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When Medicare began in 1984, the levy was introduced as a supplement to other taxation revenue to enable the Australian Government to meet the additional costs of the universal national health care system, which were greater than the costs of the more restricted systems that preceded it.
In 2000-01, revenue raised from the Medicare levy was approximately 18% of total Australian Government health expenditure. The Australian Taxation Office estimated revenue from the Medicare levy to be $4.6b in 2000-01.
The Australian Government funding of hospitals
Australian Government funding to the states' and territories' health systems is made through the Australian Health Care agreements.
In 2002-03 total Australian Government funding under the Australian Health Care Agreements was around $7.2b. Of this amount, over 98% was paid to the states and territories as Health Care Grants, while the balance was either allocated to national initiatives in areas of mental health, palliative care and casemix development, or paid to those states and territories which were eligible to receive financial assistance from the National Health Development Fund.
Total health expenditure
For 2000-01, the preliminary estimate of total expenditure on health (including both public and private sectors) was $60.8b, compared with expenditure of $55.7b in the previous year (table 9.22). This represented an average rate of health expenditure in 2000-01 of $3,153 per person. In 2000-01, governments provided more than two-thirds (70%) of the funding for health expenditure, while the remaining 30% was provided by the private sector. Health expenditure in volume terms grew at an average annual rate of 4.4% between 1990-91 and 2000-01. In 2000-01, health expenditure as a proportion of gross domestic product was 9.0%. This ratio was 8.8% in 1999-2000, up from 8.7% in 1998-99.
In 2001-02 there were 746 public hospitals nationally, including 22 psychiatric hospitals, compared with 760 in 1997-98. There were an average of 51,461 beds in public hospitals during 2001-02 (table 9.23), representing 65% of all beds in the hospital sector (public and private hospitals combined). Public hospital beds have declined from 3 beds per 1,000 population in 1997-98 to 2.6 beds in 2001-02.
The number of patient separations (discharges, deaths, and transfers) from public hospitals during 2001-02 was around 4 million, compared with 3.8 million in 1997-98. Same-day separations accounted for 48% of total separations in 2001-02 compared with 43% in 1997-98.
Total days of hospitalisation for public health patients during 2001-02 amounted to 16.3 million, a decrease of 0.4% since 1997-98. The average length of hospital stay per patient in 2001-02 was 4.1 days. For 1997-98 the corresponding figure was 4.4, reflecting the lower number of same-day patients compared with 2001-02. If same-day patients are excluded, the 2001-02 average length of stay was 6.9 days, compared with 7.0 days in 1997-98.
An average of 192,187 staff (full-time equivalent) were employed at public hospitals in 2001-02, of whom 44% were nursing staff and 10% were salaried medical officers. Revenue amounted to $1,532m. Most of this revenue (58%) was from patients' fees and charges. Recurrent expenditure amounted to $16,848m, of which 62% was for salaries and wages. The difference between revenue and expenditure is made up by payments from state/territory consolidated revenue and specific payments from the Australian Government for public hospitals, in roughly equal proportions.
There were 537 private hospitals in operation in 2001-02, comprising 277 acute hospitals, 24 psychiatric hospitals and 236 free-standing day hospital facilities. The number of acute and psychiatric hospitals has slightly increased on last year but continued the downward trend since 1997-98 when 317 of these hospitals were in operation. In contrast, day hospital facilities have shown strong growth for several years, with only 175 in operation in 1997-98.
Between 1997-98 and 2001-02, the average number of beds available in private acute and psychiatric hospitals increased by 7% to 24,748. There were 1.4 private hospital beds available per 1,000 population in 2001-02. The average number of beds or chairs available at free-standing day hospital facilities (used mainly for short post-operative recovery periods) increased over the same five-year period by 31% to 1,764, reflecting the continued growth in the numbers of free-standing day hospitals.
Private hospital separations in 2001-02 totalled more than 2.5 million, of which 83% were from private acute and psychiatric hospitals and 17% from free-standing day hospital facilities. Same day separations accounted for 60% of all private hospital separations (compared with 48% of public hospital separations). This higher proportion of same day separations contributed to the lower average length of stay in private hospitals (2.8 days) compared to public hospitals (4.1 days) (table 9.23).
The average number of full-time equivalent staff employed at all private hospitals was 48,506, of whom 62% were nursing staff. Total operating expenditure for private acute and psychiatric hospitals during 2001-02 amounted to $4,777m. Some 55% of this amount was spent on salaries and wages (including on-costs). Revenue received during the year was $5,066m, of which 94.5% was received as payments from, or in respect of, patients. Total recurrent expenditure for free-standing day hospital facilities during 2001-02 amounted to $219m, and revenue received during the year was $262m.
