Australia’s health spend increases

Spending on health goods and services continued to increase in the fiscal year 2021-22, according to the latest Medical Expenditure report released by the AIHW, though while governments spent more, individuals spent less.

Last year’s price tag increased by $13.7 billion to $241.3 billion as the health system continued to respond to the pandemic with hospitalisations driving the government to release more funds, even as individual health spending dropped by 0.9%, with a more significant drop of 5.3% ($1.0 billion) in real terms in the amount spent by private health insurance funds. 

Other non-government sources of spending also declined – a 2.4% drop overall - and AIHW spokesperson, Mr Geoff Callaghan, said that total health spending in 2021–22 was equivalent to 10.5% of Gross Domestic Product (GDP), approximately 0.2 percentage points lower than in 2020–21. 

“After adjusting for inflation, total health spending grew by 6.0% compared with 2020–21 – higher than the average yearly growth rate over the decade (3.4%),” he explained. 

“This translated to an average health spending of $9,365 per person in 2021–22 – an increase of $484 in real terms from the previous year.” 

Recurrent spending on hospitals increased by $4.2 billion (4.6%) in real terms to $96.0 billion, while recurrent spending on primary health care grew by $8.3 billion (10.9%) in real terms to $84.1 billion, which was also related to the pandemic, including the purchase of items such as COVID vaccines and personal protective equipment.  

Primary health care spending also included $13.6 billion on unreferred (mainly general practice) medical services. 

The Australian Government spent $105.8 billion on health, representing a $8.4 billion real increase (8.6%) from the previous year. This was more than double the average annual real growth in the decade to 2021–22 (3.5%) and higher than 2020–21 (7.6%). State and territory governments spent $70.2 billion on health, an increase of 11.0% ($6.9 billion) from 2020–21 in real terms, and above the average increase across the decade of 4.0%. 

“This indicates that growth in government health spending grew stronger than other areas of government expenses,” Mr Callaghan said. 

Government spending through the National Partnership on COVID Response (NPCR) was $12.8 billion ($6.6 billion by the Australian Government and $6.2 billion by state and territory governments). Australian Government spending through specific COVID Department of Health and Aged Care programs (outside the NPCR) was estimated to be $12.1 billion. 

"It is likely that COVID restrictions and temporary suspension of non-urgent elective surgery and non-essential treatments in most states and territories resulted in lower spending by individuals, private health insurance providers, and other non-government entities in 2021–22," Mr Callaghan explained.