As part of the annual Health expenditure Australia series, the Australian Institute of Health and Welfare (AIHW) publishes estimates of health expenditure at the national and state and territory levels. These data are used to monitor national health expenditure and assess the impact of policy changes, changes in health service use and so forth. These data are also provided to the Organisation for Economic Co-operation and Development (OECD) and the World Health Organization (WHO) to assist in international comparisons.

In addition to the annual health expenditure series, the AIHW has periodically conducted additional studies into the nature of health expenditure, including the analysis of expenditure by the demographic characteristics of the population and/or the diseases or conditions being managed. This work has estimated and apportioned expenditure to population groups based on age, sex and Indigenous status, and to disease expenditure groups using the International Statistical Classification of Diseases and Related Health Problems (ICD) and the AIHW’s Australian Burden of Disease Study (ABDS) conditions (AIHW 2015). These studies have generally produced estimates for specific sectors of the Australian health system, including hospital, general practice and pharmaceuticals. These data provide important insights into the nature and drivers of health expenditure, including how an ageing population affects health expenditure and comparisons of health expenditure between Aboriginal and Torres Strait Islander Australians and non-Indigenous Australians.

For the current disease expenditure study, previously utilised methods have been updated and expanded to cover a wider range of health care settings. The methodology for the estimation of admitted patient costs, and the distribution of costs to additional diagnoses (as appropriate) as well as the principal diagnoses recorded for each episode of admitted patient care have been updated. Cost estimates for Medicare Benefits Schedule (MBS) services and for prescription pharmaceuticals listed on the Pharmaceutical Benefits Scheme (PBS) have been developed using updated estimation methods. The estimates for hospital services were expanded to include both emergency departments and outpatient clinics. Disease expenditure estimates are reported using the conditions in the ABDS (such as coronary heart disease or stroke), an enhancement on previous reporting by ABDS group (i.e. ‘cardiovascular diseases’).

The product of this work has been the creation of several new data sets of expenditure estimates for the 2015–16 financial year reporting period. Expenditure information is added to hospital activity data for every admitted patient record in the AIHW National Hospital Morbidity Database (NHMD), all emergency department presentations in the National Non-admitted Patient Emergency Department Care Database (NNAPEDC), and all service events in the National Non-admitted Patient Databases. Data sets have been constructed for all private hospital admitted patient separations. Aggregated data sets by sex, age group, state/territory and SA3 geographical area, including patient contributions, have been created for Medicare services by provider specialty and subgroup, and pharmaceuticals by Anatomical Therapeutic Classification (ATC). All of the data sets include expenditure estimates for each ABDS condition.