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Health care expenditure versus expenditure on early intervention and prevention

Expenditure on health care versus expenditure on early intervention has always been a matter of contention for governments. Where should the money be spent to reap the greatest health rewards for the Australian population?

Consider the following example for cardiovascular disease. Many people are suffering from some form of cardiovascular disease and it can be life threatening if not caught early enough. Medical treatment is needed. This costs the government a considerable amount of money. On the other hand, there are many preventative measures that can be put in place to help prevent cardiovascular disease from occurring, e.g. regular physical activity and a healthy diet or intervene early so the impact on the health care system is reduced. Governments currently invest money on increasing individual and community capacity to partake in preventative measures to reduce the amount of people experiencing CVD. The difficulty is determining what proportion of money is spent on health care or treatment compared to early intervention and prevention.

All levels of government spend an enormous amount on health for Australians.

In 2011-12, health expenditure in Australia was estimated at $140.2 billion, compared with $82.9 billion in 2001-02 and $132.6 billion in 2010-11 (AIHW Australia's Health 2014 (external website)). Almost 70% of total health expenditure during 2011-12 was funded by governments, with the Australian Government contributing 42.4% and state and territory governments 27.3%. The remaining 30.3% ($42.4 billion) was paid for by patients (17%), private health insurers (8%) and accident compensation schemes (5%).

Health care expenditure is expected to increase remarkably in the next 40 years. With our growing and ageing population and the increased demand for health care, expenditure is projected to be over $250 billion by the year 2050. A major concern for government is how the current health care system will be able to cope in the future. Explore the future projections of Australia’s health expenditure on page 51 from the Intergenerational report 2010. (external website)

In recent years, there has been pressure to continue increasing expenditure on early intervention and prevention of chronic disease and conditions. Although federal, state and territory governments have increased the amount of expenditure in this area; there is much debate in the professional arena about the need to increase expenditure even more. The issue is how to allocate funds when evidence shows that prevention can save enormous amounts of money in the long run, however, in the meantime people need treatment for existing conditions. Prevention does not always see immediate change. It is a longer process and therefore is often seen as greater risk of investment for current governments.

Research plays an important role in health. It allows for breakthroughs in technology for early detection, prevention (such as genetic analysis) along with improved treatment and cures. The downside of research is that it is very costly. Determining what percentage of expenditure should be allocated to research is another major consideration for government.

More information on health expenditure can be obtained from Australia’s health 2014 (external website).

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  1. Use the links from the following reports to analyse the impact of cardiovascular disease on health care expenditure versus expenditure on early intervention or prevention.


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