Health expenditure Australia 2022–23

Australian Government spending

In 2022–23, Australian Government health spending was $101.5 billion, representing a $9.1 billion real decrease (8.2%) from 2021–22 (Table 10). This was lower than the average annual real growth in the decade to 2022–23 (2.8%).

The decrease in Australian Government spending between 2021–22 and 2022–23 was due mainly to the pandemic ending which resulted in decreases in grants to states and territories (10.1%), and direct Australian Government spending (8.4%). Health spending associated with the health insurance premium rebate increased by 0.1% (Table 12).

The biggest decreases for Australian Government spending were in public health (including spending on COVID-19 vaccines, anti-viral treatments and rapid antigen tests) and referred medical services (including diagnostic imaging, specialist services, among others).

Spending relative to government expenses

In 2022–23, the Australian Government spent $101.5 billion on health, accounting for 15.9% of total government expenses. This was approximately 1.1 percentage points lower than in 2021–22 (Figure 9), indicating that the Australian Government nominal health spending was slower than other areas of government expenses (Table 11).

Figure 9: Ratio of Australian Government health spending to Australian Government expenses, current prices, 2012–13 to 2022–23

Sources: AIHW Health Expenditure Database; Australian Bureau of Statistics (ABS 2024b) (Table 11).

Spending programs

Australian Government spending in 2022–23 (Figure 10) comprised:

• direct Australian Government spending ($61.3 billion, or 60.4%), mostly administered through the Department of Health and Aged Care on programs for which the government has responsibility, such as the MBS, PBS, and health research. This also includes some health spending by Defence ($582 million).
• grants to states and territories ($30.8 billion, or 30.4%), including National Health Reform funding (mainly comprising public hospital funding), National Partnership on COVID-19 Response (NPCR), other National Partnership Payments (NPPs) and the PBS Section 100 funding in public hospitals.
• rebates and subsidies for privately insured people under the national Private Health Insurance Act 2007 ($6.5 billion, or 6.4%).
• DVA funding for goods and services provided to eligible veterans and their dependants ($2.9 billion, or 2.9%).

The 8.2% decrease in Australian Government health spending between 2021–22 and 2022–23 can be attributed to decreases in spending through specific Department of Health and Aged Care programs ($5.6 billion decrease) and funding to states and territories through grants ($3.5 billion decrease). The main driver of this decrease was COVID-19 related health spending funded by the Australian Government such as spending on COVID-19 vaccines, rapid antigen tests, masks and personal protective equipment.

Figure 10: Australian Government total health spending by program, constant prices ^(a), 2012–13 to 2022–23

⁽ᵃ⁾ Constant price health spending is in 2022–23 prices.

Notes

1. Australian Government own program spending, mostly administered through the Department of Health and Aged Care on programs for which the government has responsibility, such as the MBS, PBS, health research and capital consumption. This also includes some health spending by the Department of Defence since 2019–20.
2. Grants to states include the Commonwealth Government National Health Reform funding, National Partnership on COVID-19 Response (NPCR), other National Partnership Payments (NPPs) and the funding of PBS section 100 programs in public hospitals.
3. Spending on the medical expenses tax rebate is not included.
4. Tax revenue has been deducted from Australian Government own program spending.

Source: AIHW Health Expenditure Database (Table 12).

Area of spending

During 2022–23, more than one-third (36.3%) of Australian Government health spending was for primary health care ($36.8 billion) (Figure 11). Of this:

• pharmaceuticals subsidised through the PBS (not including Section 100 drugs and other drugs that could be allocated to the areas of public hospital services and private hospitals) contributed $13.7 billion.
• unreferred medical services (mainly visits to a general practitioner) was $11.1 billion.
• public health was $4.5 billion.
• other health practitioner services were $2.9 billion (Table A6).

Figure 11: Australian Government health spending, by area of spending, constant prices ^(a), 2012–13 to 2022–23

⁽ᵃ⁾ Constant price health spending is in 2022–23 prices.

Notes:

1. Other services include patient transport services, aids and appliances, and administration.
2. Spending on the medical expenses tax rebate and capital is not included.

Source: AIHW Health Expenditure Database (Table 13).

Spending on public hospitals was the next largest area of Australian Government health spending with $31.8 billion, followed by referred medical services ($14.6 billion) (Figure 11, Table A11b). For the first time, total Australian Government public hospital spending included an estimate for government benefits paid for in-hospital MBS services, ($783 million). This figure was estimated based on government benefits for Medicare funded services allocated to public hospitals by the proportions derived from Hospital Casemix Protocol (HCP) data. However, this is unlikely to capture the full amount for MBS spending on non-admitted patients which, according to the NHFB, could be as high as $982 million. The AIHW is continuing to work with the department, the NHFB and HEAC to address this data gap.

