Healthcare costs increasingly shifting to patients, study shows

13 September 2019

Out-of-pocket spending on health by households in Australia is rising faster than overall household spending on goods and services—and taking an increasingly bigger slice of the household budget, according to a research study published today in Australian Health Review, the journal of the Australian Healthcare and Hospitals Association (AHHA).

The study, by Sydney University researchers Professor Farhat Yusuf and Professor Stephen Leeder, uses consumer-reported data gathered by the Australian Bureau of Statistics Household Expenditure Survey.

Household out-of-pocket (OOP) spending on healthcare rose by more than 25% over a recent 6-year period while overall household spending on goods and services rose by 15%.

In 2015–16, the mean amount spent by households on healthcare out of their own pockets was $4,290, or 5.8% of total household expenditure.

The most expensive OOP item was private health insurance ($1,744), followed by non-PBS medicines ($585), specialists ($438) and dentists ($396). Spending on GPs was $96.

The biggest percentage rises in out-of-pocket healthcare costs between 2009–10 and 2015–16 were for health insurance (51% rise), co-payments to ‘other health professionals’ (42% rise), and co-payments to specialists (35% rise).

‘Out-of-pocket expenses on healthcare as a proportion of the total household budget has been rising in real terms since 1984’, said AHHA Chief Executive Alison Verhoeven.

‘This study notes that the progressive movement of healthcare costs “from public to person” has occurred “without policy debate, slowly and steadily, with small steps such as freezing Medicare rebates”.

‘Other more recent data suggest that OOP costs have continued rising right to the present day.’ The situation was brought to a head earlier this year with media reports of huge five-figure co-payments for some types of medical and surgical care, particularly cancer care, with dire financial consequences for individuals as a result.

‘Yet, there is no evidence that higher OOP costs are related to better quality of care or increased access to care.

‘This creeping burden on individuals challenges our notions of universal healthcare, a fair go, and care based on medical need rather than the depth of your pockets’, Ms Verhoeven said.

The study found that OOP costs were highest among affluent households, especially those holding private health insurance.

Correspondingly, OOP costs were lowest in low-income households, but no data were available on to what extent care was skipped because of the cost. Other studies show, however, that OOP costs weigh most heavily on individuals with low incomes and multiple health problems.

‘This individual upward drift in out-of-pocket health expenses deserves very serious policy attention before our nation’s health starts to drift downwards’, Ms Verhoeven said.

Recent estimates of out-of-pocket expenditure on health care in Australia is available at http://www.publish.csiro.au/ah/Fulltext/AH18191. This release is also available online.

The Australian Healthcare and Hospitals Association is the national peak body for public and not-for-profit hospitals, Primary Health Networks, and community and primary healthcare services.