To better understand the long-term trends in health expenditure in Australia, this report presents data for the 25 years from 1989–90 to 2013–14, describes some of the key trends and explores the relationships between health expenditure and its drivers.

A story of growth

Over the 25-year period, health expenditure grew much faster than:

  • inflation-growing from $50.3 billion in 1989–90 to $154.6 billion in 2013–14 in real dollars (that is, taking inflation into account)
  • the population-with per person expenditure increasing by 123.5%
  • population ageing-with the ratio of total spending to the size of the population aged 65 and over increasing by 69.0%.

Health expenditure growth occurred in a context of relatively rapid growth in the broader economy-but at a faster pace. Health expenditure increased from 6.5% of gross domestic product (GDP) in 1989–90 to 9.7% of GDP in 2013–14.

Despite this growth in health expenditure relative to the economy, health expenditure did not grow faster than government revenues and the wealth of individuals at all stages in the entire 25-year period.

Over the entire period growth in health expenditure was greater than growth in taxation revenue, but this mostly occurred during periods of relatively slow revenue growth (as during the global financial crisis).

Non-government health expenditure tended to keep pace with growth in individual net worth over the period, but was faster than growth in average incomes.

Drivers of health expenditure

It is likely that population factors such as population growth and population ageing have had an important influence on the demand for health goods and services. The development of new technologies and community expectations regarding their availability and use also appear to have a large impact on this demand. Increased demand for health goods and services does not automatically translate into increased health expenditure though. The information presented in this report suggests that a combination of factors, including increased wealth and government policies, have determined if, how and when demand for services are met and, ultimately, how much is spent.