• AIHW Data Quality Statements, Superseded 04/11/2022

Summary of key issues

• Total health expenditure, as reported from the Australian Institute of Health and Welfare (AIHW) Health Expenditure Database, excludes some types of health-related expenditure, including residential aged care, welfare expenditure, some local government expenditure and some non-government organisation expenditure, such as that by the National Heart Foundation and Diabetes Australia.
• To create the estimates for Australian Government spending, each year the AIHW is provided with an extract of accounting data from the Australian Government Department of Health and works with the Department to allocate each expenditure item to its most appropriate area of spending. Throughout the years, there have been changes in both the data and approaches to allocation. While every effort is made to ensure consistency, this can lead to changes in the classification of areas of expenditure for some items.
• The final Australian Bureau of Statistics (ABS) Private Hospital Establishment Collection (PHEC) was conducted for the 2016–17 reporting period. Data from this collection contributed to estimates of both individual and other private expenditure. The expenditure estimates for 2017–18 have been modelled using historical PHEC data. From 2018–19, the Private Hospital Data Bureau (PHDB) is used to estimate the patient revenue component of private hospitals. In 2019–20, the other revenue component is modelled on historical data using the growth rate of the patient revenue component. Therefore, the private hospital expenditure in 2018–19 and 2019–20 might not be directly comparable with previously published data.
• Data for over-the-counter sales of health-related products by individuals at supermarkets and retail pharmacies for the period 2016–17 to 2019–20 are sourced from Information Resources Incorporated (IRI) data collection. This collection changes over time and can have different scopes compared to the years prior to 2016–17. Therefore, cautions need to be exercised in relevant comparisons.
• Due to data unavailability, individuals’ expenditure on private scripts in 2019–20 is continued to be modelled using historical data and the growth rates of private health insurance coverage and fees charges.
• In 2017, the Australian Government funded the Tasmanian Government for operating the Mersey Community Hospital. The payment was made as a single lump sum payment but funds are being accrued over a 10-year period. Australian Government expenditure for Mersey Community Hospital from 2007–08 has not been offset from Tasmanian government’s expenditure.
• The ABS implemented a new classification system for the reporting of government finance statistics for the 2017–18 period onwards. Estimates from 2017–18 onwards are not directly comparable with previously published data.
• There have been some revisions to previously published estimates of health expenditure, due to receipt of extra or revised data or changes in method. As a result, comparisons over time should be based on the estimates provided in the most recent publication, or from the data visualisation tool available, rather than by reference to earlier editions.

Description

The AIHW compiles, annually, the health expenditure estimates, which comprises a wide range of information about health expenditure in Australia, and is the foundation of the Australian National Health Accounts (ANHA). The ANHA is developed to provide an understanding of the long term trends in overall health expenditure and how they are changing over time.

The ANHA are reported in the annual Health expenditure Australia report about 15 months after the end of the financial year and are provided to the Organisation of Economic Cooperation and Development and World Health Organisation according to the international System of Health Accounts classification. Each release provides a 10-year time series from the reference year. In 2019–20 release, data are presented from 2009–10.

The AIHW’s Health Expenditure Advisory Committee gives advice on the health expenditure collection and reporting. The committee consists of representatives from the ABS, Australian Prudential Regulation Authority, Commonwealth Grants Commission, Department of Health, Department of Human Services, Department of Veterans' Affairs, Independent Hospital Pricing Authority (IHPA), Treasury, National Health Funding Body and each state and territory health department.

The Australian Institute of Health and Welfare (AIHW) is an independent corporate Commonwealth entity under the Australian Institute of Health and Welfare Act 1987 (AIHW Act), governed by a management Board and accountable to the Australian Parliament through the Health portfolio.

The AIHW is a nationally recognised information management agency. Its purpose is to create authoritative and accessible information and statistics that inform decisions and improve the health and welfare of all Australians.

Compliance with the confidentiality requirements in the AIHW Act, the Privacy Principles in the Privacy Act 1988 (Cth) and AIHW’s data governance arrangements ensures that the AIHW is well positioned to release information for public benefit while protecting the identity of individuals and organisations.

For further information see the AIHW website www.aihw.gov.au/about-us, which includes details about the AIHW’s governance (www.aihw.gov.au/about-us/our-governance) and vision and strategic goals (www.aihw.gov.au/about-us/our-vision-and-strategic-goals).

The AIHW’s reporting on health expenditure includes ANHA, which are distinct from but related to the Australian National Accounts produced by the Australian Bureau of Statistics (ABS) and the System of Health Accounts reported by the OECD, Eurostat and WHO.

