Compilation of health expenditure estimates

The HED, where the AIHW health expenditure data are collated and stored, is compiled each financial year. However, it takes approximately 15 months after the end of the reference year to receive, process, check and analyse the data, and release the HEA report.

Allocation of expenditure

The HED is structured to reflect the flow of funds in the health system (Figure 32), each column representing a funding source and the rows, the areas of expenditure (Table T1).

Derivation of expenditure estimates are based around the source of funding approach, whereby offsets are made to avoid double counting and to reflect the original source of funding (see Offsets).

This structure is reflected further in the estimates reported in the HEA, which presents health spending firstly by source of funds and secondly by area of expenditure.

State and territory level data

Data are disaggregated and reported at the state/territory level. Where the state/territory level data are not available in the source data, the expenditure estimates are allocated to the states and territories using allocation factors such as population or medical staffing proportions.

More detailed levels of geographical and demographical data (such as Statistical Area 3, data by age group, and data by socio-economic group) are not available in the HED. Such level of details might be available in AIHW’s Disease expenditure reports.


Offsetting is the mechanism by which an adjustment is made for potential double counting of expenditure. By applying an offset, account is taken of circumstances where the same funds are spent more than once due to the way they flow in the health system. In these instances, a decision is required about which source the expenditure will be counted against. In the ANHA the source of funds approach is used to allocate expenditure to where the funds originated. The offsets are explained in detail throughout this chapter.

An example of an offset is that, as state and territory governments receive funding from the Australian Government, such as NHR funding and health-related NPPs, the spending is counted as components of spending by the Australian Government. The corresponding amounts are then deducted from state and territory governments’ gross expenditure to remove any double counting. Revenue that state and territory governments received from other sources (such as from DVA or non-government entities) are accounted for in a similar way.


Data processing, including data sources

The Australian Government

The Australian Government total health spending includes spending:

  • by DVA (column A)
  • by grants to states and territories, through NHR funding and NPPs (column B), including HSDs in public hospitals
  • on PHI premium rebate claimed through providers (column C) and through taxes (column M)
  • by DoH, including spending on MBS and PBS programs (column D)
  • by other Australian Government agencies, such as spending on capital expenditure, capital depreciation, health research and the net medical expenses tax rebate (which had phased out by the end of 2018–19) (column E). As of 2019–20, spending by the ADF is also included.

State and territory governments

Non-government funding sources

The non-government total health spending includes spending:

  • by PHI providers (column G)
  • by Individuals (column H)
  • by Other private entities (column I)
  • by Workers’ compensation insurance providers (column J)
  • by CTPI providers (column K)