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Report reveals growth in health expenditure slowing down

18 October, 2007

According to a new report released by the Australian Institute of Health and Welfare, Health expenditure Australia 2005-2006, growth in health expenditure is slowing.

Health expenditure comprises recurrent and capital expenditure on hospitals, medical, dental, patient transport services, other health practitioner, community and public health services, medications, aids and appliances, health research and the administrative systems that support these services.

Health expenditure is mostly funded by the Australian Government and state and territory governments with some funding also by private health insurance, households, local government, non-government and other private sector organisations.

The total health expenditure in Australia grew by over 7% between 2004-05 and 2005-06 to $87 billion or $4,200 per person.

Health expenditure as a proportion of gross domestic product (GDP) was 9%, down slightly from 9.05% the previous year, and up from 7.5% in 1995-96. This makes Australia's GDP comparable to New Zealand, more than the UK, and considerably lower than the USA, which in 2005 was 15.3% of GDP.

The report shows that after adjusting for inflation, total health expenditure increased 3.1% in 2005-06, compared to annual average growth in the decade to 2005-06 of 5.1%.

The areas of expenditure that showed relatively high real increases (after allowing for inflation) were research (7%), public hospital services (6%), community health (5%), aids and appliances and other health practioners (4% each).

For the period 2003-04 to 2005-06, real growth in dental services expenditure averaged 1.9% per year - 1.9 percentage points below the annual real growth in total recurrent health expenditure of 3.8%.

In nominal terms, average annual growth for dental services expenditure was 7.2% during this period, 1.0 percentage points lower than the growth for total recurrent health expenditure of 8.2%.

The total amount spent on dental services in 2005-06 was $5,337 billion. This represents 6.1% of the total recurrent health expenditure.

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