New health and aged care expenditure projections
The Australian Institute of Health and Welfare (AIHW) has produced a new set of projections of expenditure by disease for Australia for the period 2003 to 2033, which show dementia and diabetes showing the greatest projected increase.
Under the central set of assumptions used in the study, total health and residential aged care expenditure is projected to increase by 189% in the period 2003 to 2033 from $85 billion to $246 billion—an increase of $161 billion.
This is an increase from 9.3% of gross domestic product (GDP) in 2002–03 to 12.4% in 2032–33. Increases in volume of services per treated case are projected to account for half of this increase (50%) .
The two demographic growth factors—population ageing (23%) and the absolute increase in population (21%)—are projected to contribute almost a quarter each.
Other non-demographic factors contributing to the increase include excess health price inflation (5% of the increase). Changes in disease rates overall reduce expenditure projections by about 1.5% or $2.3 billion.
The projection model shows that the causes of increased health and residential aged care expenditure vary greatly depending on the disease being considered.
Diabetes has the greatest projected increase (436%) between 2003 and 2033, followed by dementia (364%).
The projected growth in diabetes expenditure of 436% is due to multiple reasons, particularly the projected impact on diabetes prevalence rates of expected increases in obesity.
