My presentation will be about health system in Australia 

PDF files has been attached to cover all element in the chapter 

also need to add How  ( Australia dealt with Covid-19 )

kindly use reliable and certified resource beside the attached file 

pictures and graphs should be add in order to have super perfect attractive presentation 

and of course free pilgrims 

Courtesy of the Central Intelligence Agency

CHAPTER 26
Australia
Gary E. Day and Bernard J. Kerr Jr.

▶ Country Description
TABLE 26-1 Australia
Nationality Noun: Australian(s)

Adjective: Australian

Ethnic
groups

English 25.9%, Australian 25.4%, Irish 7.5%, Scottish 6.4%, Italian 3.3%, German 3.2%, Chinese 3.1%, Indian 1.4%,
Greek 1.4%, Dutch 1.2%, other 15.8% (includes Australian aboriginal.5%), unspecified 5.4%

Religions Protestant 30.1% (Anglican 17.1%, Uniting Church 5.0%, Presbyterian and Reformed 2.8%, Baptist, 1.6%, Lutheran
1.2%, Pentecostal 1.1%, other Protestant 1.3%), Catholic 25.3% (Roman Catholic 25.1%, other Catholic 0.2%), other
Christian 2.9%, Orthodox 2.8%, Buddhist 2.5%, Muslim 2.2%, Hindu 1.3%, other 1.3%, none 22.3%, unspecified 9.3%
(2011 est.)

Language English 76.8%, Mandarin 1.6%, Italian 1.4%, Arabic 1.3%, Greek 1.2%, Cantonese 1.2%, Vietnamese 1.1%, other
10.4%, unspecified 5% (2011 est.)

Literacy# Below Level 1: 3.7%

Level 1: 10%
Level 2: 30%
Level 3: 38%
Level 4: 14%
Level 5: 1.2%

Government
type

Federal parliamentary democracy

Date of
independence

January 1, 1901 (federation of UK colonies)

Gross
Domestic
Product
(GDP) per
capita

$65,400 (2015 est.)

Unemployment
rate

6.2% (2015 est.)

Natural
hazards

Cyclones along the coast; severe droughts; forest fires

Environment:
current
issues

Soil erosion from overgrazing, industrial development, urbanization, and poor farming practices; soil salinity rising
because of the use of poor-quality water; desertification; clearing for agricultural purposes threatens the natural habitat
of many unique animal and plant species; the Great Barrier Reef off the northeast coast, the largest coral reef in the
world, is threatened by increased shipping and its popularity as a tourist site; limited natural freshwater resources

Population 23, 940,333 (Dec. 2015 est.)

Age
structure

0-14 years: 17.9% (male 2,089,561/female 1,982,719)
15-24 years: 13.14% (male 1,533,526/female 1,455,870)
25-54 years: 41.67% (male 4,822,083/female 4,658,371)
55-64 years: 11.82% (male 1,333,924/female 1,355,347)
65 years and over: 15.47% (male 1,628,108/female 1,891,505) (2015 est.)

Median age Total: 38.4 years
Male: 37.7 years
Female: 39.2 years (2015 est.)

Population
growth rate

1.07% (2015 est.)

Birth rate 12.15 births/1,000 population (2015 est.)

Death rate 7.14 deaths/1,000 population (2015 est.)

Net
migration
rate

5.65 migrant(s)/1,000 population (2015 est.)

Sex ratio At birth: 1.06 male(s)/female
0-14 years: 1.05 male(s)/female
15-24 years: 1.05 male(s)/female
25-54 years: 1.04 male(s)/female
55-64 years: 0.98 male(s)/female
65 years and over: 0.86 male(s)/female
Total population: 1.01 male(s)/female (2015 est.)

Infant
mortality rate

Total: 4.37 deaths/1,000 live births
Male: 4.67 deaths/1,000 live births
Female: 4.04 deaths/1,000 live births (2015 est.)

Life
expectancy
at birth

total population: 82.15 years
male: 79.7 years
female: 84.74 years (2015 est.)

Total fertility
rate

1.77 children born/woman (2015 est.)

HIV/AIDS
adult
prevalence
rate

0.17% (2015 est.)

Number of
people living
with
HIV/AIDS

28,200 (2013 est.)

HIV/AIDS
deaths

Less than 100 (2013 est.)

Data from Central Intelligence Agency. The World Fact Book, 2016: Australia. https://www.cia.gov/library/publications/the-world-
factbook/geos/as.html. Accessed December 4, 2016; Australian Bureau of Statistics. Programme for the International Assessment of
Adult Competencies, Australia, 2011–2012. Catalogue No. 4228.0.
http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/4228.0Main+Features202011-12. September 10, 2013. Accessed 2016.

History
Australia is a vast, ancient island continent. It was first settled more than 50,000 years ago by migrating
tribes making the short trip across from Southeast Asia to the northern parts of the continent. These
Aboriginal and Torres Strait Islander peoples spread across the land, including the island of Tasmania to
the south, and are thought to have numbered around 350,000 at the time of first European contact in the
17th century.1

After a period of exploration by Dutch, French, and English explorers, the eastern parts of Australia were
claimed in 1770 by Captain James Cook in the name of Great Britain. Initial settlement quickly followed.
The first fleet of 11 ships carrying 700 convicts and 400 guards and officials arrived in January 1788 to
establish the penal colony of New South Wales. Five more self-governing British crown colonies were
then established during the early part of the 19th century. On January 1, 1901, after a countrywide
referendum, the six colonies federated, and the Commonwealth of Australia was formed.

Australia’s history since British settlement in 1788 has been marked by several important events. The
discovery of gold in the early 1850s brought many immigrants to Australia from Britain, Ireland, Europe,
North America, and China. This and subsequent gold discoveries heralded a period of considerable
prosperity, population growth, and spread. Involvement in two world wars and in other major conflicts of
the 20th century, notably Korea and Vietnam, while creating a large loss of life (mainly young men) and a
strain on national resources, helped create a sense of national unity and identity.

