Govt Health Spending Down - Report

Government spending on health in 2012-13 slowed to record low levels while growth in non-government funding remained relatively strong, according to a new report from the Australian Institute of Health and Welfare (AIHW).

The report, Health Expenditure Australia 2012-13, shows total spending on health goods and services in Australia was estimated at $147.4 billion in 2012-13 (9.67 per cent of GDP). This was just 1.5 per cent higher than in 2011-12.

'This is the lowest growth the AIHW has recorded since it began the Health expenditure Australia series in the mid-1980s, and more than three times lower than the average growth over the last decade (5.1 per cent),' AIHW Director and CEO David Kalisch said.

“The report shows Government spending on health overall fell by 0.9 per cent in 2012-13. This was largely due to a fall of 2.4 per cent in the Australian Government's funding. During the previous decade, Australian Government spending had experienced average annual growth of 4.4 per cent.

“The main drivers of the decrease in Australian Government spending were reductions in spending on the Pharmaceutical Benefits Scheme, public health, dental services and e-health.”

The report found that spending also fell in the categories of health insurance premium rebates, Department of Veterans' Affairs funding and the medical expenses tax rebate in 2012-13.

The report also shows that growth in State and Territory Government funding of health expenditure was relatively low. State and Territory health spending grew by just 1.4 per cent in 2012-13, 4.2 percentage points lower than the average growth for the decade.

“In 2012-13, Governments funded $100.8 billion or 68.3 per cent of total health expenditure in Australia. This was 1.6 percentage points lower than in 2011-12, the largest reduction of the decade,” David Kalisch said.

“The Australian Government's contribution was $61.0 billion (41.4 per cent of total funding) and State and Territory Governments contributed $39.8 billion (26.9 per cent).

“Non-government funding sources provided the remaining $46.6 billion (31.6 per cent). The share contributed by non-government sources rose by 1.6 percentage points, with individuals contributing just over half of the increase (0.9 percentage points).

"In contrast to Government funding, growth in non-government funding was relatively strong. It grew by 7.2 per cent in 2012-13 compared to the average of 5.4 per cent for the decade," Kalisch said.  

In 2012-13, estimated spending per person on health averaged $6,430, which was $17 less per person than in the previous year.

"This small reduction meant that expenditure essentially grew in proportion to-rather than faster than-population growth for the first time in the decade," Kalisch said.

The Not for Profit sector has responded to the report, with a wide range of health advocacy organisations calling on the Government and Parliament to show leadership in relation to health funding.

"Good health is a fundamental building block to the well-being of individuals, communities and the economy. There is a need for considered and evidence based approaches to healthcare funding and services," CEO of ACOSS, Dr Cassandra Goldie said while launching the NFP statement.

"Community organisations with a deep interest in health are growing increasingly alarmed about the significant changes that are being proposed in the area of health, without significant community discussion about the implications, particularly on those who are most vulnerable and most likely to be impacted by changes such as the proposed GP co-payment.

"Organisations who have signed up to today's statement remain opposed to any form of GP co-payment, even one with exemptions as this does not go far enough to ensure that those who most need healthcare are not faced with cost barriers.

"Any changes in healthcare funding needs to protect those who are most vulnerable and disadvantaged. Current proposals on the table do not adequately address the impacts on groups, including Aboriginal and Torres Strait Islander people, those with chronic illness, and older members of our community.

“We also know that those who are poorer are more likely to be sick. So, it is those who are least likely to be able to afford it who are going to be most impacted by measures such as new or increased co-payments.

"In addition to proposals such as the GP co-payment, and increases to the co-payment for PBS medicines, there are other adverse changes being made through the budget, such as the reduction of funding to health promotion and preventative health. It's hard to see how this will help improve people's health and take off pressure in the health system.

"There is strong evidence that supports investing in preventive health as the most long-term, cost effective and ethical approach to maintaining and improving Australia's universal health care system. Investing in a healthy Australia takes strong leadership and a vision for a better future for all people and communities in Australia.

"The groups who have come together today stand ready to work with Government to improve the effectiveness and efficiency of the health system. We call on the Government and the Parliament to focus on evidence, and not be tempted to introduce short term fixes to expenditure which will only cost more in the long term."

A copy of the Joint Community Statement on Health and signatories can be found here