Trends in Australian government health expenditure by age: a fiscal incidence analysis

Abstract

Objective: Australian government health expenditure per capita has grown steadily across the past few decades, but little is known about trends in the age distribution of health expenditure. Methods: In this paper, the Australian Bureau of Statistics (ABS) fiscal incidence studies, which track expenditure at the household level between 1984 and 2010, are used to shed light on this topic. Results: The main finding was that spending has shifted focus from the younger half to the older half of the population. This shift is evident in three areas: (1) acute care (hospitals); (2) community health services (doctors); and (3) pharmaceuticals. Together, these areas account for approximately 88% of expenditure. The trend is independent of demographic aging. It is unlikely to reflect changes in population health. Its explanation is open to debate. Conclusions: Growth in expenditure per household has been more than threefold faster for elderly than young households. Across this period, expenditure per household per week has increased by 51% for the young, by 79% for the middle aged and by 179% for the elderly. This age-related growth is most prominent in expenditure on acute care, community health services and pharmaceuticals.What is known about the topic? The Productivity Commission has published figures that relate age and Australian heath expenditure. However, there has been no published study of age-related trends in Australian health expenditure. What does this paper add? In addition to tracking age-related trends across 26 years, this paper adds a breakdown of those trends into four categories of expenditure, namely acute care, community health services, pharmaceutical benefits, and other. This breakdown shows that the trends vary by expenditure type. What are the implications for practitioners? The paper shows that forward projections in health expenditure need to take into account age-related trends as well as demographic trends.