Colonization, however, severely disrupted Aboriginal society and economy—epidemic disease caused an
immediate loss of life, and the occupation of land by settlers and the restriction of Aboriginal and Torres
Strait Islanders to reserves disrupted their ability to support themselves. Over time, this combination of
factors had such an impact that by the 1930s only an estimated 80,000 of this population remained in
Australia.1

A massive program of European immigration after World War II—some 2 million people arriving between
1948 and 1975—saw Australia’s population grow substantially, helping to fuel a lengthy period of
economic prosperity and growth. Discovery and exploitation of the country’s natural and mineral
resources have underpinned Australia’s development and wealth and encouraged rapid development of
agricultural, mining, and manufacturing industries up until 2009.

Most recently, a downturn in global commodities has seen sharp falls in the export earnings from
Australia’s natural resources, putting pressure on revenues that underpin the national economy. Similarly,
Australia is at a nexus in terms of large scale manufacturing due to the relatively small size of the
Australian market and cost of local salaries and wages compared to less expensive imports. With large-

https://www.cia.gov/library/publications/the-world-factbook/geos/as.html

http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/4228.0Main+Features202011-12

scale industries, such as motor vehicle manufacturing, ceasing in 2017, Australia is looking to redefine its
economy with new markets and approaches to manufacturing and exports.

Size and Geography
Australia has a land area of some 7.7 million square kilometers. This is about twice the size of the
European Union and is close to the size of the United States (excluding Alaska). Situated in the southern
hemisphere between the Indian and Pacific oceans, a large proportion of the continent (around 40%) lies
within the tropics (see map in FIGURE 26-1). Distances are huge, some 4,000 kilometers from west
(Steep Point in Western Australia) to east (Byron Bay in New South Wales) and 3,680 kilometers from
north (Cape York in Queensland) to south (Wilson’s Promontory in Victoria).

FIGURE 26-1 Map of Australia

© Bardocz Peter/Shutterstock

Beyond its continental shores, Australia also has jurisdiction over a large number of islands, most notably
the island of Tasmania, but also many others such as Melville Island (off the Northern Territory),
Kangaroo Island (South Australia), King and Flinders Islands (Tasmania), the Torres Strait Islands
(Queensland), and more distant islands including Macquarie Island (well south of Tasmania), Christmas

Island (off Western Australia, and Lord Howe Island (off New South Wales).

Government and Political System
Since achieving nationhood in 1901, Australia has had a federal system of government whereby power is
divided among the Commonwealth Government and the governments in each of Australia’s six states and
two territories. The form of government reflects the country’s British heritage, a constitutional monarchy
with the British sovereign as head of state (currently Queen Elizabeth II). The monarch is represented
federally by the governor-general and at state levels by state governors.

Separation of powers—legislative, executive, and judicial—is embedded in the system of government.
This is well described by

Healy et al.2

The Parliament makes the laws, the Government implements and supervises, and the Courts interpret them. The legislative power
of the Commonwealth is vested in a Federal Parliament. The executive power is vested in the Queen and is exercisable by the
Governor-General as the Queen’s representative. Judicial power is exercised by the High Court of Australia and the Federal Court of
Australia, and other state courts exercising federal jurisdiction.

Healy et al.2

The Commonwealth Parliament, located in the nation’s capital, Canberra (in the Australian Capital
Territory), is bicameral. Elections for the two chambers, the House of Representatives (the lower house)
and the Senate (the upper house), take place every three years. Electorates in the 150-seat lower house
are allocated by population size, and members are elected for 3 years with a preferential voting system.
Senators in the upper house are allocated equally across the states. Each state is represented by 12
senators and each territory by 2, elected for 6 years by proportional representation. Through a system of
rotation, half of the Senate retires every 3 years and is replaced (or reelected) at the time of a general
election for House of Representatives members.3

The political party that wins the majority of seats in the lower house is empowered to form a government.
Since 1944, when the Liberal Party was formed by Robert Menzies, successive Commonwealth
Governments have been formed by the Australian Labor Party and by a coalition of the Liberal and
National parties. Over the last nine years there has been a succession of prime ministers and changes of
government from Coalition to Labor and now back to Coalition. Over this time Australia has seen six
changes of prime minister (1996–2007 John Howard, 2007–2010 Kevin Rudd, 2010–2013 Julia Gillard,
2013 Kevin Rudd, 2013–2015 Tony Abbott, and since 2015 Malcolm Turnbull). While the current federal
government is led by the Coalition (Liberal and National Parties), there is a mix of Labor Party and
Coalition governments across the seven states and territories. Another interesting and unusual feature of
Australia’s system of government is that voting is compulsory for all enrolled citizens aged 18 years and
over, in each state and territory and at the federal level.

Macroeconomics
During the 1990s and early 2000s, Australia’s economy performed particularly well, boasting one of the
Organisation for Economic Co-operation and Development’s (OECD) fastest growing economies during
that period. Significant reforms since the 1980s, including financial deregulation, floating the exchange
rate, free trade agreements, stronger trade ties with Asia, lowering of tariffs, and changes to the tax
system, have helped to produce a diversified and internationally competitive economy with per capita
gross domestic product (GDP) (A$50,026/US $37,828 in 2016) on par with several major European
economies, such as the United Kingdom, Germany, and Canada.

An abundance of natural resources has enabled Australia to become a major exporter of agricultural
products, minerals, metals, and fossil fuels. Much of Australia’s economic focus has been on the
economies of the Asia-Pacific region. The boom in mining exports in recent years, driven largely by

China’s rapid growth, has now slowed substantially, placing pressure on natural resource revenues and
national balance of payment emergence as an economic force in the world economy.

A short summary of Australia’s most recent economic statistics reveals that (1) inflation has remained
steady at 1.30% per year through June 2016, (2) unemployment has been climbing slowly in line with
slowing economic growth (5.70% in June 2016), (3) the exchange rate has been around A$0.74 to US $1,
and (4) cash rates have been at a historically low level of 1.75%. The Reserve Bank of Australia has
tightened monetary policy by reducing interest rates in an attempt to stimulate the domestic economy.4 As
to the future, the Australian economy is entering a phase of significant international uncertainty. The
global economy, and in particular the Asian economies that Australia trades with, is slowing, and this is
substantially affecting all Australians with borrowings. In addition, rising unemployment, nationwide
droughts affecting agricultural production, falling commodity prices, and major shifts in large-scale local
manufacturing are all creating economic issues for the national government. As a result, Australia’s strong
economic footing will be at risk. Australia’s economic growth has slowed considerably over the last eight
years, and with the government carrying larger burdens of national debt, there will be pressure on our
national credit ratings.

