Health spending $94 billion, growth keeps pace with economy

Total expenditure on health in Australia reached $94 billion or $4,507 per person in 2006-07, according to a report released today by the Australian Institute of Health and Welfare.

'This was a $7 billion, or $286 per person, increase over the previous year,' said Mr John Goss of the Institute's Expenditure and Economics Unit.

After adjusting for inflation, the increase was 4.8%, which is similar to the average annual growth rate of 4.9% over the previous decade.

The growth in expenditure on health was similar to the growth in spending on all goods and services. As a result, the health expenditure to Gross Domestic Product (GDP) ratio remained at 9%, the same as in 2005-06 and 2004-05.

The report, Health expenditure Australia 2006-07, showed that, compared with other Organisation for Economic Co-operation and Development (OECD) countries, Australia's health spending as a proportion of GDP, was similar to Italy, New Zealand and Norway. It was higher than the United Kingdom, but considerably lower than the United States, where health spending is substantially higher than for all other nations at 15% of GDP.

Almost 70% of health expenditure in Australia was funded by governments, with the Australian Government contributing $40 billion (42%), and state, territory and local governments contributing $25 billion (26%). The remaining $29 billion (31%) was funded by individuals, private health insurers, and other non-government sources.

'Although the Australian Government has consistently been the largest single source of funds over the period 1996-97 to 2006-07, its funding share has declined in recent years. The peak was 44% in 2000-01,' Mr Goss said.

'For public and private hospitals combined, the Australian Government's share of funding peaked at 45% in 2000-01 and has fallen every year since then to 40% in 2006-07. Over the same period, State and territory government funding increased from 35% to 42%,' he said.

For public hospital funding alone, the Australian Government's share through the Australian Health Care Agreements (AHCAs) peaked at 40% in 2000-01 and has fallen to a 33% share in 2006-07. The State and territory government share of public hospital funding on the other hand rose from 45% in 2000-01 to 52% in 2006-07.

The three major areas of health expenditure - hospitals, medical services and medications - accounted for 72% of all recurrent spending on health in 2006-07, which was similar to the pattern of expenditure seen over the last decade.


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