Spending on public hospitals was the next largest area of Australian Government health spending (between $28.1 billion and $29.7 billion depending on how some MBS benefits for services provided in public hospitals are treated), followed by referred medical services ($18.3 billion or $15.0 billion also depending on how some MBS spending is treated).
The estimated spending on public hospitals and referred medical services by the Australian Government is represented as a range here to reflect additional components of MBS spending that have not historically been treated as public hospital spending in the national health accounts methodology but that are believed to be related to services provided in public hospitals.
MBS funding by the Australian Government in public and private hospitals
The lower bound of $28.1 billion of the Australian Government spending on public hospital services includes spending by the Department of Veteran’s Affairs (DVA), National Health Reform funding, PBS section 100 programs (Highly Specialised Drugs, PBS Efficient Funding of Chemotherapy program, Chemotherapy Pharmaceutical Access Program (CPAP) and the Special Authority Program (trastuzumab - Herceptin), Botulinum Toxin Program, and Human Growth Hormone program) delivered through hospitals, a small grouping of other National Partnership Payments, an allocation of the private health insurance premium rebates, some specific programs administered by the Department of Health and Aged Care and Department of Defence and capital consumption allocated to public hospitals. More details can be found in Table A11.
This amount currently does not include:
(i) Government benefits paid for in-hospital MBS, mostly for private patients in public and private hospitals. This includes both inpatients and outpatients (at public hospitals’ outpatient clinics). The majority of these components are currently allocated to Referred medical services. This is primarily because limitations in the MBS data mean public hospital spending cannot be directly derived, including:
(i.1) Only MBS payments for medical services provided to admitted patients are flagged as ‘in hospital’. Outpatient and non-medical services are not recorded as hospital services.
(i.2) MBS ‘in-hospital’ services cannot be differentiated by services provided to private patients in a private hospital versus services provided to private patients in a public hospital.
(i.3) In addition, MBS payments are generally made to individual patients and individual practitioners, rather than directly to hospitals. There are, however, arrangements in place, particularly between practitioners and hospitals, that can mean that part or all of the MBS benefits are passed on to the hospital in lieu of payments from patients or fees for private practice arrangements for practitioners in public hospitals. A lack of detail regarding exactly who ultimately receives the MBS benefits and these payments are treated in data provided by both the Australian Government and the states and territories has meant that there is currently no consensus as to how best to treat this revenue in the ANHA.
While these limitations currently prevent the full incorporation of these MBS components into the area of public and private hospital spending, the AIHW has worked and will continue to work with the HEAC to develop a method for quantifying the amount of spending involved for the MBS components and to better understand the likely flow-on impact for other spending categories such as referred medical services and benefit-paid pharmaceuticals.
The estimated quantities of these components are provided below for both public and private hospitals. This does not include an estimate of the non-medical components for the MBS for private hospitals as there is no data currently available to quantify this.
In terms of the flow-on impacts, the full inclusion of this new way of categorising this spending into the ANHA would result in reductions to the estimates for referred medical services (as spending is reallocated to hospitals) in addition to increasing the Australian Government contributions for both public and private hospitals. The full inclusion would also be likely to result in reductions to public hospital spending estimates for Individuals and potentially State and territories, however the full effects require further work with HEAC to determine. The greatest impact is likely to be on the estimates for spending by Individuals on public hospital services, however, it is difficult to be certain of this given limitation in the available data.
Private hospitals spending would not be associated with the same degree of flow-on issues because the current estimation methods already exclude these amounts.
Table: Estimates of Australian Government’s spending in public and private hospitals, including in-hospital MBS and PBS, 2020–21 ($ million)
||MBS for admitted patients
||MBS for non-admitted patients
The AIHW is continuing to work with data providers and HEAC to resolve outstanding issues and fully incorporate these new estimates into the ANHA.
Using the current estimates, the rise in total Australian Government spending between 2019–20 and 2020–21 was mostly due to an increase of $3.9 billion on primary health care (mostly public health by $2.9 billion, including spending on masks, personal protective equipment and COVID–19 vaccines), $1.6 billion on referred medical services (including spending on COVID–19 testings, diagnostic imaging, specialist services, among others), $0.2 billion on public hospitals, and $0.1 billion on research (Figure 11).
Over the decade since 2010–11, referred medical services had the highest average annual growth rate by the Australian Government (3.9% per year), followed by public hospital services (3.6% per year) and primary health care (3.5% per year) (Figure 11). Note that growth calculations for Australian Government public hospital funding do not include additional components of MBS spending as stated above.
Private health insurance premium rebates
In 2020–21, the rebate for private health insurance premiums paid by the Australian Government was $6.2 billion, a real increase of $60 million from 2019–20 (Figure 12). The rebate amount presented here is an estimate of the rebate paid out as benefits (to estimate health spending). This is done to exclude spending on non-health related items such as health insurance advertising. It is therefore smaller than the total rebate paid to individuals to reduce premiums, which are reported elsewhere (such as in DoHAC and ATO annual reports). More details on the estimation can be found in the Australian National Health Account: concepts, methodology and data sources.
Figure 12: Health insurance premium rebates as health spending, constant prices(a), 2010–11 to 2020–21