Health expenditure is money spent on health goods and services. It includes money spent by all levels of governments as well as non-government entities such as individuals, private health insurers, and injury compensation insurers. Health spending on goods and services includes hospitals (both public and private); primary health care (unreferred medical services, dental services, other health practitioners, community health, public health, and medications); referred medical services; other services (patient transport services, aids and appliances, and administration); research; and capital expenditure.
Health expenditure in 2020–21
The AIHW has been reporting on estimates of health spending in Australia for more than 3 decades. The annual estimates are based on data from the AIHW health expenditure database, which is a collation of more than 50 data sources that capture health spending by governments, individuals, private health insurers, and other private sources in each financial year (AIHW 2022). Since data from some of the sources could only be obtained with a significant time lag (especially data from state and territory governments, as well as some Government Finance Statistics data), it normally takes between 15 to 18 months after the end of the financial year to release the health expenditure report. The most up-to-date report is Health expenditure Australia 2020–21.
Government COVID-19 health response
The initial impact of COVID-19 on the whole health system was analysed in Health expenditure Australia 2019–20. In addition, data on spending by governments on specifically identifiable COVID-19 programs are available for 2019–20 and 2020–21. Government COVID-19 spending in 2019–20 and 2020–21 includes:
- spending on the National Partnership on COVID-19 Response (NPCR): data from the National Health Funding Body (NHFB)
- Australian Government spending through Department of Health and Aged Care programs (including Medicare Benefits Schedule (MBS) and Pharmaceutical Benefits Schedule (PBS)).
Data do not include state and territory governments’ spending outside the scope of the NPCR.
International comparison of health spending
Data for comparison are sourced from the Organisation for Economic Co-operation and Development (OECD). The OECD is a forum where governments come together to discuss a range of issues, such as health, with the aim of improving economic and social wellbeing of communities (OECD 2021a). The OECD currently has 38 member countries including Australia, which has been a member since 1971. For more information on the OECD, see the OECD website.
The OECD uses the System of Health Accounts (SHA) 2011 framework to collect and report data on health expenditure. This framework looks at the consumption, provision, and financing of health care (OECD et al. 2017). The most updated comparable data used on this page are for 2019 (the 2019–20 financial year).
Health spending in 2020–21
Australia spent an estimated $220.9 billion on health goods and services in 2020–21 – this is an average of approximately $8,617 per person. The real growth (adjusted for inflation) in total health spending (recurrent and capital) was 7.1% more than in 2019–20. While this growth was more than double the average yearly growth rate over the decade to 2020–21 (3.4%), it largely reflected a rebound back to pre-pandemic health spending trends, particularly for non-government spending.
In 2020–21, health spending accounted for 10.7% of the gross domestic product (GDP) in Australia, 0.5 percentage points higher than in 2019–20.
See Overview for more information.
In 2020–21, governments funded $156.0 billion of the total health expenditure (70%) with non-government sources funding the remaining $64.9 billion (29%).
Spending by source of funds
Of the total government funding in 2020–21, the Australian Government contributed $94.4 billion, with state and territory governments contributing $61.6 billion. In 2020–21, health spending by non-government entities (including individuals, private health insurers, injury compensation insurers and other private sources) increased by 6.4% in real terms compared with 2019–20.
Spending by individuals was the largest source of growth in non-government spending at $33.2 billion (9.3% more than in 2019–20), likely associated with the easing of pandemic restrictions. Despite this rebound, the proportion of health spending funded by individuals remained relatively low after generally declining over the past decade (14% and 15% in current prices in the last two financial years compared with 18% in 2010–11).
See Spending trends by sources for more information.
Areas of health spending
During 2020–21, spending increased on most areas of health. The greatest increases in recurrent spending were for:
- primary health care, a $6.7 billion (10.1%) increase in real terms, which was associated with increased spending related to the pandemic, such as personal protective equipment and the first stages of the COVID-19 vaccine rollout.
- hospitals, a $4.2 billion (4.9%) increase in real terms. This growth in hospital spending was partially driven by an increase in overall hospitalisations (including elective surgery services) due to the easing of COVID-19 restrictions in 2020–21.
See Spending trends by areas of spending for more information.
Government COVID-19 health response
The pandemic impacted health spending in many ways, often through increasing the cost and complexity of service delivery in ways that are difficult to quantify. There were, however, some large COVID-19–specific response programs, such as the National Partnership on COVID-19 Response (NPCR) and spending on COVID-19–related programs by the Australian Government Department of Health and Aged Care. Over the period 2019–20 to 2020–21, there was an estimated $20.0 billion spent through these programs ($12.1 billion on the NPCR and $7.9 billion on the Department of Health and Aged Care programs) in current prices.
Spending on the National Partnership on COVID-19 Response
In 2019–20, spending on the NPCR was estimated to be $4.5 billion in current prices ($2.5 billion by the Australian Government and $2.0 billion by state and territory governments). Note that the pandemic only started about 4 months before the end of the 2019–20 financial year. During 2020–21, government spending through the NPCR was $7.7 billion ($4.0 billion by the Australian Government and $3.7 billion by state and territory governments) (Figure 1). The components of the Australian Government spending in 2020–21 were:
- hospital services payments ($1.3 billion, or 33%)
- state public health payments ($2.3 billion, or 58%)
- private hospital financial viability payment ($0.4 billion, or 8.9%).
As part of the NPCR, state and territory governments also funded $1.3 billion on hospital services payments and $2.3 billion on state public health payments.