Data processing: 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 DoHAC, 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). Since 2019–20, spending by the Department of Defence is also included.
Column A – Department of Veterans’ Affairs

Expenditure components

Offsets

Notes

  • DVA health spending data (rows 01, 04, 06, 12, 14, 15, 16, 24, 30, 32, 40)
  • RPBS data on benefits payments (row 21)

None

  • DVA Public hospitals (rows 01, 06) is offset against State and territory governments (column F)
  • DVA Private hospitals (row 04) is offset against Individuals (column H)
  • DVA Other research (row 32) is offset against Other Australian Government (column E)

Expenditure components

The Australian Government funds DVA by making payments through DVA for health services to eligible veterans and their dependents.

Annual expenditure statistics for estimating spending by DVA are sourced from three tables:

  • ‘MRCA and SRCA’ (which are related to payments for health care under the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988, Military Rehabilitation and Compensation Act 2004 and Safety Rehabilitation Compensation Act 1988)
  • ‘Program benefits’ that qualify under DVA National Treatment Account
  • RPBS.

The payments of health goods and services from ‘MRCA and SRCA’ and ‘Program benefits’ are mapped to areas of spending:

  • Public hospitals (row 01)
  • Private hospitals (row 04)
  • Public psychiatric hospitals (row 06)
  • Patient transport services (row 12)
  • Referred medical services (row 14)
  • Dental services (row 15)
  • Other health practitioners (row 16)
  • Benefit paid pharmaceuticals (row 21)
  • Aid and appliances (row 24)
  • Other administration (row 30)
  • Other research (row 32)
  • Unreferred medical services (row 40).

Payments for Pharmaceutical Services in ‘Program Benefits’ is apportioned to states and territories using proportions derived from the RPBS.

DVA’s spending on Residential Nursing Home is allocated to row 11 (High-level residential care) and spending on Community Nursing is allocated to row 68 (Welfare expenditure) – these are not currently included in the ANHA.

Offsets

There are no offsets for column A.

Notes

DVA’s spending on:

  • Public hospitals are offset against State and territory governments (column F) to derive State and territory own spending on Public hospitals.
  • Private hospitals are offset against Individuals (column H), which includes total patient revenue from private hospitals obtained from the PHDB.
  • Other research is offset against Other Australian Government (column E) as these amounts are captured in ABS Research and Experimental Development statistics, used to estimate the total spending by the Australian Government on health research.

Also note that DVA changed their reporting system of health expenditure in 2020–21 which have some impacts on the time series of health spending in this report. Therefore, caution should be exercised when comparing results between years for any area of expenditure.

Column B – Australian Government funding of States and territories

Expenditure components

Offsets

Notes

  • NHR funding for Public hospitals (row 01): data from Treasury Final Budget Outcome and NHFB
  • NHR funding for Public health (row 27): data from Treasury Final Budget Outcome and NHFB
  • Other NHR funding, including NPCR funding (rows 01, 04, 12, 20, 27, 36)
  • NPPs on various areas (rows 01, 14, 15, 20, 27, 30, 32, 36, 40, etc.): data from Treasury Final Budget Outcome
  • PBS Section 100 programs in Public hospitals (row 01): data from PBS (Section 100)

None

  • NHR, NPPs are offset against State and territory governments (column F) in row 01 and other relevant rows (except for capital grants in row 36)
  • PBS Section 100 programs are offset against State and territory governments (column F) (row 01)
  • Other research (row 32) is offset against Other Australian Government (column E)
  • Capital grants (row 36) are offset against capital expenditure by Other Australian Government (column E)

 

Expenditure components

The Australian Government contributes to funding of health services to the states and territories through the NHRA. NHR funding is primarily directed to spending on the public hospital systems managed and administered by the states and territories. Health-related payments are also made as NPPs for specific projects or outcomes.

The data used in estimating the Australian Government funding of states and territories are sourced from:

  • NHR funding and NPPs from Table 3.12 of the Treasury Final Budget Outcome, with updates from the NHFB.
  • PBS Section 100 programs from DHAC PBS (Section 100).

These data are provided at the state/territory level.

