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3.21 Expenditure on Aboriginal and Torres Strait Islander health compared to need

Why is it important?

A basic principle of equity is that health expenditure should reflect the relative needs for health services (Whitehead 1992). Health expenditure for population groups with higher levels of need should be proportionately higher. A broad assessment of how well this principle is implemented is provided by comparing differentials in health status with differences in per capita health expenditure.

Findings

On a per person basis, average health expenditure for Aboriginal and Torres Strait Islander peoples in 2010–11 was estimated to be $7,995, which was $1.47 for every $1.00 spent per non-Indigenous Australian. This was an increase from $1.39 in 2008–09 and $1.20 in 2001–02 (CPI adjusted), indicating expenditures for Indigenous Australians increased at a greater rate than for non-Indigenous Australians over this period. Some of the change since that time will reflect improvements in the accuracy and quality of estimates, rather than actual expenditure increases.

During 2010–11, Australian governments provided an estimated 91% of the funding used to pay for health goods and services for Aboriginal and Torres Strait Islander peoples compared with 68% for non-Indigenous Australians. From 2001–02 to 2010–11 Australian governments' health expenditure per Indigenous Australian grew by 65%. Those on lower incomes rely more on publicly provided services and spend less money on private services than people with higher incomes and are much more likely to present to hospitals, even for primary health care (Deeble 2009). For Indigenous Australians, expenditure on hospitals was 5.8 times the expenditure for medical services (e.g. MBS services provided by a medical practitioner) compared with a ratio of 2.1 for non-Indigenous Australians. This reflects different usage patterns and costs.

Australian Government funding was low for Medicare and medication and high for community health services. Per-person funding provided by the Australian Government for Aboriginal and Torres Strait Islander peoples was $2,149 compared with $1,558 for non-Indigenous Australians, a ratio of 1.38:1. Per-person funding provided by state and territory governments for Aboriginal and Torres Strait Islander peoples was $5,460 compared with $2,129 for non-Indigenous Australians, a ratio of 2.6:1, with the greatest expenditure in public hospitals followed by community health services.

Estimated expenditure per Aboriginal and/or Torres Strait Islander person by state and territory governments varies across jurisdictions, with the highest expenditures per person in the NT. Most variation between jurisdictions may be explained by differences in the proportion of Indigenous Australians within the jurisdiction living in remote and very remote areas. For the main health programmes, in 2010–11, expenditures were an estimated $6,616 per Indigenous Australian in remote and very remote areas compared with $4,460 in outer regional, $3,835 in inner regional areas and $3,899 in major cities. The higher expenditures in rural and remote areas are largely related to hospital services and grants to Indigenous health services, and partly reflects higher costs of delivering health care services in those areas (AIHW 2013d).

MBS expenditure per person was higher for non-Indigenous Australians than for Indigenous Australians across all remoteness areas. The gap for expenditure between Indigenous and non-Indigenous Australians was greatest in outer regional and remote areas and was smallest in major cities. PBS expenditure per person was lower for Indigenous Australians in all non-remote areas, with the biggest expenditure gap occurring in outer regional areas. PBS expenditure per person was higher for Indigenous Australians in remote areas (see measure 3.15).

By disease, the greatest difference in per person expenditure for hospital separations was due to non-communicable diseases such as mental and behavioural disorders and genitourinary diseases (including dialysis) and injuries. However, expenditure for non-Indigenous Australians was higher than for Indigenous Australians for treatment of neoplasms and musculoskeletal and connective tissue disorders. For expenditure on potentially preventable hospital separations, the greatest difference is attributable to chronic conditions such as diabetes complications, chronic obstructive pulmonary disease and rheumatic heart disease (AIHW 2013c).

In 2010–11, expenditure for primary health care services was $3,602 per person for Aboriginal and Torres Strait Islander peoples compared with $2,447 for non-Indigenous Australians. Primary health care expenditure on medical services, including those paid through the MBS, was $406 per person for Aboriginal and Torres Strait Islander peoples compared with $626 for non-Indigenous Australians. Per person expenditure on pharmaceuticals in the primary care sector was also much lower for Aboriginal and Torres Strait Islander peoples ($244 versus $751). Per person expenditure on community health services was eight times higher for Indigenous Australians—$1,967 per person compared with $236 per person for non-Indigenous Australians. Community health expenditure accounted for $1.1 billion in 2010–11 or 55% of total primary health care expenditure for Indigenous Australians. Per person expenditure on dental services for Aboriginal and Torres Strait Islander peoples was 42% lower than that for non-Indigenous Australians.

Australian Government Indigenous-specific health programme expenditure through the Department of Health has increased from $115 million in 1995–96 to $693 million in 2012–13, a growth in real terms of 292%.

In 2010–11, expenditure for secondary and tertiary health care services (excluding high-level residential care) was $4,113 per person for Indigenous Australians compared with $2,339 for non-Indigenous Australians. Hospital expenditure is the largest single expenditure item in secondary/tertiary health care services, accounting for $3,525 per Indigenous Australian. Expenditure on secondary/tertiary care medical services (mainly specialist care) was estimated to be $255 per person for Aboriginal and Torres Strait Islander peoples compared with $385 per person for other Australians.