The AIHW compiles its Health Expenditure Database from a wide variety of government and non-government data sources. Since 2008–09, the main source of state and territory government expenditure data has been the Government Health Expenditure National Minimum Data Set (GHE NMDS), which consists of data provided by the states and territories to the AIHW. Information about Australian Government expenditure is also sourced from the ABS, Australian Prudential Regulation Authority, Australian Taxation Office, Comcare, Department of Health, Department of Veterans' Affairs and Treasury.

This release of Health expenditure Australia 2019–20, includes data for the 2019–20 financial year, as well as data back to 2009–10.

The AIHW Health Expenditure Database cannot be compiled for a given year until all providers have supplied data for that year. Timely reporting depends on whether all providers meet the deadline for data supply. Any delay to data supply past the deadline may impact on the release date.

The data are generally released about 15 months after the end of the reference year, as part of the annual Health expenditure Australia series of publications. Due to the COVID-19 disruptions to data supply, Health expenditure Australia 2019–20 is published later than this normal timeline.

Reports based on the database are published and are available on the AIHW website where they can be downloaded here.

Additional tables that support the analysis presented in Health expenditure Australia 2019–20 are available in Excel format and can be downloaded here.

Data are also available through a data visualisation tool.

General enquiries about AIHW publications can be made to the Strategic Communications and Stakeholder Engagement Unit on (02) 6244 1000 or via email to [email protected].

Specific enquiries about health expenditure data can be made to the Health Economics Unit via email to [email protected].

See Australian National Health Account: concepts, methodology and data sources for detailed descriptions of concepts, definitions, data sources and estimation methods, and see the Glossary for the terms used.

Also see Comparison and alignment of Australian health expenditure estimates for similarities and differences of different health spending figures in different reports.

Further information on the GHE NMDS can also be found here.

Scope and coverage

Total health expenditure reported for Australia (both domestically and internationally) is known to be an underestimate—it excludes some types of health-related expenditure, including some local government expenditure and occupational health spending by non-government sources such as private enterprises. Some of the expenditure by non-government health organisations—such as the National Heart Foundation and Diabetes Australia—is also not included. In particular, most of the non-research expenditure funded by donations to these organisations is not included, as data are not available.

The estimates do not include indirect expenditure, such as the cost of lost wages for people accessing health services.

The AIHW’s Health Expenditure Database is highly relevant for monitoring trends in health expenditure, including international comparisons. Policymakers, researchers, government and non-government organisations, and the public use these data for many purposes.

Comparisons with gross domestic product (GDP) enable consideration of the size of the health sector relative to the broader economy, and per person expenditure provides an indication of changes in expenditure in relation to the population.

The relative contribution of the Australian Government and state and territory governments is relevant to health policy, planning and administration. Similarly, non-government sector expenditure, including the out-of-pocket expenses of individuals, is also relevant to various health policy issues such as those related to access and provision of services.

The estimates enable governments to monitor the impact of their policy initiatives as well as broader social and economic trends on health spending.

The AIHW does not separately collect health expenditure information from local government authorities.

Reference period

The most recent reference period of these data is the 2019−20 financial year.

Geographic detail

Data are presented at the national and state and territory levels.

Statistical standards

The data are analysed and categorised in terms of the AIHW’s classification of area of expenditure and source of funds as well as the OECD, Eurostat & WHO’s System of Health Accounts.

Potential sources of error

Some services provided in hospitals attract a subsidy from either the MBS or PBS. Up to now, hospital spending estimates have not explicitly treated any MBS spending as public hospital spending (it is treated as spending on ‘referred’ or ‘unreferred’ medical services) and only some PBS items. This is primarily because limitations in the MBS data mean public hospital spending cannot be directly derived. An attempt has been made in the latest reporting to quantify these additional amounts, particularly for public hospital.

The AIHW does not separately collect health expenditure information from local government authorities. If a local government authority received funding for health care from the Australian Government or state and territory government, it appears as expenditure by that respective body.

The data, to the greatest extent possible, are produced on an accrual basis; that is, expenditures and funding reported for each area relate to expenses and revenues incurred in the year in which they are reported. This is not always achievable. For example, the data from private health insurance funds are sometimes provided on the basis of the date when the claims for benefit are processed, which is not necessarily the same as the date when the services were provided.