NHR funding is assigned to Public hospitals (row 01) and Public health (row 27). Payments under NPPs are mapped to the relevant areas of spending, including:

  • Public hospitals (row 01)
  • Referred medical services (row 14)
  • Dental services (row 15)
  • Community health (row 20)
  • Public health (row 27)
  • Other administration (row 30)
  • Research (row 32)
  • Capital expenditure (row 36)
  • Unreferred medical services (row 40).

Since 2019–20, the NHR funding has been including the Australian Government contribution in the National Partnership on COVID-19 Response (NPCR). Data for the NPCR entitlements are obtained from the NHFB and are allocated to public hospitals (row 01), private hospitals (row 04), community health (row 20), public health (row 27), patient transports (row 12), and capital expenditure (row 36). Personal protective equipment (subject to 2018–19 baseline) spending is allocated to rows 01, 04, 12, 20, and 27 using state and territory’s reported gross expenditure spending on those areas.

Offsets

There are no offsets for column B.

Notes

To derive state and territory own expenditure, the Australian Government funding of states and territories is offset against State and territory governments’ gross expenditure (column F) in relevant areas of spending, except for capital expenditure.

Capital expenditure and other research are offset against the relevant areas by Other Australian Government (column E), as column E already includes the total spending by the Australian Government on health research and capital expenditure.

Column C – Private health insurance rebate claimed through private health insurance providers

Expenditure components

Offsets

Notes

  • PHI premium rebate claimed through providers: data from DHAC program cost centre expenditure. Total rebate is allocated to various areas (rows 01, 04, 12, 14, 15, 16, 20, 22, 24, 28) based on PHI provider benefit payments (data from APRA)

None

  • PHI premium rebate is offset against PHI providers (column G) in relevant areas

Expenditure components

The Australian Government subsidises the cost of PHI by paying a rebate on the premiums paid by individuals for PHI. It is regarded as an indirect subsidy of all types of health services through PHI. The rebate can be paid directly to PHI providers (column C) or through the tax system (column M) (Box 2.2).

The data used in processing PHI rebates claimed through PHI providers are sourced from the relevant DHAC program cost centre expenditure. This amount is allocated to areas of expenditure based on the proportion of benefit payments in each area by PHI providers (Box 3.1), obtained from APRA data:

  • Public hospitals (rows 01)
  • Private hospitals (row 04)
  • Patient transport services (row 12)
  • Referred medical services (row 14)
  • Dental services (row 15)
  • Other health practitioners (row 16)
  • Community health (row 20)
  • All other medications (row 22)
  • Aids and appliances (row 24)
  • Hospital insurance Administration (row 28)

Box 3.1: Apportioning private health insurance rebates to areas of health expenditure

Rebate amounts are allocated to areas of expenditure based on the proportion of benefit payments in each area by PHI providers.

However, not all revenue collected by PHI providers is spent on health. Data from APRA are used to compute the proportion of total PHI provider revenue paid out as health benefits and spent as health administration. This proportion is applied to calculate the total rebate amount spent for health purposes. As the result, the estimate of health spending reported in HEA is an estimate of the rebate paid out as benefits. It is therefore smaller than the total rebate paid to individuals to reduce premiums.

For example, in 2018–19, data from APRA showed that 94.3% of total PHI provider revenue was spent on health (including paid out as health benefits to members and spent on administration). As the rebate is treated as a revenue source for PHI providers, only 94.3% of the total rebate is counted as health expenditure in the same year.

More detail on the processing of these data are described in Column G – PHI providers.

Offsets

There are no offsets for column C.

Notes

PHI premium rebate amounts paid by the Australian Government are offset against PHI providers (column G) in the relevant areas of spending. Column G calculates the gross health expenditure funded by PHI providers, therefore subsidies from the Australian Government (through PHI providers and through taxes) are subtracted to derive PHI providers’ own health spending.

