This report provides estimates of health expenditure in Australia between 2000-01 and 2010-11. Expenditure on health in Australia was estimated to be $130.3 billion in 2010-11, up in real terms (after adjustment for inflation) from $77.5 billion in 2000-01 and $122.5 billion in 2009-10.

In 2010-11, health expenditure as a percentage of Australia's Gross Domestic Product (GDP) was 9.3%. In 2009-10, health expenditure as a percentage of GDP was 9.4%. Over the 7 years from 2000-01 to 2007-08, the ratio of health expenditure to GDP increased to be 0.6 percentage points above the 2000-01 level (from 8.2% to 8.8%). In just 2 years, the ratio increased by another 0.6 percentage points and then reduced slightly in 2010-11 to be 0.5 percentage points above the 2007-08 level. This relatively rapid increase is largely attributable to a slowing in GDP growth following the global financial crisis, rather than changes in health expenditure.

Analysis of health inflation suggests that prices in the health sector have grown quicker than in the broader economy over the past 10 years. Growth in health expenditure, however, has largely been driven by increases in the volume of health goods and services purchased,rather than the price of services. This increase in volume appears to be more related to population growth than additional expenditure per person. Growth in per person health expenditure between 2000-01 and 2010-11 (3.9% per year) was slower than growth in total health expenditure (5.3% per year).

In 2010-11, the estimated national average level of recurrent expenditure on health was $5,796 per person. In that year, expenditure in New South Wales ($5,356 per person) was 2.7% below the national average, while the Northern Territory's average spending ($7,339 per person) was 33.4% higher than the national average. The average annual real growth per person over the period 2000-01 to 2010-11 was highest in the Northern Territory (4.8%) and South Australia (4.5%).

Governments funded 69.1% of total health expenditure during 2010-11, up from 67.7% in 2000-01. The percentage contribution of the Australian Government declined in most years throughout the period, dropping from 44.4% in 2000-01 to 42.7% in 2010-11. The state and territory contribution grew from 23.3% to 26.4% over the same time. Non-government sources provided 30.9% in 2010-11.

Spending on public hospital services in 2010-11 was estimated at $38.9 billion, or 31.5% of recurrent expenditure. Expenditure on medical services ($22.5 billion or 18.2%) and medications ($18.4 billion or 14.9%) were other major contributors. Increased spending on public hospital services of $2.2 billion in real terms was the largest component of the increase in health expenditure, accounting for over one-third (35.4%) of the increase in recurrent expenditure, followed by spending on medications which grew by $2.1 billion.

The Australian Government's share of public hospital funding was 40.3% in 2010-11. State and territory governments' share of public hospital expenditure was 49.5% in 2010-11, down from 50.5% in 2009-10 but up compared to 2000-01 (47.2%).