Demographics
Australia’s population was close to 24.0 million in December 2015,5 a 1.0% increase over the previous
year. Around half of this increase is due to natural increase (births less deaths) and half to net overseas
migration. Since federation in 1901,6 the population has increased by just over 20.0 million people; in the
decade from 2006 to 2016, the population increased by around 2.4 million.5,7

The majority of Australians are of European descent, a reflection of early settlement from the British Isles
during the colonial era and to post-federation immigration from Europe. More recently, an increasing
number of immigrants to Australia are from Asia and Oceania. Australia has one of the largest proportions
of immigrant populations in the world. More than 23% of Australians were born overseas.5

The mainland Aboriginal and Torres Strait Islander population was 669,900 (3.0% of the total population)
in 2011.8 In 2001 this population was estimated at 534,770. Over the decade to 2011 there has been an
annual growth rate in population of between 2.0% and 2.3% per year.8

Australia’s population is highly urbanized with two-thirds living in major cities around the coastal fringe.
The state capitals are all coastal: Sydney, Melbourne, Brisbane, Adelaide, Perth, and Hobart. The
exception is the nation’s capital, Canberra, which is inland from Sydney but still within 100 kilometers from
the coast.

Although Australia has no official state religion, the 2011 census provides a snapshot of the religious
beliefs of the population. Results show that 61.0% of Australians called themselves Christian, of which
25.0% identified themselves as Roman Catholic and 17.0% as Anglican. Followers of non-Christian
religions numbered 7.2% (Buddhism, Islam, Hinduism) and 22.0% were categorized as having “no
religion” (which includes nontheistic beliefs, such as humanism, atheism, agnosticism, and rationalism).9

▶ Brief History of the Healthcare System

Pre–World War II
A range of influences have shaped the complex system of health care now in place in Australia. From

early beginnings as a convict settlement in the colony of New South Wales in 1788, health services in
Australia have evolved into a mix of public and private delivery, based largely on British and American
models and shaped inevitably by unique political, economic, and social events.

The first 100 or so years of European settlement were characterized by a somewhat haphazard mix of
private medical services and government-funded hospitals for convicts, paupers, and the impoverished.
Support for health costs was also forthcoming from a range of benevolent and charitable organizations
and friendly societies. During the 19th century, colonial governments across the country also assumed
responsibility for the maintenance of public health, such as sanitation and the control of infectious
diseases, through the passage of comprehensive public health acts modeled on British legislation of the
time.10

The coming of nationhood in 1901 brought with it a federal system of government under which
responsibility for the provision of health services was shared among the Commonwealth Government and
the governments of the six states and two territories.

Since World War II
Initially, the Commonwealth’s health responsibilities were restricted to quarantine matters only, but an
amendment to the Constitution in 1946 enabled the Commonwealth to make laws with respect to (among
other things) “pharmaceutical, sickness and hospital benefits, medical and dental services, but not so as
to authorize any form of civil conscription.” This latter clause was inserted into the amendment following
pressure from the medical profession, a response no doubt to the perceived threat of a British-style
National Health Service being introduced in Australia.

Prohibition of civil conscription, interpreted to mean that medical practitioners could not be compelled to
work for the government, not only helped to entrench the predominant fee-for-service payment system for
medical services but also played a part in delaying the introduction of the Commonwealth-funded
prescription insurance system under which all Australians have access to subsidized life-saving
medicines. As a result, the Pharmaceutical Benefits Scheme (PBS), as it is known, first mooted in 1945,
was not fully implemented until the Pharmaceutical Benefits Act passed through Federal Parliament in
1948. Passage of this act had not been easy. It was passed twice and overturned once; it was the subject
of a national referendum, constitutional change, and fierce public debate on the powers of the
Commonwealth Government.

The 1946 constitutional amendment also enabled the Commonwealth Government to enter into funding
agreements with the states for the provision of free public hospital care for patients in public wards. This
arrangement, intended to protect patients from the high cost of hospital care, has remained the basis of
hospital financing agreements between the Commonwealth and the states ever since.

The other main features of the health system (given effect through the 1953 National Health Act) were the
pensioner medical services arrangements and the medical benefits scheme. The former ensured the
provision of free health services to aged and invalid pensioners through agreements with the Australian
Medical Association, whereas the latter subsidized medical costs for members of nonprofit health
insurance schemes.

These four pillars of Australia’s health system—(1) subsidized medicines, (2) Commonwealth funding for
state hospitals, (3) subsidized health care for pensioners, and (4) subsidized private health insurance—
remained in place largely unaltered for the next 20 years, until the introduction of a national health
insurance scheme known as Medibank in 1975. Not surprisingly, the move from a system funded
predominantly through subsidized private insurance to one funded predominantly by government was met
with strident opposition from vested interests and political opponents alike. After rejection of the
necessary legislation by the opposition-controlled Senate in 1973 and 1974, dissolution of both houses of

Parliament and a subsequent general election, Medibank was finally enacted in July 1974 and came into
operation a year later. The major elements of the new scheme were subsidized medical services for
patients and free access to public hospital care through hospital cost-sharing arrangements among the
Commonwealth and the state and territory governments.

From 1975, a period of conservative government ensued (the Fraser-led Liberal-National Coalition),
during which several changes were made to Medibank, which saw a gradual return to greater reliance on
private health insurance for medical services.10 Election of a Labor Party government in 1983 then
heralded the return of a universal tax-funded national health insurance scheme known as Medicare. The
subsequent change of government in 1996 did not materially affect these arrangements, which now enjoy
bipartisan political support and widespread public support.

▶ Description of the Current Healthcare System
The Australian healthcare system is complex with numerous providers of services, funding arrangements,
and regulatory mechanisms. The overall aim of the system is to provide all Australians with ready access
to healthcare services at low cost or no cost at all. Service providers include medical practitioners
(physicians), various health professionals, private and public hospitals, and government and
nongovernment agencies. Responsibility for funding is shared among all levels of government and the
nongovernment sector, such as private health insurers and individual consumers.

The Commonwealth Government is responsible for funding the provision of medical services,
pharmaceutical benefits, aged residential care services, and disability services, as well as public health,
research, and national information management. The state and territory governments are responsible for
delivery and management of a range of health services, such as public hospital services, mental health
programs, community support programs, and women’s and children’s services.

