Australia’s health spending has returned to pre-pandemic levels, with a total expenditure of $252.5 billion on health goods and services in 2022–23. This equates to $9,597 per person and represents 9.9% of the national economic activity.

The Australian Institute of Health and Welfare (AIHW) has today released 3 new reports: Health expenditure Australia 2022–23, Health system spending on disease and injury in Australia 2022–23 and Health system spending on the response to COVID-19 in Australia 2019–20 to 2022–23. The reports collectively provide a comprehensive overview of health spending in Australia and the sources of funding for health goods and services.

Health expenditure Australia 2022–23 shows that the decrease in government spending during 2022–23 was largely associated with reduced spending related to the COVID-19 pandemic, such as vaccines and personal protective equipment.

‘The AIHW has been reporting on national health expenditure for over three decades, helping us understand the health system and its relationship to the economy as a whole,’ said AIHW spokesperson Geoff Callaghan.

Total health spending was 0.3% lower than in 2021–22 after adjusting for inflation, while on a per-person basis, spending dropped 2.4% in real terms. This can be attributed to health spending and population growth returning to pre-pandemic levels.

Government sources funded approximately 70.8% of total health expenses, with $101.5 billion provided by the Australian Government and $77.3 billion by state and territory governments.

‘Government spending decreased by 2.6% in 2022–23, due to a decrease in COVID-19-related spending, while non-government spending grew 5.8% but remained below pre-pandemic trends,’ said Mr Callaghan.

‘Health spending as a percentage of total government expenditure also dropped slightly from 17.2% to 17.1%, indicating slower growth in health funding relative to other sectors.’

Primary health care spending fell by 8.2% to $83.3 billion, indicating reduced pandemic-related public health spending such as on the vaccine rollout, rapid antigen tests and personal protective equipment. Hospital expenditure rose 4.7% to $107.1 billion, driven by increased hospitalisations and patient admissions post-pandemic.

Disease and injury-related spending

Of the $172.3 billion in health spending that could be directly attributed to disease and injury in 2022–23, cancer was the highest-cost disease group at $18.9 billion, followed by cardiovascular diseases ($16.2 billion) and musculoskeletal disorders ($15.9 billion). 

Cancer has been the top-ranked disease group since 2014–15, accounting for around 10% of spending each year, with its costs doubling since 2013–14.

Chronic conditions made up almost half (48%) of disease-related spending, totalling $82 billion. The most expensive chronic conditions were osteoarthritis ($4.9 billion) and back pain ($3.9 billion). However, injuries from falls were the most expensive of the disease conditions with expenditure of $5.1 billion in 2022–23.

Spending was higher for females ($84 billion) compared with males ($76 billion), with expenditures peaking in the 70–74 age group for both genders.

Health spending in response to COVID-19

‘A total of $55.9 billion was spent on Australia’s health response to the COVID-19 pandemic between 2019–20 and 2022–23,’ said Mr Callaghan.

Governments spent $54.8 billion (77% by the Australian Government and 23% by state and territory governments). Individuals contributed $1.1 billion for personal protective equipment, rapid antigen tests and sanitisers.

Key areas of government spending included primary care ($30.4 billion) which involved COVID-19 vaccination efforts ($9.4 billion) and public hospitals ($14.1 billion).

Australia’s excess mortality rate during the pandemic period was 4.9%, the fifth lowest among 33 OECD countries.

Additionally, Australia ranked fourth lowest out of 36 OECD countries for additional health spending above pre-COVID trends.