.
HOW
AUSTRALIA PAYS FOR HEALTH CARE
The Australian health care system is large and complex. It involves public
and private health care providers, both for-profit and not-for-profit and
charitable, at both levels of (State/Federal) Government and a wide range of health professionals,
both employed and in private practice. Medicare covers only part of the health
care system, albeit a substantial one. The rest is funded in a variety of ways.
How much does Health Care really cost?
In 1997-98 Australia spent $47.3 billion on health care (Health Expenditure
Bulletin No 15, June 1999, AIHW). This amounts to 8.4% of GDP. This percentage
has been stable since the early 1990s, after increasing in the late eighties
from 7.6% of GDP in 1984-85.
Over the last decade GDP in real terms increased by about 4.1% with the
health cost component rising by 4.6%. This means that health care costs have
only exceeded the general rate of economic growth by 0.5% over a ten year period
- a reality in direct conflict with claims of "spiralling health
costs".
Who pays now?
Today, about 68% of the $47.3 billion overall health costs comes from taxes
paid by Australians to Commonwealth, State and Local Governments. This
proportion has been slowly declining since 1984-85. The remaining 32% of health
spending from non-government sources is made up of direct charges to patients
(about 15%), health insurance premiums (around 10.5%) and other non-tax sources
such as health costs for workers compensation and third party insurance claims.
Around 11% of government health care spending comes from the
Medicare
Levy.
With the introduction of the 30% rebate on private health insurance premiums
the proportion of health costs funded by health insurance will fall and
taxpayers' contributions will rise, in this case towards private care. It is
unlikely that there will be much direct impact on overall health expenditure as
the funds will largely go to subsidising the costs of premiums for existing
health fund members.
What does the money buy?
The biggest share of recurrent funding (around 37% of the total) goes into
hospitals, public and private. Around 20% of the funds go to services provided
by private doctors, 12% to pharmaceutical costs and 7.5% to nursing homes. The
balance of around 22% funds research, ambulances, non-medical health
professionals, aids and appliances and community and public health.
GP services account for 37% of the $6.3 billion expenditure on Medicare
rebates. Of this $6.3 billion, around 15% is spent on specialist consultations,
15% on pathology, 15% on diagnostic imaging services and 11% on operations.
Australia gets a health system, which is, on balance, fair and efficient with
most people having ready access to high quality hospital and medical services at
no charge or low cost at the point of service. In Australia today, no one need
fear the financial costs of illness.
Return to Health Care: INDEX
