Australian Health System How is it structured? Presentation to Indonesian Delegation. Prof. Michael Reid June 2014

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1 Australian Health System How is it structured? Presentation to Indonesian Delegation Prof. Michael Reid June 2014

2 Economy Australia Overview and Key Facts Australia has a market economy, the thirteenth largest economy in the world. People One of the most ethnically diverse countries in the world, with one in four Australians born outside of Australia. The Indigenous population, referred to as Aboriginal and Torres Strait Islanders, are 2.5% of the total population.

3 Australia Key Facts cont. Ageing Population The median age of Australia s population is 36.7 years- this is projected to increase to around 38 in 2016 and 39 in People aged 65 years and over, account for 13.2% of the population. This demographic is projected to account for around 15.5% (3.75m) of the population in 2016 and 18.5% (5.1m) in Population Australia s population is 23.5 million. Australia s population is largely urbanised (63% in capital cities) and is heavily concentrated in the south-eastern states of New South Wales (32%) and Victoria (25%). Very sparsely settled in remote Australia only 66,000 people in 66% of Australia s total geography.

4 Australia s Health Status Australians enjoy one of the highest life expectancies in the world : 79.5 years for males and 84.0 years for females. Levels of smoking are very low - less than 1 in 7 people aged 14 and over smoking daily. Most children are immunized : 92% of 1 year olds, 90.4 of 5 year olds. However, Aboriginal and Torres Strait Islanders fare worse : 12 years lower life expectancy : access to services far worse High, and worsening, rates of obesity for all Australians. Differential health status for low socio economic and rural/remote communities.

5 Australia s Health System A Beveridge rather than a Bismark health system. Health care provided and financed by government through tax payments. Most hospitals and health clinics owned by government. Some doctors are government employees some are private doctors and collect fees from government. Public hospital services free and for most GP services there is no patient billing. Similar to Great Britain, Spain, Scandinavia and New Zealand. Bismark schemes (often employer based insurance) more in United States, Germany, Japan and France.

6 The Australian Health System Flow of funds S Source: Australian Institute for Health and Welfare (AIHW)

7 Health Expenditure Trends Total Health expenditure from all sources: $140.2 billion. Individual health expenditure: $5881 per person. Health expenditure per GDP: 9.1% Components of health expenditure: Public hospital services :$42 billion Medical services :$24 billion Medications :$19 billion Government funding for health services : 70% Non-government funding Individual :17% Private Health insurance : 8% Other : 5%

8 Australian Health System Private Health Insurance Private health insurance is optional for the Australian population but there are tax disincentives for higher individuals not joining. Currently there are 36 health funds registered. 53% of the Australian population aged 15 years and over has private health insurance. Private health insurance coverage levels are highest for the years age group, after which coverage levels decrease significantly. Insurance is community rated with no premium differentiation on health status, age, sex or locality.

9 Roles and Responsibilities

10 Roles and responsibility Australian Health System Federal Government Principal responsibility for health policy development. Implements and regulates via a range of legislative, agency and cooperative mechanisms with States. Directly funds Aged Care, Veterans Health Services and Primary GP services. Policy and regulatory responsibility Three main responsible departments- Health (DoH)and Prime Minister and Cabinet (PMC) and Human Services (DHS). Collaborates with States via COAG and various standing committees. Economic and financial drivers Generates revenue for Medicare and other programs via corporate, individual and goods and service tax as well as a specific Medicare Levy.

11 Australian Health System Federal Government Some Federal instrumentalities/national Approaches National Disability Insurance Scheme (NDIS) Department of Veterans Affairs (DVA) Therapeutic Goods Administration (TGA) Pharmaceutical Benefits Scheme (PBS) Pharmaceutical Benefits Advisory Committee (PBAC) Medical Services Advisory Committee (MSAC) Australian Commission for Safety and Quality (ACSQ) National Health Performance Authority (NHPA) Australian Institute of Health and Welfare (AIHW) Independent Hospital Pricing Authority(IHPA) National Registration and Accreditation Scheme (NRAS)

12 Australian Health System State and Territory Governments States are system managers and provide public hospital and community health services. Most States have devolved autonomy for running hospitals to Local Hospital Networks (LHNs). States have significant cost pressures with health comprising around 25% of State budgets. Increasing use of public/private partnerships for the private sector build/operate all or part of public hospital services. Public hospitals in Australia 753 or about 68% of all hospital beds.

13 Australian Health System Community Health Services (CHSs) CHSs as part of State health or Local Government agencies - provide a range of primary health and human services including: Maternal and Child health services Allied health services Community nursing Dental services Drug and alcohol services Public health services Population health services.

14 Australian Health System Private Hospital Sector Private Hospitals in Australia 592 hospitals or 32% of all public and private beds. Mix of for-profit and not-for-profit (largely religious hospitals). Two large providers (Ramsey and Healthscope) receive 21% of private hospital revenue. Most elective surgery day procedures done in private hospitals. Many private operators have contracts with State governments/dva to treat public patients.

15 Australian Health System Current Trends Devolve autonomy to Local Health Networks (LHNs). Create a single National Hospital Pricing Structure. Greater role for insurers in coordinating care. Greater contestability/increased private sector provision of public services. Significantly increased transparency/comparative performance analysis. Greater consumer choice especially aged care/disability sectors.

16 Australian Health System Current Trends(cont.) However, recent Federal Government budget: Proposes copayments for GP services. The revenue from which will be used to create significant medical research funds. Ceased proposed Federal government sharing of increasing costs of public hospitals (replaced by CPI adjustments). Abolishes/merges a number of Federal bodies which influence/regulate national policies/standards.

17 Thank you for listening

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