Australian Institute of Health and Welfare (2021) Health Expenditure Australia 2019-20, AIHW, Australian Government, accessed 25 June 2022.
Australian Institute of Health and Welfare. (2021). Health Expenditure Australia 2019-20. Retrieved from https://www.aihw.gov.au/reports/health-welfare-expenditure/health-expenditure-australia-2019-20
Health Expenditure Australia 2019-20. Australian Institute of Health and Welfare, 17 December 2021, https://www.aihw.gov.au/reports/health-welfare-expenditure/health-expenditure-australia-2019-20
Australian Institute of Health and Welfare. Health Expenditure Australia 2019-20 [Internet]. Canberra: Australian Institute of Health and Welfare, 2021 [cited 2022 Jun. 25]. Available from: https://www.aihw.gov.au/reports/health-welfare-expenditure/health-expenditure-australia-2019-20
Australian Institute of Health and Welfare (AIHW) 2021, Health Expenditure Australia 2019-20, viewed 25 June 2022, https://www.aihw.gov.au/reports/health-welfare-expenditure/health-expenditure-australia-2019-20
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The differences in purpose, scope and coverage are the key reasons for the observed differences in health expenditure statistics across the different reports. In recent years the AIHW has worked with stakeholders in the HEAC to better understand the similarities and differences across the various health expenditure reporting entities. The first phase of this work was published in the Health expenditure Australia 2018–19 report (published in 2020) with the inclusion of a report section which descibes the various reports and the drivers of varying health expenditure estimates.
This section provides an analysis of the drivers of different health expenditure estimates across the various reporting entities.
Variances in health expenditure statistics are due to the different scope and classifications systems used. For example, where spending through health insurance is considered part of the health system under the ANHA, it is considered part of the insurance sector in the System of National Accounts. Another reason for variation comes from the ABS use of the GFS as a source for government spending, which varies from the source used by the AIHW, which has been tailored specifically for the ANHA. While the basis for both systems is the general ledger transactions that are recorded by the various government agencies, including Departments of Health, the two vary for a number of reasons.
The relevant point of comparison between Government Finance Statistics (GFS) on health expenditure based on the Classification of the Functions of Government (COFOG) and those in the ANHA relates to statistics on Australian and jurisdictional government funding of expenditures. Reasons for differences include:
COFOG is a ‘purpose’ classification, which means that the basis for classifying expenditures is the purpose for which the expenditure relates, rather than the nature of the activity. This means, for example, that remote housing constructed for the purpose of housing doctors would be treated as health expenditure in COFOG.
The health division in COFOG potentially includes activities that are outside of the scope of the ANHA (for example, nursing and convalescent home services) and may exclude activities that are within the scope of the ANHA.
Within GFS, unconsolidated statistics of expenditures by state and territory governments include expenditures financed by transfers from the Australian Government. Consolidated statistics remove transactions between levels of government. This process is known as consolidation, and is performed to avoid double-counting of government transactions. Likewise, within GFS, statistics of expenditures by state governments includes expenditure financed by payments from non-government sources, which are excluded from health expenditures funded by state and territory governments in the ANHA.
Likewise, within GFS, statistics of expenditures by state governments includes expenditure financed by payments from non-government sources, which are excluded from health expenditures funded by state and territory governments in the ANHA.
The estimates of government final consumption expenditure in the System of National Accounts (SNA) can be compared with estimates of government funded health expenditure in the ANHA. Reasons for differences include:
Differences between GFS health expenditure statistics and ANHA expenditure statistics as described above, as the GFS statistics form the basis for the SNA estimates of government final consumption expenditure.
Health-related transfers from governments to households will not be included as government household final consumption expenditure. Instead, they will be reflected in estimates of private final consumption expenditure in the SNA. However, these transfers, because they are funded by government, are included as government funded expenditure in the ANHA.
Likewise, the estimates of household final consumption expenditure on health can be compared with estimates of non-government expenditures in the ANHA. Reasons for differences include:
Household final expenditure funded by government transfer to households, which will be shown as government funded expenditure in the ANHA.
Health expenditure by residents and non-residents on health care. Spending by non-residents in Australia is included in ANHA expenditure estimates, but is deducted from HFCE, while spending by Australian residents abroad are added to HFCE. These adjustments are recorded as net expenditure overseas (NEO).
The inclusion of any non-government expenditure in the ANHA that is treated as intermediate consumption expenditures in the SNA rather than HFCE (i.e. any health expenditures by businesses).
The treatment of health insurance providers administrative expenses. These are shown as part of non-government health expenditure in the ANHA. However, they are excluded from household final consumption expenditure in the SNA. In the SNA, these expenses are treated as input costs of the insurance industry, which produces insurance services. The household acquisition of health insurance services is recorded in the miscellaneous goods and services component of household final consumption expenses.
Furthermore, a range of different sources and methods are used to compile the various estimates of final consumption expenditure in the SNA and the ANHA estimates of non-government expenditure. The use of these different sources and methods will likely cause differences in the estimates in addition to the conceptual and scope differences mentioned above.
While these jurisdictional reports generally use the same source data as are provided to the AIHW for the ANHA (audited financial statements and ‘general ledgers’), variations in scope and methods can occur. Classifying the data to fit the ANHA classification system can require adjusting specific items to avoid duplication, or drawing on other data sources, such as hospital activity data, to ‘fit’ the spending into ANHA categories.
The ANHA data vary from the jurisdictional annual reports primarily because the ANHA is national in scope, not limited to a single department or jurisdiction, and must avoid double counting where there are transfers between agencies (and the same spending may be reported by both). An important contributor to this are the federal transfers and, in particular, National Health Reform Agreement payments as well as payments for programs such as for highly specialised drugs. The ANHA effectively 'removes' these amounts from state and territory spending and reports them under the Australian Government 'Health and other' category. Other reasons for variation include payments from insurers. To create an illustrative comparison with annual report figures here, a number of adjustments have been made to account for the main reasons for variation. In particular, where the transfers have been added back in to the state and territory figures, they have been removed from the Australian Government 'Health and other' category as they are not managed directly by the Department of Health so do not appear in the annual report.
Some examples of drivers of variability between annual reports and the ANHA include:
In preparing their submissions for the ANHA each year, the state and territories remove these scope and duplication issues from the data that is provided to the AIHW. To ensure this is done consistently over time and between jurisdictions, this work is overseen by the Health Expenditure Advisory Committee, which includes representatives from all jurisdictions and the AIHW is continuing to work with all jurisdictions to ensure transparency.
The National Health Funding Body (NHFB) was established in 2011 to support funding and payments made under the National Health Reform Act 2011. The NHFB estimates comprise two components – a state pool and a state managed fund. Payments into the state pool include:
There are two relevant points of comparison between the statistics published by the NHFB and those in the ANHA:
On the Australian Government side, NHFB’s published numbers on the Commonwealth contribution of the National Health Reform Agreement (NHRA) funding are directly used as the main component of Commonwealth public hospital funding in the ANHA. The ANHA estimates are calculated using information on total public hospital expenditure provided by jurisdictional departments of health. State and territory governments’ own funding on public hospitals are derived by offsetting NHRA and other grants and revenues that states and territories received from the Australian Government and other sources.
The estimates of total public hospital funding from NHFB statistics and in the ANHA will differ because of:
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