Australia’s health spending prognosis

By Jane Garcia in Sydney

More than 80 delegates attending the 8th Annual Health Conference held in Sydney in March heard about diverse aspects of health care from funding frameworks and the role of the private health care industry, to workforce challenges and information technology.

Health care had essentially become a luxury good, with economic growth affecting not only a nation’s capacity to respond to health care demands but also driving health care expenditure growth, according to Professor Hal Swerissen, Head of the School of Public Health at La Trobe University.

“As health expenditure increases up to a point so does life expectancy,” he said.

“However, the reality is that effect knocks out at about $1000 per capita and after that life expectancy doesn’t increase with increased health expenditure.

“The US spends about US$5000 per capita on health, Australia spends about half that and Portugal spends about a third that but you’ll notice that Portugal and Australia both have higher life expectancy than the US. In effect, what happens is that nations spend money in proportion to their capacity to do so and on their economic activity but not all of that spending is rational in the sense of outcomes achieved.”|

Professor Swerissen said Australia would experience significant growth in health expenditure and demand for health services resulting from its ageing population, technological innovation, changing social patterns and increased consumer expectations.

Over the past three decades, ageing had contributed an about 0.5 per cent increase in health care expenditure per year but that would accelerate dramatically as the baby boomers entered old age and because of the pace of improved technology.

An ageing population would interact with technology, with a significant increase in the technology used to treat and manage chronic disease, he said.

“We have an expansion in technology for increasing marginal gains,” Professor Swerissen said.

“There are real gains but they are more marginal than the concept of a vaccination program or clean water. The impact has been some increased efficiency but also increased demand.

“Although we have the marginal returns on investment, the reality is that ‘you’re a long time looking at the lid’ so people are prepared to spend their discretionary income on that last little bit of gain. As a community, the richer countries are the more likely their willingness to spend on those marginal gains.”

He said as consumers became better educated and more affluent, they had higher expectations of health care choice, responsiveness and service delivery and would be more assertive and demanding.

Another important factor for Australia’s health policy and services will be how

Australia ’s changing family structures – including a much more mobile population, smaller families and an increase in female workforce participation – will impact on the availability of informal care over time, according to Professor Swerissen.

“Only 10 per cent of people at the moment that are in the older age group and have chronic illness and disabilities that require personal care and attention are getting all of their care from formal support,” he said.

“As we cut down on the availability of informal support that means we have to equate that with formal services, which has been developed in programs like the home assisted care program. The future for that is unknown because the participation of women and its impact on family structure may stabilise, I’m not sure about that.”

Professor Swerissen said government policy would respond to the rising need for public health expenditure by becoming increasingly focused on health management, such as trying to manage chronic disease better, risk factor preventional management and maternal and child health, to impact on long-term health outcomes

Australia currently had a health system built on the idea that everyone had an injury or an infectious disease so the model of treatment was local, simple episodic care. But this model was not so effective at dealing with problems that were difficult to treat and manage, he said.

 “In terms of health system reform if we’re going to achieve that sort of management of the healthcare system, we need a much greater emphasis on early intervention and prevention in chronic disease management and coordinated access to care and care substitution,” Professor Swerissen said.

“We need to have a discussion about what is the right architecture and design for a system that deals with chronic illness. We’ve put all the emphasis on the back end and none of the emphasis on the front end.”

“The Council of Australian Governments has moved towards this, but it has not moved anywhere near enough. We essentially have a reactive, episodic system and everyone knows the problems of that.”

“It does major trauma pretty well, it does straight forward procedures pretty well, it does straight forward primary care services well; it doesn’t deal with complex, acute non-chronic and chronic care very well at all.”

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