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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.

Total expenditure on health in 2007-08 was $103.6 billion compared with expenditure of $94.9 billion the previous year, an increase of 9% in nominal terms. This represented an average rate of health expenditure in 2007-08 of almost $4,900 per person.

Australian Bureau of Statistics. (2010). Year Book 2009-2010 (external website)

Health care expenditure is expected to increase remarkably in the next 40 years. The Australian government spent just over $50 billion on health expenditure in 2009-2010. With our growing and ageing population and the increased demand for health care, this 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)

Source: Commonwealth of Australia, 2010, 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. The NSW Department of Health produced a report in 2007 titled Healthy people NSW: Improving the health of the population (external website). Interestingly, it highlights the cost effectiveness of prevention on page 6.

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 2010 (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.
    • Box 4.1 (external website) from the Intergenerational Report 2010, page 55
    • Table 11.29 (external website) from the Australian Bureau of Statistics Yearbook Australia 2009-2010
    • Figure 4.1 (external website) (page 8) and Figure 4.3 (external website)(page 10) from the Australian Institute of Health and Welfare’s Health care expenditure on cardiovascular diseases 2004–05 report.

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