• Spending overview
• Policy overview
• Diseases overview

Spending overview

Healthcare expenditure in Australia continues to grow in line with the ageing of the population, advances in medical technology and treatments, and the public’s increasing awareness of health-related issues. According to the latest official figures, government spending on healthcare in Australia in fiscal year 2008/09 (July-June) was an estimated A$49.3bn (US$43.3bn), which amounted to around 3.8% of GDP and was equivalent to A$2,330 (US$2,047) per head. Including private spending, total expenditure on healthcare was equivalent to 10.8% of GDP in 2009, or US$5,061 per head, according to estimates by a UK-based research company, Espicom. However, current spending per head is lower than the weighted average for the OECD countries, and is also lower as a percentage of GDP. The Economist Intelligence Unit forecasts that healthcare expenditure per head will rise to US$6,719 in 2014, as a result of rising income levels and the needs of an ageing population. Most of this increase will come from private spending—the government has budgeted health spending increases in line with GDP growth until 2012/13.

Policy overview

Australia established a national healthcare-funding system, known as Medicare, in 1984. Contributions are made through taxes and a levy based on taxable income. Medicare provides free hospital care and subsidises spending on non-hospital care, such as doctors’ consultation fees. Doctors’ fees payable by private hospital patients are partly paid by Medicare, but all other charges payable by such patients must be met by the patients themselves or by their private insurers.

In the past decade the government has tried to encourage the adoption of private health cover, in an attempt to contain the burden of Medicare costs. However, the proportion of Australians covered by private healthcare has grown only marginally since the new system was implemented. In 2007/08 around 53% of the population was covered by private health insurance, up from 43% in 2000.

In February 2008 the government formed the National Health and Hospitals Reform Commission (HHRC) to develop a long-term strategy for healthcare reform. In a report released in February 2009 the commission made a number of recommendations, perhaps the most important of which was that the federal government should take responsibility for all primary healthcare policy and funding in order to provide a coherent national strategy. At present, primary healthcare funding is derived from the federal government (in part through Medicare) and also from state governments. The HHRC also recommended that  comprehensive primary healthcare centres should be set up in most communities, to act as “one-stop shops” for health-related services.

In its final report on the healthcare system, released in July, the HHRC described a system that was under considerable strain and required numerous urgent reforms. Problems included poor management of chronic diseases, the division of funding and responsibility between federal and state governments and a lack of innovative use of technology (such as electronic health records). In the run-up to the federal election in November 2007, Labor’s leader, Kevin Rudd (who is now the prime minister) pledged that under Labor the federal government would take responsibility for the operation of hospitals away from state governments if they failed to improve hospital performance. However, despite the problems identified by the HHRC, state governments’ hostility to a federal takeover of the hospital system has led Labor to back away from its pre-election pledge. A takeover of the operation of hospitals by the federal government looks unlikely in the forecast period.

Diseases overview

Life expectancy in Australia has increased gradually, reaching an estimated 81.6 years in 2009. This compares favourably with an average of 79.7 years in the G7 grouping of major industrialised economies. Females in Australia live on average 84.1 years, while males average 79.2 years. The prevalence of smoking has more than halved since 1964, with just 17.7% of the population categorised as daily smokers in 2004 (latest available data), comparing favourably with an  average of 24.5% of the population in OECD countries. However, the comparison with other countries is not as encouraging when it comes to alcohol consumption: each year the average Australian aged over 15 consumes alcoholic beverages containing 9.8 litres of pure alcohol, while the average in the OECD is 9.4 litres.

Like their counterparts in many developed nations, Australians have to battle the bulge. The latest statistics show that in 2005 the percentage of the adult population considered overweight was 36%. In 2005 overweight and obese individuals accounted for 54% of the total population—a worrying figure, given the health risks associated with obesity. Moreover, almost one-quarter of Australian children are overweight and 5-6% are obese.