Research — 01 March 2017

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Personal spending on health is about $28.6 billion a year in Australia. This includes $3 billion on hospitals, $5.5 billion on dental care and almost $11 billion on medication.  We shell out a further $21 billion each year on health insurance premiums.

As private consumers, we contribute almost one in every five dollars spent on health care. Among wealthy countries, we have the third-highest reliance on out-of-pocket payments and it’s growing.

Australians spend more on vitamins than prescription drugs. Photo: John Shakespeare

Data from the Australian Institute of Health and Welfare shows funding from non-government sources – mostly out-of-pocket costs – increased four-and-a-half times faster than government funding in 2014-15.

It’s topical and problematic for a number of reasons. Health is expensive, complex and highly charged, so the surrounding politics are necessarily fraught.

Rising out-of-pocket costs of health are a genuine concern because it deters some people from seeking health care when they need it.

It is estimated that in 2014-2015, one in every 20 people who needed to see a GP skipped or delayed the visit because of cost. A 2016 study by James Cook University and the NSW Bureau of Health Information found that almost half of Australians living with depression, anxiety and other mental health conditions skipped medication or therapy because of cost. Emily Callander, a health economist and lead researcher on that study, said the US was the only country of 11 that had more people skipping healthcare due to cost than Australians.

These are, in themselves, valid arguments against the introduction of additional financial barriers to healthcare. It explains why a GP co-payment as mooted and eventually withdrawn by the federal government in 2014, proved so unpopular.

In many cases, the assumption is that an individual’s outlay for health is not discretionary. There may be exceptions but, you might think, very few of us are likely to shell out hard-earned money on doctors or pathologists or other health services we don’t need.

You would be wrong. When you dig into the data it’s clear that discretionary health spending is burgeoning.

Roughly a third of what individuals spend on health – to the tune of $9.3 billion – goes on vitamins, supplements, over-the-counter painkillers and other unsubsidised drugs. It is more than the combined sum we spend on dental care and hospitals.

First, the efficacy of vitamins – whether they deliver any real benefit at all – is unclear. In some specific instances there is established evidence that vitamins can help but that is a small proportion of the 11,000 complementary medicine products that are for sale.

By way of contrast, prescription medications are subject to rigorous testing to ensure they are safe, effective and meet stringent standards. The standard for getting a complementary medicine on the market is far lower, consisting of an online application.

Prescription medication is also, by definition, prescribed by a medical practitioner so can be deemed medically necessary.

And yet what we spend on medications we are expressly told we need, that are scientifically proven to be effective, is dwarfed by what we spend on medicine we hope might help a problem we might not have.

Last year, Australians spent an estimated $3.9 billion on alternative health therapies including therapies such as chiropractic and naturopathy, traditional Chinese medicine as well as homoeopathic and aromatherapy products. According to an IBISWorld industry report that revenue will potentially be affected by growing scrutiny of whether these therapies actually help. It is startling to consider this industry is thriving despite a lack of scientific evidence to suggest it works.

There is no question that what a lot of Australians spend on their health is entirely unavoidable. It comprises a significant weekly expense in most households and creates a degree of financial stress in many.

Yet it is also clear that plenty of us are happy to spend more money on hope, than we do on health. I can’t figure out if that’s a credit to our optimism or a blight on our sense?

This piece by Georgina Dent was originally published on ‘The Sydney Morning Herald’ Feburary 27, 2017.

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