Total health spending
Estimates for total health spending capture the national aggregate of all spending on health goods and services for recurrent and capital purposes.
In 2020–21, Australia spent an estimated $220.9 billion on health. In real terms, this represented a 7.1% growth in spending from 2019–20, equating to an additional $14.6 billion (Figure 1a). The real growth in spending in 2020–21 (7.1%) was higher than the average over the decade from 2010–11 (3.4%), however, the 2020–21 value was broadly consistent with the longer-term trend. This suggests a ‘rebound’ in spending following low growth during the early stages of the pandemic associated with activity restrictions (Figure 1b). While the overall amount of spending might appear similar to previous trends, there were some signs of the pandemic impacting on the type of spending, particularly through vaccines and the government COVID-19 response funding arrangements.
Figure 1a: Nominal (a) and real (b) total health expenditure, 2010–11 to 2020–21
The line graph shows that total health spending in both current and constant prices increased each year from 2010–11 to 2020–21. Total health spending in current prices increased from $131.1 billion in 2010–11 to $220.9 billion in 2020–21. In the same period, total health spending in constant prices increased from $158.5 billion to $220.8 billion.
Figure 1b: Total health spending, constant prices, in the 2 years during the COVID-19 pandemic (2019–20 to 2020–21) compared to the trend of the previous 10-year period (2008–09 to 2018–19)
The line graph shows the total health spending, in the two years during the COVID-19 pandemic (2019–20 to 2020–21) compared to the trend of the previous 10-year period (2008–09 to 2018–19). Assuming the average growth rate for the previous 10-year period remains the same for 2019–20 and 2020–21, the trend amounts of total health spending in constant prices for 2019–20 and 2020–21 were $210.5 billion, $218.0 billion respectively. While the actual amounts for these years were $206.3 billion and $220.9 billion, respectively.
Government’s COVID-19 health response
Following the beginning of the Novel Coronavirus (COVID-19) pandemic in late February 2020, the Australian Government entered a National Partnership Agreement – the National Partnership on COVID-19 response (NPCR) with state and territory governments. This agreement aims to provide financial assistance for the additional costs incurred by state and territory health services in responding to the COVID-19 outbreak, and efforts to minimise the spread of COVID-19 in the Australian community.
This agreement has 3 funding arrangements in 2020–21:
- Hospital Services Payments
- State Public Health Payments (including Vaccine Dose Delivery Payment)
- Private Hospital Financial Viability Payment.
In addition, governments implemented a range of policies and programs in response to the COVID-19 pandemic, including referred and unreferred medical services through MBS telehealth, mental health programs, public health mainly related to primary care respiratory clinics, COVID-19 testings and vaccinations (outside the NPCR), MBS-funded COVID-testing, distribution of masks and personal protective equipment (PPE) to health systems and a national communication campaign.
The main areas in which spending increased were:
- primary health care, by $6.7 billion (10.1% increase)
- hospitals, by $4.2 billion (4.9% increase)
- referred medical services, by $2.2 billion (10.0% increase)
- other services, by $0.8 billion (5.6% increase)
- capital expenditure, by $0.6 billion (4.9% increase) (tables A5 and A6).
Table A6: Total health expenditure, constant prices, by area of expenditure and source of funds, 2020–21 ($ million)