Facilities
Medicare is the centerpiece of Australia’s health system. It is a universal, publicly funded health insurance
system that allows all Australians to access affordable high-quality health care. In place in its present form
since 1984, Medicare is financed by general taxation revenue and a Medicare levy based on taxable
income. Medicare provides free or subsidized treatment by medical practitioners (physicians) and grants
to the states and territories to assist with the cost of running public hospitals. The Commonwealth jointly
funds public hospitals with the states so that these services are provided free of charge to patients. In
2011–2012, there were 1,345 acute care hospitals throughout Australia, of which 753 were public
hospitals containing a total of 56,582 beds.11 In that same year, there were 592 private hospitals in
Australia (TABLE 26-2), with a total of 24,362 beds.11 There were also a small number of public
psychiatric hospitals containing a total of 1,705 beds.

TABLE 26-2 Australia’s Hospitals and Available Beds, 2011–2012
Public acute Public psychiatric Private hospitals Total

Hospitals 753 17 592 1,362

Available beds 56,582 1,838 24,362 82,782

Available beds per 1,000 population 2.6 0.1 1.3 4.0

Data from Australian Institute of Health and Welfare. Australia’s Health 2014. Canberra; 2014.

Workforce
In common with many other countries around the world, Australia is experiencing significant shortages of
health professionals across the spectrum of occupations. This is despite significant growth in the overall
health workforce in recent years. Between 2006 and 2011, the total number of people employed in health
occupations grew by 22.1% from 956,150 to 1,167,633.11 TABLE 26-3 shows total numbers employed in
selected health occupations, as well as rates per 100,000 population. Australia has a similar number of
practicing medical practitioners per capita as the OECD average and a higher per capita number of
practicing nurses.11

TABLE 26-3 Australia’s Health Workforce, Selected Occupation, 2012
Occupation Number Per 100,000 population

Nurses and midwives 290,144 1,124

Medical practitioners 79,653 374

Pharmacists 21,331 89

Physiotherapists 20,081 80

Dental practitioners 17,283 74

Occupational therapists 7,231 45

Data from Australian Institute of Health and Welfare. Australia’s Health 2014. Canberra; 2014.

Health workforce shortages will continue into the future due in part to an aging population and lower
numbers coming into the health workforce due to falling fertility rates in the 1980s and 1990s. For
comparison, the two largest components making up the health workforce are nurses and midwives and
doctors; almost two out of five nurses and midwives are 50 years or older, with one in four medical
practitioners being 55 or older.12

Technology and Equipment
Australia’s fortunate status as a wealthy developed nation has enabled it to build and foster a health
system with access to advanced, up-to-date medical and surgical technologies and health facilities.
Although direct measures of the stock and spread of these technologies and equipment are not available,
it is possible to identify particular technologies—new pharmaceutical listings for example—and to
measure their impact on health costs and (in some instances) health outcomes.

The scale of the medical technology industry in Australia is immense, with an annual turnover of
approximately A$10.0 billion (US $7.6 billion) in 2012, imported goods to the value of A$4.4 billion (US
$3.3 billion), and exported goods worth A$1.9 billion (US $1.4 billion).13 From these figures alone,
regulation and monitoring has been necessary to keep health expenditure in check and to ensure that
only the most effective and efficient technologies are approved for use. An earlier study by the
Productivity Commission (a Commonwealth Government agency) into the impacts of advances in medical
technology in Australia14 concluded that (1) advances in medical technology in Australia have brought
large benefits but have also been a major driver of increased health spending in recent years and that (2)
overall, advances in medical technology arguably have provided value for money, particularly as people
highly value improvements in the quality and length of life.

The predominance of public funding in Australia’s health system brings with it various rationing and gate-
keeping mechanisms aimed at controlling the cost impact of new technologies. The underlying philosophy
of these mechanisms is for evidence-based health care. New drugs and medical procedures, for example,
must be assessed as cost-effective before they can be subsidized for listing on the PBS or the Medicare

Benefits Schedule. Indeed, Australia was the first country in the world to require drug manufacturers
seeking to have a new drug listed on the PBS to demonstrate its cost-effectiveness.

Another feature of Australia’s system is the drive to increase the diffusion and use of information
technology at all levels of health care. There is high-level commitment from all levels of government to
encourage the uptake of information technology to improve clinical and medical practice. Most physician
practices are computerized both for clinical and administrative purposes, and the introduction of a national
electronic medical record is currently being implemented, albeit with a slow uptake. This is mainly due to
an opt-in system for patients. This national electronic medical record is intended to reduce errors, adverse
events, and duplication of services, reduces the incidence of inappropriate treatments, and allows for
access across Australia. There remains considerable scope for progress in this area, which to date has
been delayed by understandable concerns about patient privacy, confidentiality and cost.

▶ Evaluation of the Healthcare System
Over the last decade there has been an awareness of and emphasis on health system performance in
Australia. An indication of this was the establishment in 2011 of the National Health Performance
Authority (NHPA). The NHPA was responsible for monitoring, reporting, and benchmarking hospital
performance and a range of other health performance measures, including national reporting on
MyHospital and MyHealthyCommunities. In 2016, the NHPA ceased operations, and its role and functions
were taken up by the Australian Institute of Health and Welfare and the Australian Commission on Safety
and Quality in Health Care.15 The performance criteria cover a wide range of indicators, including equity,
effectiveness, appropriateness, efficiency, responsiveness, accessibility, safety, continuity, capability, and
sustainability. Also high on the list in any evaluation of health system performance are measures of health
status and health outcomes.

Cost
Health spending in Australia totaled nearly A$155 billion (US $117 billion) in 2013–2014 or A$6,639 (US
$5025) per person.16 This represents 9.7% of Australia’s GDP, which puts Australia around the average
in comparison with other OECD countries, including Norway, Finland, and Greece; below countries, such
as the United States, Canada, Japan, and New Zealand; and above the United Kingdom. TABLE 26-4
shows how spending on health services in Australia has progressed in the past decade.