Best efforts are made to ensure the accuracy of the published figures. However, there are usually some revisions to previously published estimates of health expenditure, due to receipt of extra or revised data or changes in method. As a result, comparisons over time should be based on the estimates provided in the most recent publication, or from the data visualisation tool available, rather than by reference to earlier editions. In Health expenditure Australia 2019–20, some changes are made to the health expenditure database due to:

• Resubmission of historical data by Department of Veterans Affairs, some states and territories, and some injury compensation regulators
• Changes in methodology to correct historical errors for some Department of Health cost centres, dental expenditure, and ABS research.

Data validation

Data provided by state and territory health agencies are validated by the agency to ensure they have been collected accurately. State and territory health agencies are also provided with an opportunity to review the final data for their jurisdiction before public release.

The ANHA aims to support a long-term, whole-of-system understanding of health spending nationally and over time. This system is unique in Australia and it varies from other health system reporting in scope, degree of stability over time and classification systems used. Other systems tend to focus on specific funding programs, jurisdictions or time periods.

The long-term holistic approach requires developing methods to appropriately allocate spending figures from multiple and often overlapping data sources. These sources change over time to the relatively stable ‘area’ and ‘source’ categories used in the ANHA. In doing so, care is taken to avoid the risk of misallocation, unnecessary breaks in the time series, missed data and double counting.

The methods used in the ANHA are overseen by the Health Expenditure Advisory Committee (HEAC). The HEAC includes subject matter experts and representatives from the Australian Government and all state and territory governments. The AIHW has worked with the HEAC over many years to develop approaches to maximise the completeness and accuracy of the estimates over time and minimise the risk of double counting. For example, when estimating total spending on hospital services in a year, the funds the Australian Government gives to states and territories is subtracted from the hospital spending reported by the states and territories to derive the amount that the states and territories spent from their own resources.

This holistic approach, unique classification system and methods developed mean the figures reported here often vary from other data sources, particularly where other reporting tends to focus on specific funding programs, institutions, funders or purposes. For example, program-specific reporting such as for the Medicare Benefits Scheme, government budget papers or health department annual reports vary from the figures here due to differing classifications, scopes and methods used to account for double counting.

As part of ongoing data quality improvement activities, the AIHW, through the HEAC, works with the ABS, the Australian Government, state and territory governments, the NHFB, the OECD, Eurostat & WHO and other data suppliers to ensure the estimates presented in the ANHA are as complete and accurate as possible and reflect changes in health system financing over time.

Estimates are not comparable with the data published in reports issued before 2005–06 due to the reclassification of expenditure on high-level residential aged care from ‘health services’ to ‘welfare services’.

Since 2008–09, some of the data presented in the Health expenditure Australia series of publications have been collected through the GHE NMDS. The data collection process requires state and territory data providers to allocate expenditure against a different range of categories from those used for previous collections. These data have been mapped back to the expenditure categories from previous reports to ensure consistency and comparability in these statistics over time.

Throughout the years, there have been changes in the cost centres data provided by the Australian Department of Health which might lead to changes in the classification of areas of expenditure for some items.

The final Australian Bureau of Statistics (ABS) Private Hospital Establishment Collection (PHEC) was conducted for the 2016–17 reporting period. Data from this collection contributed to estimates of both individual and other private expenditure. The expenditure estimates for 2017–18 have been modelled using historical PHEC data. From 2018–19, the Private Hospital Data Bureau (PHDB) is used to estimate the patient revenue component of private hospitals. In 2019–20, the other revenue component is modelled on historical data using the growth rate of the patient revenue component. Therefore, the private hospital expenditure in 2018–19 and 2019–20 might not be directly comparable with previously published data.

Data for over-the-counter sales of health-related products by individuals at supermarkets and retail pharmacies for the period 2016–17 to 2019–20 are sourced from Information Resources Incorporated (IRI), which might have different scope compared to the years prior to 2016–17.

Due to data unavailability, individuals’ expenditure on private scripts in 2019–20 is continued to be modelled on historical data.

In 2017, the Australian Government funded the Tasmanian Government for operating the Mersey Community Hospital. The payment was made as a single lump sum payment but funds will be accrued over a 10-year period. Australian Government expenditure for Mersey Community Hospital from 2007–08 has not been offset from Tasmanian government’s expenditure.

AIHW 2021. Health expenditure Australia 2019–20. Health and welfare expenditure series no. 65. Cat. no. HWE 87. Canberra: AIHW.

OECD, Eurostat & WHO 2011. A system of health accounts 2011 edition. Paris: OECD Publishing.