Hospital spending in Australia reached $123.4 billion in 2024-25, up 4% from the previous year and continuing to grow faster than spending on primary health care and prevention, according to new data from the Australian Institute of Health and Welfare (AIHW).
Total spending on health goods and services increased by $9.6 billion to $290.7 billion in 2024-25, equivalent to $10,614 per person and 10.5% of gross domestic product (GDP). After adjusting for inflation, total health spending grew by 3.4%, outpacing population growth of 1.6% and resulting in the first increase in spending per person since 2021-22.
The AIHW has today released Health expenditure Australia 2024-25, providing a detailed overview of health spending in Australia by area of spending, source of funding and trends over time.
‘The AIHW has been reporting on national health expenditure for more than 3 decades, helping us understand the health system and its relationship to the economy as a whole,’ AIHW spokesperson Geoff Callaghan said.
‘Average health spending increased by $185 per person, or 1.8%, as growth in total health spending exceeded population growth during the year.
Health spending accounted for 16.8% of total government expenses, unchanged from 2023-24.
Governments funded 70% of total health expenditure, with the Australian Government providing $113.9 billion and state and territory governments providing $89.6 billion. Government health spending increased by 3.9% in real terms, while non-government spending increased by 2.4%.
‘State and territory governments are now funding a larger share of Australia’s health system than at any point in the past decade (30.8%), reflecting strong growth in public hospital spending, which remains the largest component of health expenditure (42.4%) and continues to grow faster than primary health care spending,’ Mr Callaghan said.
Hospital spending increased by 4% to $123.4 billion, driven mainly by increased government funding and higher hospital activity. Public hospital services accounted for $99.9 billion of this expenditure, an increase of 5.2% in real terms.
Primary health care spending, including public health, increased by 1.2% to $93 billion. The increase was mainly driven by higher spending on dental services, other health practitioner services and community health services
Disease and injury-related spending
Alongside this report, the AIHW has released the latest analysis of Australia’s national health spending on disease and injuries in 2024-25.
Of the $195.1 billion in health spending that could be directly attributed to disease and injury in 2024-25, the 3 highest-cost disease groups were cancer ($21.7 billion), cardiovascular diseases ($18.4 billion) and musculoskeletal disorders ($17.5 billion).
Cancer has been the highest expenditure disease group since 2017-18, accounting for around 11% of disease spending in 2024-25, with spending more than doubling since 2013-14. Cancer also had the highest burden of disease in 2024, indicating that its share of spending is broadly aligned to its impact on the population.
Mental health conditions and substance use disorders had the second highest burden of disease and ranked third in terms of spending.
For the first time, the report includes estimates of disease expenditure by socioeconomic status. Across all disease groups combined, the cost per service was consistently higher for people living in the most disadvantaged areas than for those living in the least disadvantaged areas between 2013-14 and 2024-25.
Disease and injury spending growth drivers
The report also includes a new analysis of the factors driving growth in health system spending on disease and injury in Australia.
Population growth was the largest contributor to spending growth, accounting for 44.3% of the increase. Higher expenditure per service contributed 33.6%, while population ageing contributed 16.0%.
Changes in disease burden accounted for 6.7% of expenditure growth, while changes in service use relative to disease burden reduced growth by 0.6%. The report highlights that the drivers of spending growth vary across diseases, health services, age groups and sex.
