.4%
- out-of-hospital medical services – $99.2 million or 3.3%
- dementia support programs and initiatives – $50.6 million or 1.7% (Figure 14.1).
Figure 14.1 is two bar graphs that show the distribution of Australian Government expenditure that was directly attributable to dementia in 2018–19. The first bar graph shows the distribution of dementia expenditure between broad service areas. It shows that the majority of spending was on residential aged care services, with most of the remainder consisting of community based aged care services and hospital services. The second graph shows the distribution of dementia expenditure by service area sub-categories. The majority of expenditure was on residential aged care services, followed by the Home Care Packages Program and public and private admitted patient care
The health and aged care expenditure estimates above reflect costs that are thought to be directly attributable to dementia and therefore they do not include expenditure related to other conditions. However, it is important to recognise that many people have co-existing conditions, some of which may be directly associated with dementia. In addition, dementia is often the main reason for people using certain health and aged care services, particularly residential aged care. For example, the estimated costs of care related to managing co-existing conditions in people with dementia who are living in residential aged care totals $6.8 billion. If these costs were included, the total direct health and aged care system expenditure for people with dementia (rather than directly attributable to dementia) would be $9.8 billion.