Column D – Department of Health and Aged Care (DoHAC)

Expenditure components

Offsets

Notes

  • Spending administered by DHAC on health and medical services (excluding MBS) in various areas (rows 01 to 40): data from the DHAC program cost centres
  • Benefit payments for medical services covered by MBS (rows 14, 15, 16, 40): data from MBS.
  • Benefit payments for pharmaceuticals under the PBS (Section 85) (row 21)
  • PBS Section 100 programs in Private hospitals (row 04) and community (row 21)
  • Departmental expenses of DHAC and Services Australia allocated to Other administration (row 30)

None

  • Health research (rows 31, 32) and Capital expenditure (row 36) spending is offset against Other Australian Government (column E)

Expenditure components

The Australian Government contributes significantly to health funding through programs and payments administered through DoHAC. These include:

  • payments of benefits for medical services covered by MBS
  • payments of benefits for pharmaceuticals under the PBS
  • direct spending on health and medical services, excluding MBS benefit payments from DoHAC program cost centres
  • departmental expenses by DoHAC and Services Australia administration spending for health purpose.

Program cost centres (except the cost centre for PHI rebates claimed through PHI providers, as mentioned in column C) are mapped to the relevant areas of expenditure based on the main purpose of the service. The cost centres are checked thoroughly annually with DoHAC to ensure new items are included and mapped accordingly. State-specific cost centres are allocated to the relevant state or territory. For cost centres that are not state-specific, factors such as population or staff number proportions are used to allocate expenditure at the state/territory level.

These cost centres are assigned to the following areas of expenditure:

  • Hospitals: Public hospitals (rows 01, 05, 06), Private hospitals (row 04)
  • Primary health care: Dental services (row 15), Other health practitioners (row 16), Community health (row 20), Benefit paid pharmaceuticals (row 21), All other medications (row 22), Public health (row 27) and Unreferred medical services (row 40)
  • Referred medical services (row 14)
  • Other services: Patient transport services (row 12), Aids and appliances (row 24), Hospital insurance administration (row 28), Medical insurance administration (row 29) and Other administration (row 30)
  • Research: University based research (row 31) and Other research (row 32)
  • Capital expenditure (row 36).

Payments of benefits for medical services on the MBS are used to compute the health spending for: Referred medical services (row 14); Dental services (row 15); Other health practitioners (row 16), and Unreferred medical services (row 40).

Note that, as mentioned in subsection 2.3.4 above, since 2012–13, in-hospital MBS services have been allocated to row 14 (the majority) and row 40 (a small amount of PHC provided in hospitals) due to the unavailability of identifying whether a particular MBS service is provided in a public or private hospital.

As DoHAC spending on aged care, sports and health workforce is not currently in the scope of the ANHA, a proportion of  total spending is calculated to estimate the health component of the administrative and departmental expenses of DoHAC. This proportion is also used for the departmental expenses of Services Australia. The results are allocated to Other administration (row 30).

Offsets

There are no offsets for column D.

Notes

Spending for research (rows 31, 32) and Capital expenditure (row 36) is offset against Other Australian Government (column E).

Column E – Other Australian Government

Components

Offsets

Notes

  • Medical expenses tax rebate (row 37): data from Treasury–Tax Benchmarks and Variations Statement
  • Australian Government expenditure on health research (rows 31, 32): data from ABS Research and Experimental Development statistics (health)
  • Australian Government capital expenditure (row 36): data from ABS Government GFCF
  • Australian Government capital depreciation: data from ABS Capital Consumption (ETF 1231) (various rows 01 to 40) using proportions calculated from DHAC’s cost centre data in Column D
  • Department of Defence health spending (various rows 01 to 40); reported since 2019–20
  • Health research (rows 31, 32) and Capital expenditure (row 36) from DVA, DHAC’s cost centres, and Australian Government grants to states and territories
  • Medical expenses tax rebate (row 37) is offset against Individuals (column H)

Expenditure components

This column includes other spending on health by the Australian Government (except DVA, DoHAC, grants to states and territories and PHI rebates). The data used in estimating this are sourced from:

  • Medical expenses tax offset from Treasury–Tax Benchmarks and Variations Statement. The Australian Government contributes to funding for health through the medical expenses tax rebate, available to individuals to claim through the taxation system if they have out-of-pocket medical expenses over a specified amount. As of 01 July 2019, the rebate was no longer obtainable, with a small amount of late processing in 2019–20.
  • Expenditure by the Australian Government on research from ABS Research and Experimental Development statistics, is generally only available every second year. The ABS research surveys used are:
  • 8111.0 Research and Experimental Development, Higher Education Organisations, Australia. Tables: 81110do003 (by source of funds) and 8110do006 (by socio-economic objective). Data are available on a state/territory basis.
  • 8109.0 Research and Experimental Development, Government and Private Non-profit Organisations, Australia. Tables: 81090do003 (Government expenditure) and 81090do007 (Private non-profit expenditure). Data are allocated to state/territory level using population proportions.
  • Australian Government capital expenditure from ABS Government Gross Fixed Capital Formation (GFCF).
  • Australian Government capital depreciation from ABS capital consumption (Economic type framework (ETF) 1231), with depreciation allocated to various areas (rows 1 to 40) using proportions calculated from DHAC’s cost centre data (column D).

Spending on health research funded by the Australian Government is derived using:

  • research with a health socioeconomic objective only from the ABS research surveys
  • the Higher Education Organisations survey provides estimates for University based research (row 31)
  • the Government and Private Non-profit Organisations survey provides estimates for Other research (row 32).

Research funded by State and territory governments and local governments is included in column F, while research funded by the private sector is included in column I (Other private).

NHMRC grants are included as other Australian Government expenditure but are offset against itself since the grants have been accounted for in the University based research from the Higher Education Organisations survey.

Capital expenditure (row 36) by the Australian Government obtained from ABS Government GFCF is available at a national level only; these estimates are allocated to states and territories based on the proportion of health and medical staff in each jurisdiction.

The ABS data on depreciation of fixed assets (ETF 1231) for the Australian Government are allocated to the relevant area of spending and the state/territory level by using proportions calculated from cost centre data (processed in column D).

Since 2019–20, health expenditure by Australian Department of Defence (rows 01 to 40) has been added to the HED in column E.

Offsets

The ABS research surveys and ABS Government GFCF provide comprehensive estimates for Australian Government expenses relating to health research (rows 31, 32). Therefore, health research spending funded by DVA (column A), grants to states and territories (column B), and DoHAC (column D) are offset in column E to avoid double counting. Similarly, spending from DoHAC’s cost centres and Australian Government grants to states and territories on capital expenditure (row 36) are also offset in this column.

Notes

Medical expenses tax rebate (row 37) is treated as a subsidy by the Australian Government to Individuals. It is offset against Individuals health spending in column H. This rebate was phased out after the end of 2018–19.

Column M – Private health insurance rebate claimed through tax

Components

Offsets

Notes

  • PHI premium rebates through tax: data from the ATO Annual report. Total rebate is allocated to various areas (rows 01, 04, 12, 14, 15, 16, 20, 22, 24, 28) based on PHI provider benefit payments (data from APRA)

None

  • PHI premium rebates are offset against the PHI providers (column G) in relevant areas

Expenditure components

The Australian Government subsidises the cost of PHI by paying a rebate on the premiums individuals pay for this insurance. It is regarded as an indirect subsidy of all types of health services through PHI. The rebate can be paid through the tax system (column M) or directly to PHI providers, which reduces premiums (column C) (Box 2.2). Where the premium rebate is claimed through tax, PHI members pay the full premium and claim the rebate at the end of the financial year.

Data for the total PHI premium rebates claimed through tax are sourced from:

  • ATO Annual report.

The rebate amounts are allocated to areas of expenditure based on the proportion of benefit payments in each area by PHI providers (Box 3.1), obtained from APRA data:

  • Public hospitals (rows 01)
  • Private hospitals (row 04)
  • Patient transport services (row 12)
  • Referred medical services (row 14)
  • Dental services (row 15)
  • Other health practitioners (row 16)
  • Community health (row 20)
  • All other medications (row 22)
  • Aids and appliances (row 24)
  • Hospital insurance Administration (row 28)

More detail on the processing of these data are described in Column G – PHI providers.

Offsets

There are no offsets for column M.

Notes

The PHI premium rebate amounts paid by the Australian Government are offset against PHI providers (column G) in the relevant areas of spending. Column G calculates the gross health expenditure funded by PHI providers, therefore subsidies by the Australian Government (through taxes as well as through funds) are subtracted to derive PHI providers’ own health spending.