TABLE 26-4 Trends in Health Spending in Australia, 2003–2014
2003–2004 2008–2009 2013–2014

Total health expenditure, current prices
(A$ million)
(US$ million)

94,932
38,864

125,705
55,029

154,633
82,633

Total health expenditure as a percentage of GDP 8.53 9.09 9.78

Total per capita health expenditure, current prices
(A$)
(US$)

3,708
2,026

5,328
2,854

6,639
3,990

Public share of total health expenditure (%) 67.3 68.8 67.8

Data from Australian Institute of Health and Welfare. Health Expenditure Australia 2013–2014. Canberra; 2015.

In the ten years from 2003–2004 to 2013–2014, total health expenditure tended to grow faster in real
terms than GDP, with an average annual real growth of 5.0% being 2.2 percentage points higher than the
2.8% for GDP. In 2013–2014, growth in real health expenditure was just 0.6 of a percentage point higher

than GDP (3.1% compared with 2.5%, respectively). In the previous year, real health expenditure growth
was 1.4 percentage points lower than GDP growth (1.1% compared with 2.5%).16(p8)

Funding and responsibility for Australia’s health system is a complex blend of purchasers and providers
and is funded predominantly from taxation sources with federal, state, and territory governments,
contributing close to 70% of all health spending (see FIGURE 26-2).

FIGURE 26-2 Health Services—Funding and Responsibility, 2014

Reproduced from Australian Institute of Health and Welfare. Australia’s Health 2014. Canberra; 2014. http://www.aihw.gov.au/australias-
health/2014/health-system/#t2. Creative Commons license available at https://creativecommons.org/licenses/by/3.0/au/

Nongovernment funding is drawn mainly from out-of-pocket payment by individuals and health insurance
funds, which help to cover the cost of treatment in private hospitals and a range of other medical and
ancillary health services.

http://www.aihw.gov.au/australias-health/2014/health-system/#t2

https://creativecommons.org/licenses/by/3.0/au/

Funding from governments, individuals, private insurance, and other sources remained relatively
proportional until 2006 (see FIGURE 26-3), when the Australian government started to bear a larger
percentage of overall funding. In recent times, funding for health has become an area for strong debate
among the Commonwealth and the states and territories. There has been strong disagreement about the
adequacy of health funding from the Commonwealth, particularly in a time where the economy is
shrinking and the population is ageing. Attempts to curb the growth in health funding in recent years have
been largely unsuccessful.

FIGURE 26-3 Source of Funds for Health, 2001–2002 to 2011–2012

Reproduced from Australian Institute of Health and Welfare. Australia’s Health 2014. Canberra; 2014. http://www.aihw.gov.au/australias-
health/2014/health-system/#t2. Creative Commons license available at https://creativecommons.org/licenses/by/3.0/au/

The public share of health spending has varied markedly over the years, reflecting the major policy
changes of the federal government. The introduction of Medibank in 1975 saw the public share jump from
57.0% to 73.0%; this share then declined to 63.0% in the late 1970s with the gradual dismantling of
Medibank by the Fraser Coalition government. The public share of health spending jumped to 72.0% after
the introduction of Medicare by Hawke’s Labor Party government in 1984. In 2013–2014, the public share

http://www.aihw.gov.au/australias-health/2014/health-system/#t2

https://creativecommons.org/licenses/by/3.0/au/

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of health funding was 67.8%, with the nongovernment sector (insurance funds, individuals, and other)
accounting for 32.2% of funding.16

FIGURE 26-4 shows that the greatest proportion of health funding in 2011–2012 was spent on hospitals,
followed by primary health care and other recurrent costs. Component costs, public hospitals,
medications, and medical services were the single largest contributors to health expenditure.16

FIGURE 26-4 Proportion of Health Funding in Australia, 2013–2014

Reproduced from Australian Institute of Health and Welfare. Australia’s Health 2014. Canberra; 2014. http://www.aihw.gov.au/australias-
health/2014/health-system/#t2. Creative Commons license available at https://creativecommons.org/licenses/by/3.0/au/

Under Medicare, patients are entitled to access public hospital care at no charge. This includes free
medical and surgical care from physicians and surgeons, accommodation, meals, and other health
services while in the hospital if they are admitted as public patients.

http://www.aihw.gov.au/australias-health/2014/health-system/#t2

https://creativecommons.org/licenses/by/3.0/au/

In addition to having a publicly funded social health insurance scheme (Medicare), Australians can also
subscribe to private health insurance. If privately insured patients choose to be admitted as private
patients, then additional fees and charges are likely. In these instances, the patient can choose their own
physician/surgeon. When in private hospitals, patients are charged fees for accommodation, nursing care,
and other hospital care. They are also charged separately for any medical and surgical treatment. Private
health insurance is available to cover such expenses (and ancillaries, such as optical, dental and allied
health) if people wish to subscribe. Any premiums are additional to the Medicare levy (2.0% of income,
with some reductions and exclusions), which all Australian taxpayers are obliged to pay.17 In recent
years, the government has introduced a number of policies to reduce the pressure on the public health
system penalizing higher earning taxpayers with an additional Medicare surcharge if they do not take out
private insurance.

Under Medicare, the government pays a flat rate per physician consultation. A physician can choose to
charge the patient either that amount or more. A patient pays any difference. Other services funded
through Medicare include services from participating optometrists and services delivered by a practice
nurse on behalf of a general practitioner and for certain services from eligible dentists and allied health
practitioners. Claims can be made by post or over the counter at Medicare offices, or the physician can
“bulk bill” patients. In this case, physicians send accounts directly to Medicare and accept the Medicare
rebate as full payment for the service. There is no cost to the patient. Just over 8 of 10 physicians “bulk
billed” the government for their patient consultations in 2013–2014.18

In 2015, there were 373.4 million Medicare services, an average of 15.4 services per person, at a total
cost of A$20.5 billion (US $15.7 billion).19 The main services were general practitioner consultations,
followed by pathology tests, diagnostic imaging, and specialist physician attendances.

As with Medicare, the PBS is also a central and unique feature of Australia’s health system. Since its
inception in 1948, the PBS has consistently provided reliable, timely, and affordable access to important
medicines for all Australians. In so doing, the PBS has proven itself to be one of the best systems in the
world. Medicines on the Australian market are not only of high quality but also are less costly than in most
other countries. Under the scheme, consumers can access more than 2,300 brands of prescription
medicines that they are assured have been rigorously tested and found to be cost-effective. These
medicines are available from a network of 5,000 independently owned community pharmacies spread
across all parts of Australia.

