Private sector expenditure on health accounts for about one-third of total health expenditure.  Majority (around 60%) of this is individuals’ out-of-pocket expenses and the remainder is expenditure by private health and other insurers such as workers’ compensation and third-party motor vehicle insurers.

Australian Government provides about 67% of public sector expenditure on health, and state, territory and local governments provide the rest.

Private hospitals provide about one-third of all hospital beds in Australia.  Private medical practitioners provide most out-of-hospital medical services and, along with salaried doctors, perform a large proportion of hospital services.

About half of all Australians have private health insurance. 

43% of the population (9 million people) -

(a)        are covered by hospital insurance for treatment as private patients in both public and private hospitals; and

(b)        have ancillary cover for non-medical services provided out of hospital, such as physiotherapy, dental treatment and the purchase of spectacles.

Health expenditure in Australia • Total health expenditure in Australia grew by 7.1% between 2004–05 and 2005–06 to $86.9 billion or $4,226 per person. This represents a $5.8 billion increase from 2004–05, or $225 more per person than the previous year (Tables 1 and 6). • High-level residential aged care expenditure has been reclassified from health expenditure to welfare services expenditure. As a result, data in this report are not comparable with the data published in the previous issues. The reclassification of high-level residential aged care expenditure from health to welfare services expenditure has reduced the health to GDP ratio in 2004–05 and 2005–06 by 0.6 percentage points (i.e. the health to GDP ratios would have been 9.7% and 9.6% respectively without the reclassification) (Table 64). The welfare services expenditure to GDP ratios have been correspondingly increased (AIHW in press). • Real growth (adjusted for inflation) in expenditure on health was 3.1% in 2005–06 compared to real growth in 2004–05 of 5.3% and an average annual growth of 5.1% between 1995–96 and 2005–06 (Table 1). • Expenditure for research grew in real terms by 7.0% in 2005–06, public hospital services grew by 5.6%, community health by 5.2%, aids and appliances by 4.0%, other health practitioners by 3.7%, private hospitals by 1.3% and medical services by 0.2% (Table A8). • Real expenditure on medications increased 1.6% in 2005–06 (Table 20) compared to an average annual increase in constant prices of 8.6% from 1995–96 to 2005–06.