Health Expenditure in Australia 2022-2023
In the 2022–23 fiscal year, Australia’s total health expenditure reached $252.5 billion, equating to $9,597 per person and representing 9.9% of the nation’s GDP. This reflects a substantial investment in maintaining Australia’s health system, including significant allocations for pharmaceutical services to support the population’s health needs.
Government vs. Non-Government Spending
Government sources funded over 70% of total health expenditure. The Australian Government contributed $101.5 billion, while state and territory governments added $77.3 billion, totalling $178.8 billion.
Non-government spending accounted for $73.8 billion, a 5.8% increase compared to the previous year. This includes out-of-pocket costs borne by individuals and contributions from private health insurance, a substantial portion of which is directed toward pharmaceutical services.
Health Spending by Sector
Government sources funded 70.8% of total health expenditure. The Australian Government contributed $101.5 billion, while state and territory governments added $77.3 billion, totaling $178.8 billion.
Non-government spending accounted for $73.8 billion, a 5.8% increase compared to the previous year. This includes out-of-pocket costs borne by individuals and contributions from private health insurance, a substantial portion of which is directed toward pharmaceutical services.
Health Spending by Sector
Health expenditure in 2022–23 was distributed across several key areas, with pharmaceuticals playing a crucial role:
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- Pharmaceuticals and Primary Health Care Spending on primary health care totaled $36.8 billion, including $13.7 billion allocated to subsidized medications through the Pharmaceutical Benefits Scheme (PBS). The PBS plays a critical role in ensuring access to essential medicines for Australians. However, primary health care overall saw a 8.2% decrease, primarily due to reduced spending on pandemic-related services such as COVID-19 vaccines and PPE, which had driven up expenditure in prior years.
- Hospitals Hospitals accounted for the largest share of health spending, totalling $107.1 billion (42.4% of total expenditure). This represents a 4.7% increase compared to the previous year, reflecting rising hospital admissions and increased demand for hospital-based services, which include pharmaceutical treatments and care.
- Referred Medical Services Spending on referred medical services, which includes specialist consultations and diagnostic tests, reached $21.3 billion (8.4% of total health expenditure). Many of these services involve the prescription and administration of high-cost medications.
The remaining $40.8 billion (16.2%) was allocated to other health services, research, and capital spending.
Impact of COVID-19 on Health Spending
The COVID-19 pandemic had a significant impact on health expenditure, with $55.9 billion spent on pandemic-related responses between 2019–20 and 2022–23. This included spending on vaccines, testing, and protective equipment.
As the pandemic’s acute phase subsides, pandemic-related expenditures have declined. However, pharmaceutical spending continues to play an essential role in supporting public health, particularly through treatments like COVID-19 antivirals.
Health Spending Relative to GDP
Australia’s health expenditure in 2022–23 accounted for 9.9% of GDP, slightly above the OECD average. Spending peaked during the pandemic in 2020–21 before stabilizing in recent years.
Trends over the past decade show sustained growth in health spending, with significant investments in pharmaceuticals and medication subsidies, driven by initiatives such as the Pharmaceutical Benefits Scheme (PBS) to ensure equitable access to essential medicines for all Australians.
Figure: Australia’s health spending to GDP ratios (2012-2022), including and excluding residential aged care expenditure by Australian Institute of Health and Welfare
Key Trends Over the Decade
Over the past decade, health spending has shown a consistent upward trend, peaking during the pandemic. Although spending levels are now stabilizing, they remain higher than pre-pandemic rates. The recent decline reflects reduced expenditure on COVID-19-related services.
Australia’s investment in health continues to be substantial, reflecting the nation’s commitment to maintaining a robust health system despite evolving challenges.
For more insight, please see
● https://www.aihw.gov.au/reports/health-welfare-expenditure/health-expenditure
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