The new Intergenerational Report, Australia to 2050: Future Challenges, shows Australia's ageing population is placing major pressure on the health system which is set to increase in the decades ahead.
As the population ages, more people fall into the older age groups that are the biggest users of health services. At the same time, rising demand for more medical services, and new technologies and drugs, are sharply pushing up health spending. Costs are growing across all age groups and in all major categories of health spending: hospitals, medical benefits, pharmaceuticals and private health insurance.
These pressures will see health spending almost double over the next 40 years – from 4.0 per cent of GDP in 2009-10 to 7.1 per cent of GDP in 2049-50.
Health expenditure accounts for more than two-thirds of the overall increase in spending projected in the 2010 Intergenerational Report.
Ageing and population growth account for around 40 per cent of the overall increase in projected spending, with the remainder due to increased demand for health services and the introduction of new technology.
The Rudd Government is committed to reforming our health and hospitals system so that every health dollar buys higher-quality, better-value health services.
To build the health and hospital system that Australia needs for the 21st century, the Rudd Government has already invested a record $64 billion in the hospital and health system.
The Rudd Government also established the National Health and Hospitals Reform Commission (NHHRC) and in 2010 will deliver health reform to improve service delivery, ensure value for money, and deliver a more responsive and better coordinated health and hospitals system.
The Government has already taken significant steps to tackle growing health and hospital costs. The 2009-10 Budget introduced a vital savings measure to rebalance policies supporting private health insurance. These measures are designed to ensure low- and middle-income Australian taxpayers are not subsidising the health insurance of wealthier Australians.
Australia to 2050: Future Challenges shows that the private health insurance rebate is the fastest growing area of health expenditure, demonstrating the importance of the Government's measure. This important savings measure is currently still being blocked by the Coalition in the Parliament and, if not passed, will increase total health spending in 2049-50 by 0.15 per cent of GDP (to 7.28 per cent of GDP).
The cost to Australian taxpayers of blocking this measure is almost $2 billion (over the forward estimates) and $100 billion over the report's projection period.
Australia to 2050: Future Challenges also projects spending on aged care to increase as a proportion of GDP from 0.8 per cent in 2009-10 to around 1.8 per cent in 2049‑50.
The Government is committed to a sustainable, high quality aged care and this year will make more than 12,000 new aged care places available to meet the care needs of older Australians today building on the 225,000 places already providing care. We are building a modern aged care system that will help meet the challenges of our ageing population.
The Government is making the tough decisions to manage long-term fiscal pressures and ensure a sustainable health system. There are big challenges ahead for the Australian health system, but the Government is committed to delivering a sustainable, quality health system for all Australians.