Currently, most of the population (general consumers) pay a maximum of A$38.30 (US $28.97) for any
one prescription item. Concessional patients and pensioners pay only A$6.20 (US $4.70) per item. There
are two safety net thresholds—one for general patients and the other for concessional patients. From
January 1, 2016, the general patient safety net threshold was A$1,475.00 (US $1,126.00). When patients
and/or their families reach this amount, they can apply for a Safety Net Concession Card and pay only
A$6.00 (US $4.52) per prescription for the rest of the calendar year. The concessional safety net
threshold is A$372.00 (US $284.00). Once patients and/or their families reach this amount, they can
apply for a Safety Net Entitlement Card and receive items free of charge for the rest of the calendar
year.20

The cost of the scheme has risen significantly over the years. In 2005, its first year of operation, around
300,000 prescriptions for PBS medicines were dispensed, at a cost to the Commonwealth Government of
A$150,000 Australian dollars (US $113,000). By 1960, this had grown to 24 million prescriptions at a cost
of A$44.00 million (US $33.10 million). In 2006–2007, the PBS covered 170.00 million prescriptions at a
total cost (government and private) of A$6.70 billion (US $5.04 billion). By 2014, this had risen to A$9.10
billion (US $6.85 billion). The total PBS prescription volumes increased by 6.3% from 2013 to a total of
209.80 million in 2014. Government expenditure amounted to 82.5% of the total cost of PBS
prescriptions. The remainder was patient contributions that amounted to A$1.50 billion (US $1.13 billion).
The average dispensed price per prescription of PBS medicines decreased to A$42.20 (US $31.80) for
the year ending June 2014. The average government cost of these scripts was A$34.83 (US $26.23) for

the same period.19

There are several reasons for this increasing cost. First, the number of available medicines continues to
grow. As new drugs come onto the market and get approved, they are added to the list of subsidized
medications. Second, the new generation drugs listed on the PBS are more costly and doctors tend to
prescribe the newer, more potent, and more effective products. Thus, the mix of drugs being prescribed
by doctors is increasing in cost. Third, Australia’s aging population and chronic disease profile is driving
the use of more medications. The number of prescriptions dispensed per person increases with age as
medicines play an important role in improving the quality and longevity of people’s lives. Fourth, the
number of people eligible for concessional and pensioner pharmaceutical benefits is increasing, which in
turn adds to the cost for the PBS.

Quality
Quality of care is but one of a number of factors, in addition to socioeconomic, environmental, behavioral,
biomedical, and genetic factors, that help to determine the health and well-being of the population. Quality
is difficult to define and even more difficult to measure. It can be subjective, such as an individual patient’s
view of the quality of a particular encounter with the health system or the wider public’s view of the
performance of their local hospital or ambulance service.

A key biennial government publication, Australia’s Health, outlines the health improvement of the nation
over time. Since Australia’s Health was first published over 25 years ago, Australia’s ranking among
comparable countries has improved on most measures: (1) Australia’s life expectancy at birth (84.8 years
for females and 79.8 years for males in 2016) placed Australia among the top 6 nations in the world. (2)
Marked improvements in ranking are evident for mortality rates from coronary heart disease, stroke, lung
cancer, and transport accidents. (3) Rates of smoking continue to fall, moving Australia into the “best
third” of OECD countries on this measure. (4) Australia also scores well and has improved rankings on
self-rated health, dental health, various mortality measures, and lower alcohol consumption.

On the downside, Australia’s ranking has fallen on measures of mortality from suicide, diabetes,
respiratory diseases, and infant mortality. The ranking for obesity has not changed, with 63% of
Australians classified as overweight or obese.11 Australia is among the “worst third” group of OECD
countries on this measure.

Australia’s health system has also been compared to other developed health systems worldwide.
Australia had mixed results when compared internationally, including:

Ranked 4th out of 11 for access to care on the same or next day appointment with a doctor when sick (behind Germany, New
Zealand, and the Netherlands),
Ranked 4th worst when waiting four or more months for surgery (behind Norway, Canada, and New Zealand),
Ranked 5th out of 11 for experiencing a medical/medication or lab error in the last two years (19%),
Ranked 5th out of 11 for experiencing a gap in discharge planning in the last two years (55%), and
Ranked 4th out of 11 for a health system that works well with only minor changes required (behind the United Kingdom,
Switzerland, and the Netherlands).22

Access
Equity of access to health services is one of the main objectives of Australia’s health system. In particular
is one of the underpinning principles of the universal taxpayer funded Medicare and Pharmaceutical
Benefits (PBS) systems. Both are funded through general taxation as well as by a 2% Medicare levy on
income. Patients also contribute through a system of structured co-payments for prescription medicines.
For physician services, patients pay any gap between the amount that the physician charges and the
Medicare rebate for the service.

Access to public hospital services is available for Australian citizens who can elect to have free
accommodation, medical and nursing care, as well as necessary medicines as public patients. Patients
can also choose, if they wish, to be treated in a private hospital, or as a private patient in a public hospital.
They are then required to meet the associated medical, surgical, and accommodation costs with the
assistance of private health insurance and some assistance from Medicare.

Access to a wide range of prescription medicines is made possible through the PBS. As described earlier,
patients are required to contribute to the cost of their medicines through a system of co-payments. In
addition, a safety net is in place that provides further protection for individuals and families against the
financial burden associated with high use of medicines. Access to pharmaceutical services is also
facilitated through a set of regulations that govern where Australia’s nearly 5,000 community pharmacies
are located. This is particularly important in rural and remote parts of Australia where population density is
low and communities are few and far between.

In 2013, the federal government commenced the centrally funded National Disability Insurance Scheme.
Currently under trial in multiple sites across Australia, this scheme will provide all Australians under the
age of 65 (who have a permanent, significant disability) with reasonable and necessary supports to be as
active as possible in the community. Over 460,000 Australians with disabilities, families, and caregivers
will have access to the scheme.