Pharmaceutical Benefits Scheme (PBS)
The Australian Government provides persons eligible for Medicare with access to a wide range of prescription medicines through the PBS. Further discounts are given to concession card holders such as Health Care Card, Pensioner Concession or Australian Government Seniors Health Card. The following details relate to charges and safety net levels applying at 1 January 2003.
In 2002-03 the PBS had 159 million benefit prescriptions, representing a cost to the Australian Government of $4,584.7m and a total cost, including co-payments, of $5,444.4m (table 9.24).
The number of PBS prescriptions per capita in 2002-03 was 8.0, compared with 7.9 in 2001-02. The number of benefit prescriptions increased by 2.6% over the previous year, and the cost to the Australian Government of these prescriptions grew by 9.2% (in current dollars).
The rate of growth in prescription numbers and their cost reflects the ongoing trend towards newer and more costly medicines. Over the 10 years from 1992-93 to 2002-03, the average PBS dispensed price doubled, from $16.76 to $34.24 (in current dollars).
Private health insurance
Private health insurance is offered by 43 registered health insurers, giving a voluntary option to all Australians for private funding of their hospital and ancillary health treatment. It supplements the Medicare system, which provides a tax-financed public system that is available to all Australians. Depending on the type of cover purchased, private health insurance provides cover against all or part of hospital theatre and accommodation costs in either a public or private hospital, medical costs in hospital, and costs associated with a range of services not covered under Medicare including private dental services, optical, chiropractic, home nursing, ambulance and natural therapies. Overall, the private health sector funds around one-third of all health care in Australia.
Health insurance coverage
The introduction of Medicare in 1984 resulted in Australians' participation in private health insurance steadily declining. The introduction of the Australian Government 30% rebate on private health insurance in 1999, and the Government's Lifetime Health Cover policy in 2000, saw participation in private hospital cover increase dramatically, with participation rates rising from 31% in June 1999 to 46% in September 2000. Rates appear now to have stabilised with a participation rate of 44% as at 31 March 2003 (graph 9.25).
Household expenditure on health and medical care
Average household expenditure on health and medical care increased steadily between 1984 and 1998-99. As a proportion of total household expenditure on goods and services, health and medical care increased from 3.9% in 1984 to 4.7% in 1998-99.
The Household Expenditure Survey (HES) provides estimates of expenditure on medical care and health by households across Australia. Expenditure is net of any refunds and rebates received from Medicare, private health insurance companies and employers. The ABS has undertaken the HES at five-yearly intervals since 1984. Average expenditure in this survey is calculated across all households, not just those households that spent money on specific goods or services.
Expenditure on accident and health insurance accounted for the largest percentage of total expenditure on health and medical care in each of the survey periods. However, this percentage declined markedly between 1993-94 and 1998-99 (from 50% to 41%) reflecting the decrease in hospital, medical and dental insurance from 44% of total health expenditure in 1993-94 to 35% in 1998-99. This decrease was largely due to the falling health insurance coverage, and occurred despite increases in private health insurance costs between 1993-94 and 1998-99.
While the proportion of household health expenditure spent on health practitioners' fees has remained relatively constant since 1984, expenditures on individual items have fluctuated. In particular, general practitioner doctors' fees decreased from 3.8% of total health expenditure in 1984 to 2.4% in 1998-99, while specialist doctors' fees increased from 3.9% to 7.8%.
The proportion of total health expenditure spent on medicines, pharmaceutical products and therapeutic appliances increased from 20% in 1984 to 25% in 1998-99.
Health work force
In 2002-03, approximately 371,500 people were employed in health occupations in Australia, comprising 3.9% of the total number of employed persons (table 9.26). The largest components of the health work force were registered nurses (164,700), generalist medical practitioners (36,700) and enrolled nurses (23,600).
Females comprised 73% of the health work force. The high proportion of females in the health work force is due to their predominance in registered midwifery (100%), enrolled nursing (95%), registered nursing (92%) and physiotherapy (80%). Conversely, males represented 83% of the ambulance officers and paramedics, 74% specialist medical practitioners and 66% generalist medical practitioners.
Over one-third (38%) of the health work force were employed on a part-time basis, as compared to 29% of the total number of employed persons in Australia. Of people employed part-time, 91% were female, a higher proportion than the total Australian part-time work force (73%). Males constituted 9.4% of the part-time health work force compared with 28% for the total part-time work force. The higher proportion of part-time workers in the health sector is a reflection of the greater number of females in the health work force, who are more likely to work part-time.