Intergenerational report: health spending to double

FEDERAL government spending on health for each Australian is projected to increase from $2800 now to $6600 in 40 years.

FEDERAL government spending on health for each Australian is projected to more than double from $2800 now to $6600 in 40 years.

Figures contained in the intergenerational report released this morning show that under currently legislated policy Australian health expenditure is projected to increase as a proportion of GDP from 4.2 per cent currently to 5.7 per cent in 40 years.

Under previous policy settings health spending was projected to reach 7.1 per cent of GDP by 2054-55 with real health spending per person rising to $8200 in 2054-55.

The IGR predicts that the ageing of the population will contribute about 10 per cent of the projected increase in spending in real terms per person.

The number of people aged over 100 is expected to reach 40,000 in 40 years with life expectancy at birth rising to 95.1 years for men and 96.6 years for women.

However non-demographic factors like changes in technologies and treatments will be the biggest drivers of increases in health spending.

The IGR contained calculations of expected growth health spending from the current financial year of 2014-15 to 2027-28.

Medicare services is projected to be the fastest growing component of health expenditure, rising 25 per cent between 2014-15 and 2027-28 (from $855 to $1071 in today’s dollars).

Real pharmaceutical spending per person is projected to rise from $420 in 2014-15 to $474 in 2027-28 in today’s dollars.

Australian government funding for public hospitals increased from $568 per person to 2007-08 in today’s dollars to $647 per person in 2014-15 and is expected to increases $680 in 2017-18. After that spending is set to remain constant.