Health expenditure is an Australia's health topic

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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.

Figure 1: Health spending in NPCR, current prices, 2019–20 to 2020–21

The bar chart shows spending on the National Partnership on COVID-19 Response (NPCR), funded by both Australian Government and state and territory governments over the period 2019–20 to 2020–21. In 2019–20, the Australian Government funded $2.4 billion while state and territory governments contributed $2.0 billion. In 2020–21, the Australian Government spending on the NPCR was $4.0 billion and state and territory governments funding was $3.7 billion.

Source: Administrator’s Jurisdictional Advisory Committee, NHFB (2022)

Australian Government spending through Department of Health and Aged Care programs

Total Australian Government spending through specific COVID-19 Department of Health and Aged Care programs (outside the NPCR) up to 2020–21 was estimated to be $7.9 billion in current prices ($1.7 billion in 2019–20 and $6.2 billion in 2020–21) (Figure 2).

The distribution of the spending in 2020–21 included:

  • 42% ($2.6 billion) on COVID-19–related medical services (mainly related to referred and unreferred medical services through MBS telehealth)
  • 20% ($1.2 billion) on COVID-19 medical goods and equipment (mainly related to distributions of masks and personal protective equipment products for the national medical stockpile)
  • 17% ($1.1 billion) on Other COVID-19–related health spending (largely related to mental health programs, public health mainly related to primary care respiratory clinics and a national communication campaign)
  • 15% ($0.9 billion) on COVID-19 vaccinations (mainly provided access to, and delivery of, COVID-19 vaccines as part of the national rollout)
  • 4% ($0.2 billion) on COVID-19 testing (mainly through MBS-funded COVID-19 testing)
  • 2.3% ($0.1 billion) on COVID-19–related investments.

Note that COVID-19–related spending for aged care is outside the scope of this page. This also does not include COVID-19–related spending by other Australian Government agencies, which might fall into a broader scheme of economic response to COVID-19.

Figure 2: Australian Government spending through Department of Health and Aged Care programs, by areas of spending, current prices, 2019–20 to 2020–21

The bar chart shows Australian Government spending through Department of Health programs over the period 2019–20 to 2020–21. In 2019–20, Australian Government spending in response to the COVID-19 pandemic was estimated to $1.7 billion. It was estimated to be $6.2 billion in 2020–21. Of this, $2.6 billion spent on the COVID-19 related medical services, $1.2 billion on COVID-19 medical goods and equipment, $1.1 billion on Other COVID-19 related health spending, $0.9 billion on COVID-19 vaccination, $0.2 billion on COVID-19 testing and $0.1 billion on COVID-19 related investments.

Source: AIHW Health Expenditure Database

International comparisons

Using the OECD-SHA, Australia’s health spending to GDP ratio ranked 11th in 2019 and was between 17th and seventh among OECD countries from 2000 to 2019 (Figure 3). Note that comparable data are only available for 36 countries (excluding Colombia and Costa Rica) among 38 OECD member countries.

Figure 3: Health spending to GDP ratios and Australia’s rank among OECD countries, current prices and local currencies, 2000 to 2019

The line chart shows that Australia’s ranking among OECD countries ranged from 7th to 17th over the period 2000 to 2019. Australia’s ranking was relatively volatile from 2007 to 2015. Australia’s ranking was quite stable from 9th to 11th in the recent years (2016 to 2019).

The bar chart shows that in 2019 health spending as a proportion of GDP was highest in the United States at 16.0% and Japan at 11.0%. The lowest ratio was lowest in Luxembourg at 4.9% and Turkey at 4.3%. Australia’s health spending as a proportion of GDP of 9.3% was the 11th highest among OECD countries and 1.3 percentage point higher than the OECD median.

Notes:

  1. Comparable data are only available for 36 countries (excluding Colombia and Costa Rica) among 38 OECD member countries.
  2. For comparison across OECD countries, health spending figures exclude spending by providers of long-term care facilities. Health spending figures in international comparisons are not comparable with data in other sections.
  3. Due to the data revisions from some OECD member countries, these ratios and rankings for OECD countries are not comparable to the previous reports.
  4. Due to difference in reference year and methodology, these ratios are not comparable to Australia’s health expenditure: an international comparison (AIHW 2019)

Sources: AIHW Health Expenditure Database; OECD 2021b

Where do I go for more information?

For more information on health expenditure, see:

Visit Health & welfare expenditure for more on this topic.

References

AIHW (Australian Institute of Health and Welfare) (2019) Australia’s health expenditure: an international comparison, AIHW, Australian Government, accessed 20 December 2021.

AIHW (2022) Health expenditure Australia 2020–21, AIHW, Australian Government, accessed 03 April 2023.

NHFB (National Health Funding Body) (2022) Administrator’s Jurisdictional Advisory Committee, NHFB, Australian Government.

OECD, Eurostat and WHO (World Health Organization) (2017) A system of health accounts 2011: revised edition, OECD website, accessed 20 December 2021.

OECD (Organisation for Economic Co-operation and Development) (2021a) About the OECD, OECD website, accessed 20 December 2021.

OECD (2021b) Health statistics 2021, stats.oecd.org, accessed 20 December 2021.