Chapter 2

CEIS Health Report 2006
year (AIHW 2006). In this case, the trade off is between Federal government outlays in
health care expenditure and lower income tax revenue. In view of the flat nature of the
copayments and the progressive nature of income taxation, this approach also raises
equity questions.
2.3.8 Conclusion
In the post-war period, public concerns with health care has been translated into larger
public subsidies of health services allowed by substantial rises in per capita income and
government revenue. However, growth in health expenditures above the GDP average,
fiscal constraints imposed by economic cyclical shocks and new fiscal orthodoxy have
led governments to adopt policies to reign in growing public subsidies. However, trends
have varied among OECD countries. In the case of Australia, public funding of health
care has grown but its share of the total growing expenditure has remained stable in the
last decade. Government in Australia has used both command-control and market-oriented
policies to contain total public expenditure on health services. However, there have
been substantial increases in public subsidies for private hospitals and pharmaceuticals.
The first was the result of a deliberate policy to increase the use of private hospitals, while
the second has been the result of growing use of drugs and increase in their prices. In
spite of the use of expenditure thresholds that attract increasing rebates and or income
tax concessions, some features of policies aimed at containing public outlays on health
services raise both efficiency and equity issues.
References
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● Australian Institute of Health and Welfare (AIHW), 2002. “Health expenditure Australia
2000-01”, Canberra.
● Australian Institute of Health and Welfare (AIHW), 2005. “Health expenditure Australia
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● Australian Institute of Health and Welfare (AIHW), 2006. “Australia’s Health 2006”,
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● Maddison, Angus (2003). “The World Economy: Historical Statistics”, Organisation for
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● Martins JM (2002). “Who is winning? The drug companies, the Government or the
Battlers?” www.achse.org.au/publications/martins/drug.html accessed 17/03/2006.
● Martins JM (2004). “Health Financing – An International Perspective”. In Courtney M,
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