The amount of $31.8 billion of the Australian Government spending on public hospital services includes spending by 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, in-hospital MBS services, a small grouping of other National Partnership Payments, an allocation of the private health insurance premium rebates, some specific programs administered by the and Defence and capital consumption allocated to public hospitals. More details can be found in Table A11.

The decrease in total Australian Government spending between 2021–22 and 2022–23 was mostly due to a decrease of $6.9 billion on primary health care (mostly due to a decrease in public health by $6.3 billion, and a decrease in community health and other by $0.5 billion) and referred medical services by $2.0 billion (including spending on COVID-19 testings, diagnostic imaging, specialist services, among others) (Figure 11).

Over the decade since 2012–13, private hospitals had the highest average annual growth rate by the Australian Government (4.9% per year), followed by public hospital services (4.3% per year) and primary health care (2.8% per year) (Figure 11).

Private health insurance premium rebates

In 2022–23, the rebate for private health insurance premiums paid by the Australian Government was $6.5 billion, a real increase of $6.9 million (0.1%) from 2021–22 (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 Department of Health and Aged Care and ATO annual reports). More details on the estimation can be found in the Overview of data sources and methodology.

Figure 12: Health insurance premium rebates as health spending, constant prices ^(a), 2012–13 to 2022–23

⁽ᵃ⁾ Constant price health spending is in 2022–23 prices.

Notes:

1. The premium rebate is pro-rated across all expense categories (including change in provisions for outstanding claims). The rebate includes rebates paid through the tax system as well as rebates paid to funds, which directly reduce premiums.
2. Other services include patient transport services, aids and appliances, and administration.

Source: AIHW Health Expenditure Database (Table 14).

Department of Veterans’ Affairs spending

In 2022–23, the DVA spent $2.9 billion on health, mostly on hospitals ($1.0 billion), primary health care ($0.8 billion) and referred medical services ($0.6 billion). Total DVA spending decreased by 1.7% in 2022–23 in real terms (Figure 13a). Note that DVA changed their reporting system of health expenditure since 2020–21 which has some impacts on the time series of health spending in this report. Therefore, caution should be exercised when comparing results between years.

DVA spending on hospitals declined over the decade to 2022–23, with public hospitals decreasing by an average of 9.4% per year and private hospitals by 5.4% in real terms. Once again, note that the change of DVA reporting system affected the growth rates over the years. DVA spending on primary health care also decreased in real terms by a yearly average of 4.0%, accompanied by an average decrease in spending on referred medical services by 2.4%. During this period, other services (including patient transport services, aids and appliances, and administration) increased by 5.6%.

Based on the number of people in the DVA treatment population (which includes all DVA Orange, Gold and White cardholders), DVA spent $10,215 on health per member of the treatment population in 2022–23 which is 6.4% higher than the health spending per person in the total Australian population ($9,597). This average health spending per member of the DVA treatment population peaked in 2014–15 and decreased over the period 2015–16 to 2022–23 (Figure 13b). This recent downward trend in the health spending per member of the DVA treatment population is due to the decline in the number of Veteran Gold Card Holders and increase in those of Veteran White Card Holders. DVA will pay for the hospital treatment costs for Veteran White Card holders for accepted conditions or conditions under non-liability health care whereas all hospital services that meet the clinical needs of Veteran Gold Card holders are paid by DVA.

Figure 13a: Department of Veterans’ Affairs health spending by area of spending, constant prices ^(a), 2012–13 to 2022–23

⁽ᵃ⁾ Constant price health spending is in 2022–23 prices.

Source: AIHW Health Expenditure Database (Table 15).

Figure 13b: Average health spending per client of the DVA treatment population and per person in the Australian resident population, constant prices ^(a), 2012–13 to 2022–23 ($)

⁽ᵃ⁾ Constant price health spending is in 2022–23 prices.

Sources: AIHW Health Expenditure Database; Australian Bureau of Statistics (2024a); Department of Veterans' Affairs (2023) (Table 15)

Department of Defence health spending

In 2022–23, the Department of Defence (Joint Health Command) spent $582 million on heath. This was a decrease of 1.7% ($9.8 million) from 2021–22 in real terms. In 2022‑23, the biggest area of spending was other health practitioners ($196.1 million), followed by referred medical services ($120.5 million), unreferred medical services ($97.2 million), private hospitals ($76.2 million), dental services ($22.5 million) and health related administration expenses ($43.6 million).

The amounts shown represent actual health expenditure by Defence for its ADF and APS employees that could be categorised as per AIHW’s area of expenditure classification, including direct spending on health care to members, direct costs of pharmaceuticals purchased by Defence and costs for administration, including the Defence electronic health record.

Note that it is not possible to reconcile this exactly against other departmental financial reporting because some expenditure within the Joint Health Command is not related to patient care and because of the accounting practices (for example, cost accrual) employed in departmental reporting. There are also areas of health expenditure within the Department that cannot be extracted from Departmental reporting such as building maintenance and other infrastructure costs, and material used within the operational environment.