Implications

There has been an increase in Aboriginal and Torres Strait Islander health expenditure and this expenditure has increased at a faster rate than for non-Indigenous Australians. In 2010–11, 91% of Indigenous health expenditure was government expenditure (47% state and territory and 45% Australian Government). On a per person basis, average health expenditure for Indigenous Australians in 2010–11 was 1.47 times that for non-Indigenous Australians. However, Indigenous Australians are currently experiencing rates nearly twice that of non-Indigenous Australians on a range of health measures such as mortality rates and prevalence of disease.

Funding levels for Indigenous health care will continue to grow over the next four years. From 2014–15 to 2017–18, the Australian Government will invest $3.1 billion in Indigenous-specific health programmes and activities—an increase of over $500 million compared with 2009–10 to 2012–13. In 2014–15 more than $920 million will be spent on the provision of health programmes specifically for Aboriginal and Torres Strait Islander people.

Figure 3.21-1 Estimated per person health expenditure ratio of Indigenous to non-Indigenous Australians, 1995–96 to 2010–11
chart showing Estimated per person health expenditure

Figure 3.21-1 shows On a per person basis, average health expenditure for Aboriginal and Torres Strait Islander peoples in 2010–11 were estimated to be $7,995, which was $1.47 for every $1.00 spent per non-Indigenous Australian. This was an increase from $1.39 in 2008–09 and $1.20 in 2001–02 (CPI adjusted); indicating expenditures for Indigenous Australians increased at a greater rate than for non-Indigenous Australians over this period.

Source: (AIHW 2005b; AIHW 2008b; AIHW 2009; AIHW 2013c)

Figure 3.21-2 Estimated state and territory health expenditure per person, by Indigenous status, 2010–11
chart showing Estimated state and territory health expenditure

Figure 3.21-2 shows that per person funding provided by state and territory governments for Aboriginal and Torres Strait Islander peoples was $5,460 in 2010-11 compared with $2,129 for non-Indigenous Australians. Estimated expenditure per Aboriginal and/or Torres Strait Islander person by state and territory governments vary across jurisdictions, with the highest expenditures per person in the NT. Most variation between jurisdictions is explained by differences in the proportion of Indigenous people within the jurisdiction living in remote and very remote areas.

Source: AIHW health expenditure database (AIHW 2013c)

Figure 3.21-3 Expenditure by the Australian Government on Indigenous-specific health programs, nominal $m, 1995-96 to 2012–13
chart showing Expenditure by the Australian Government

Figure 3.21-3 shows that Australian Government Indigenous specific health program expenditure through the Department of health has increased from $115 million in 1995–96 to $693 million in 2012–13, a growth in real terms of 292%.

Source: Australian Government Department of Health

Figure 3.21-4 Average health expenditure per person for primary health care and secondary/tertiary health care services, by Indigenous status, 2010–11
chart showing Average health expenditure per person

Figure 3.21-4 - In 2010–11, expenditure for primary health care services was $3,602 per person for Aboriginal and Torres Strait Islander peoples compared with $2,447 for non-Indigenous Australians. Primary health care expenditure on medical services, including those paid through the MBS, was $406 per person for Aboriginal and Torres Strait Islander peoples compared with $626 for non-Indigenous Australians. Per person expenditure on pharmaceuticals in the primary care sector was also much lower for Aboriginal and Torres Strait Islander peoples ($244 versus $751). Per person expenditure on community health services was eight times higher for Indigenous Australians—$1,967 per person compared with $236 per person for non-Indigenous Australians.

Source: AIHW health expenditure database (AIHW 2013c)

Figure 3.21-5 MBS expenditure per person, Indigenous and non-Indigenous Australians, by remoteness areas of patient's residence, 2010–11
chart showing MBS expenditure per person

Figure 3.21-5 shows that Medical Benefits Schedule (MBS) expenditure per person was higher for non-Indigenous Australians than for Indigenous Australians across all remoteness areas. The gap for expenditure between Indigenous and non-Indigenous Australians was greatest in outer regional and remote areas and was smallest in major cities.

Note: excludes allied health services, optometry and dental services.

Source: AIHW health expenditure database (AIHW 2013c)

Figure 3.21-6 Health expenditure per person on selected health services, Indigenous and non‑Indigenous Australians, by remoteness area of patient's residence, 2010–11
chart showing Health expenditure per person on selected health services

Figure 3.21-6 shows that for the main health programmes, in 2010–11, expenditures were an estimated $6,616 per Indigenous Australian in remote and very remote areas compared with $4,460 in outer regional, $3,835 in inner regional areas and $3,899 in major cities.

Note: excludes health expenditure on non-admitted patient services, patient transport, dental services, community health services other than ACCHOs, other professional services, public health, aids and appliances, research and health administration.

Note: MBS excludes allied health services, optometry and dental services.

Note: PBS excludes highly specialised drugs dispensed from public and private hospitals.

Source: AIHW health expenditure database (AIHW 2013d)