▶ Current and Emerging Issues and Challenges
Australia is fortunate to have a health system that features a sophisticated infrastructure, advanced
medical technologies, and highly trained health professionals, all of which have helped to deliver high
levels of health across most sectors of the population. Several challenges and emerging issues are
apparent in the early years of the 21st century. The final section of this chapter focuses on four of these:
(1) the challenges of an aging population, (2) the inequality of Aboriginal and Torres Strait Islander health,
(3) the twin health challenges of increasing levels of obesity and diabetes, and (4) the organizational and
structural challenges that the government faces with a publicly funded healthcare system.

An Aging Population
“Demography shapes destiny” was one of the catchcries of former Australian treasurer, Peter Costello,
referring to the inevitability of the aging of the population in the country, described elsewhere as “a quiet
transformation, because it is gradual, but also unremitting and ultimately pervasive.”23 Falling fertility, the
aging of the baby-boomer generation, declining mortality, and increased life expectancy are combining to
increase the number and proportion of the population that is older, that is, those aged 65 years or more.
Over recent decades population growth has been stronger among older age groups compared with
younger age groups. Between 1973 and 2013, the number of people aged 65 and over tripled, from 1.1
million to 3.3 million. There was a six-fold increase in the number of people aged 85 and over, from
73,100 to 439,600. Over the same period, the number of children and young people (aged under 25) rose
by just 22% from 6.1 million to 7.5 million people. To highlight this point, in 2013, people aged 65 and
over comprised 14% of the population compared with 9% in 1973. People aged under 25 comprised one-
third (32%) of the population in 2013 compared with almost half (45%) 40 years earlier.11(p11)

The implications of an aging population for healthcare costs have been the focus of much analysis and
commentary in the past two decades. The upward pressure on health costs applied by an aging
population results both from the fact that older people tend to have a greater need for health services and
that they use those services more often than other age groups. The other major drivers of rising health
costs are the increasing cost and availability of new health technology, as well as burgeoning consumer
demands and expectations. Consumers increasingly expect and demand the latest and best, whether it is

the latest medical/surgical advance or the latest “miracle” drug.

Growing older is accompanied by an increasing incidence of nonfatal diseases of aging and chronic
degenerative diseases. These include arthritis, diabetes, heart disease, cancer, and dementia. Such
diseases can severely impact the quality of life and independence of older people. They also bring with
them markedly increased utilization of health services, such as medications, doctor consultations, and
hospital admissions.

Although there are many who believe an aging population is a crisis in the making, the prevailing view is
not so pessimistic. Population aging is gradual. Governments, health planners, and administrators have
plenty of time to develop new policy approaches to address the challenges ahead. The Productivity
Commission, for example, points out23 that future productivity growth will ensure that Australians are
much richer and are better able to afford the costs associated with aging. Moreover, although people are
living longer, they are generally healthier than previous generations. In the last few years more discussion
has focused on healthy aging and contributing to the workforce in later life.

The government’s Intergenerational Report24 concluded that Australians will live longer and continue to
have one of the longest life expectancies in the world. For 2054–2055, life expectancy at birth is projected
to be 95.1 years for men and 96.6 years for women. “Not only will Australians live longer, but
improvements in health mean they are more likely to remain active for longer. ‘Active ageing’ presents
great opportunities for older Australians to keep participating in the workforce and community for longer,
and to look forward to more active and engaged retirement years. There will be fewer people of traditional
working age compared with the very young and the elderly. This trend is already visible, with the number
of people aged between 15 and 64 for every person aged 65 and over having fallen from 7.3 people in
1974–1975 to an estimated 4.5 people today. By 2054–2055, this is projected to nearly halve again to 2.7
people.”24(pviii)

Aboriginal and Torres Strait Islander Health
One of the major challenges for all levels of government, but particularly the federal government, is the
state of health of Australia’s Aboriginal and Torres Strait Islanders.

This population (there were approximately 73,600 in Australia in 2014) dies on average 10 years earlier
(10.6 years for males and 9.5 years for females) than other Australians.25 While the life expectancy gap
has decreased over the last decade, by any measure it is still unacceptable. On almost every measure of
health, the gap between indigenous and nonindigenous people in Australia is significant. In terms of
health disparity, Aboriginal and Torres Strait Islanders have:

Twice the rate of hospitalization for injury or poisoning,25
Ten times the rate for dialysis,25
Five times the likelihood of dying from endocrine, nutritional, and metabolic conditions (including diabetes)
Three times the likelihood of dying from digestive conditions,11
Age-standardized death rates that are five times as high for the 35–44 age group,11
1.5 times the rate of death from cardiovascular disease,25
Twice the death rate for children aged 0–4,11 and
1.5 times the likelihood of becoming obese, twice the likelihood of smoking, of being physically inactive, and of having poor
nutrition (10% higher).11

Much of this disparity in health status is due to a range of social conditions that affect health, including the
inadequate and overcrowded living conditions of many Aboriginal and Torres Strait Islander peoples that
do not satisfy the basic requirements of shelter, safe drinking water, and adequate waste disposal.

Around A$4.6 billion (US $3.5 billion) was spent on health services for this population in 2010–2011,

about 3.7% of all health spending.25 This equates to approximately A$7,995 (US $6,093) per Aboriginal
and Torres Strait Islander, compared with A$5,437 (US $4,114) for each nonindigenous person. Between
2008–2009 and 2010–2011, government health expenditure for indigenous peoples increased by A$847
per person (US $646, adjusted for inflation)—an average annual growth rate of 6.1%. The corresponding
growth rate for nonindigenous people was 2.6%.25(p150)

In many regards, health services for Aboriginal and Torres Strait Islanders are often more costly to
deliver, both because of the remoteness of many communities and because many of the health services
are provided in different ways. A much higher proportion of health dollars for indigenous peoples is spent
on hospital services, and proportionately much less on primary health care, particularly Medicare and the
PBS. Average Medicare and PBS spending for each indigenous Australian in 2011 was around 20%–30%
less than for other Australians.25 Average spending per indigenous person on dental, private hospital, and
other professional health services was also much lower than for other Australians.

