AIHW media releases

Health expenditure in Australia in 2002-03 was $72.2 billion or $3,652 per person, according to a report released today by the Australian Institute of Health and Welfare.

This represents a $5.6 billion (or 8.5%) increase on the previous year. The rise per person was $257.

Health expenditure as a proportion of Gross Domestic Product (GDP) was estimated at 9.5% for 2002-03, up from 9.3% in 2001-02.

The AIHW report, Health Expenditure Australia 2002-03, shows that most spending in health was funded by governments (67.9%), with the Australian Government contributing $33.4 billion, and state, territory and local governments $15.6 billion.

The proportion of funding by governments, however, was down by 0.4% from the 68.3% in 2001-02.

Spending on health by Australians from their own pockets was up by 5.6% in real terms compared to the previous year. This spending growth has averaged 8.3% per year between 1997-98 and 2002-03, 3.2% above real annual growth in health expenditure overall over this period.

Out-of-pocket spending on health in 2002-03 comprised 61.4% ($14.2 billion) of non-government sector funding. Private health insurance funds comprised 22.7% ($5.3 billion), with nearly half (48.9%) of this amount going to private hospitals.

In 2002-03, $2.3 billion of health expenditure was funded by the Australian Government's health insurance rebates, compared with $2.1 billion the previous year.

The Australian Government's share of public hospital funding was $8.6 billion (49.2%), compared to $8.0 billion (49.2%) in 2001-02. The state, territory and local government share was $7.5 billion (42.9%), compared to $6.9 billion (42.3%) previously.

AIHW Director, Dr Richard Madden said that, as for previous years, the main drivers of increasing health expenditure were hospitals, pharmaceuticals, and medical and dental services. But only pharmaceutical expenditure grew faster than the overall total.

'Real expenditure on pharmaceuticals has grown rapidly at 11.6% annually from 1997-98 to 2002-03, compared with a 5.3% real growth in total recurrent spending on health over the same period.

'Comparing Australia internationally, Organisation for Economic Co-operation and Development (OECD) figures show that our health-expenditure-to-GDP ratio of 9.5% is above the OECD average of 8.4%.

'This is comparable to Canada, France, Sweden and Greece, while being above the UK and New Zealand. The USA is way ahead of all other countries at 14.6% of GDP,' Dr Madden said.