Obesity and Diabetes
Two significant and related health challenges for Australia in the early years of the 21st century have
been obesity and diabetes. In common with many other developed nations, Australia has been
experiencing an increasing prevalence of obesity in recent years. Described by the World Health
Organization as a global epidemic, obesity (or excess body fat) is associated with an increased risk of
type 2 diabetes, cardiovascular disease, high blood pressure, certain cancers, sleep apnea, osteoarthritis,
psychological disorders, and social problems.256

The latest statistics27 on the prevalence of overweight and obesity in Australia shows that (1) nearly two-
thirds (63%) of all adults (or 7.4 million people aged 18 years and over) are either overweight or obese,
up from 44% in 1995; (2) the rate of overweight adults increased from 32% in 1995 to 35% in 2012; and
(3) the rate of obesity in adults increased from 12% to 28% over the same period.

These rates of adult obesity in Australia are well above OECD averages, ranking 4th out of 16 countries.
Australia sits behind the United States, Mexico, and Hungary for obesity rates, well ahead of New
Zealand, Canada, and the United Kingdom. Apart from the well-documented health and social
consequences of obesity, the associated costs are significant and growing. A recent study by Obesity
Australia found that if left unchecked, the direct and indirect economic impact of obesity would reach
A$88.0 billion (US $67.1 billion) and affect one-third of Australians by 2025.28

Policy options abound, but successful outcomes are few and far between. Imposing a tax on food
products considered likely to contribute to obesity is not widely favored, as it targets food products
consumed by obese and nonobese alike. While a sugar tax on soft drinks has been adopted overseas,
this is yet to gain traction among Australian law makers. It also cannot be assumed that higher tax on
certain foods will necessarily shift consumption away from them toward healthier alternatives. Pressure
on the government to impose advertising restrictions, such as bans on food advertisements for children,
has also been rejected to date. Instead, there is a voluntary code of practice in place for advertising to
children that aims to not encourage or promote an inactive lifestyle combined with unhealthy eating or
drinking habits.29

While there has been much made of self-control or government regulation of the food industry, the
government’s preferred approach in recent times has been to fund awareness, health promotion, and
prevention campaigns.

Diabetes is a significant and growing chronic disease in Australia. The latest statistics show that:

About 1 in 20 (approximately 917,000) have been diagnosed with diabetes.
In 2014, nearly 30,000 people started using insulin to treat their diabetes.

Around 9% of all hospital admission in 2013–2014 were attributable to diabetes.
Approximately 1 in 10 deaths in 2012 were attributable to diabetes.
Diabetes death rates among the Aboriginal and Torres Strait Islander population due to diabetes are three times higher than
the nonindigenous population.30

Diabetes can cause diseases of the eyes, kidneys, nerves, and cardiovascular system, which can lead to
a reduced quality of life and premature death. Type 2 diabetes, the most common form, has increased in
prevalence in Australia since the 1980s, and further increases in obesity and physically inactive lifestyles
and increases in the aging of the population have the potential to continue this increase. Diabetes has
been among conditions of concern to Australia’s health ministers (federal, state, and territory) for some
time and continues to be a focus of the Council of Australian Governments’ broader commitment to
reducing the prevalence of avoidable chronic diseases and their risk factors.

There is also much concern about the financial burden of diabetes. Recent assessments suggest health
care that is directly attributable to diabetes costs approximately A$1.7 billion (US $1.3 billion) per year,
while the total cost of diabetes annually has been estimated to be as high as A$14.0 billion (US $10.7
billion). Annual direct costs for people with diabetes complications are more than twice as much as for
people without complications; A$9,600 (US $7,328) compared with $3,500 (US $2,672).31

Structural and Organizational Issues
International comparisons suggest that Australia has a health system that produces high levels of health
at reasonable cost (close to the OECD average). The predominantly publicly funded system provides
universal access to high-quality health and hospital services, ensuring that Australians are ahead of most
other comparable countries on most measures of health. Despite these successes, Australia’s historical,
political, and societal characteristics, in particular the complexities associated with its federal/state
structure, have given rise to some fundamental and somewhat intractable fiscal and organizational
problems. Five-year Health Care Agreements between the Commonwealth and state/territory
governments determine the amount of federal funding to be allocated to the states and territories to help
cover the costs of running public hospitals. Funding for the current agreement (from 2016–2017 to 2019–
2020) is likely to exceed A$95.0 billion (US $72.4 billion).32 Tensions inevitably arise between federal and
state governments concerning the adequacy and distribution of this funding. Accusations of cost shifting
among different levels of government, of inefficiencies, systems growth and of overlap and duplication of
services are commonplace and make for ongoing public controversy and debate.

In 2008, Australia’s Labor Party government was determined to address these problems, to improve the
way health care was delivered, and to make it sustainable for the future. To this end, the National Health
and Hospitals Reform Commission was established and charged with developing “a blueprint for tackling
future challenges in Australia’s health system, including: (1) the rapidly increasing burden of chronic
disease; (2) the aging of the population; (3) rising health costs; and (4) inefficiencies exacerbated by cost
shifting and the blame game.”33 Following the release of the National Health and Hospitals Reform
Commission Report in 2009, the Commission was disbanded. Since this time, successive governments
have implemented and later disbanded bodies charged with reviewing, advising, and monitoring current
health performance. This role has now been largely taken up by the Australian Institute of Health and
Welfare and the Australian Commission on Safety and Quality in Health Care.

Similarly, successive governments in recent years have taken approaches to addressing primary
healthcare needs across Australia. With an emphasis on regional general practice, chronic disease
management, community mental health services, nurse primary care, and after hours medical services,
Rudd’s Labor Party government established Medicare Locals in 2010. These were disbanded by Abbott’s
Liberal-National Coalition government in 2015 to be replaced by Primary Health Networks (PHNs). The
primary distinction between the Medicare Local approach and PHNs is that the role of the general
practitioner was strengthened and there was an emphasis on coordinating and purchasing services rather
than being a healthcare provider that competes with other local healthcare services. It is currently too
early to assess the success in the change in approach in terms of patient outcomes, particularly in

regional and rural area.

The Australian healthcare system is large and complex, approaching A$155 billion (US $117 billion) in
cost and close to 10% of GDP. Despite the relatively favorable health outcomes and life expectancies of
Australians, there will be much political and philosophical debate about the sustainability, efficiency, and
equity of the system going forward. With pressures on the national budget due to a changing economy
and an aging population, the future funding and subsidization of the health system will continue to be a
source of discussion. Future governments will need to carefully consider the funding of healthcare as it
takes up an increasing larger proportion of the overall national budget.

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