Health Pressures Skyrocket in Intergenerational Report
Wednesday, 3rd February 2010 at 3:03 pm
Australia faces significant intergenerational challenges of an ageing population, escalating pressures in the health system and climate change according to the Federal Treasury’s 2010 Intergenerational Report with the treasurer warning that health costs will double in the next 40 years.
The report called Australia 2050: Future Challenges says these issues pose long-term challenges for Australia’s economic growth, living standards and government finances.
Population ageing will mean that there will be fewer workers to support retirees and young dependants. This will place pressure on the economic growth that drives rising living standards.
Treasurer Wayne Swan says as the population ages, more people fall into the older age groups that are the biggest users of health services. At the same time, rising demand for more medical services, and new technologies and drugs, are sharply pushing up health spending.
He says costs are growing across all age groups and in all major categories of health spending: hospitals, medical benefits, pharmaceuticals and private health insurance and these pressures will see health spending almost double over the next 40 years – from 4.0 per cent of GDP in 2009-10 to 7.1 per cent of GDP in 2049-50.
Health expenditure accounts for more than two-thirds of the overall increase in spending projected in the 2010 Intergenerational Report.
Ageing and population growth account for around 40 per cent of the overall increase in projected spending, with the remainder due to increased demand for health services and the introduction of new technology.
Australia to 2050: Future Challenges shows that the private health insurance rebate is the fastest growing area of health expenditure.
The report also projects spending on aged care to increase as a proportion of GDP from 0.8 per cent in 2009-10 to around 1.8 per cent in 2049 50.
The report says Climate change is one of the most significant challenges to Australia’s long-term economic sustainability. Australia will be one of the countries hardest and fastest hit. It says climate change threatens living standards through its impact on the environment and on the economy.
The report says small adjustments now – to grow the economy by increasing productivity and participation, restrain unsustainable growth in spending, plan for future demographic change and tackle climate change – will prevent the need for much sharper and more costly adjustments in the future.
The full report can be downloaded at www.treasury.gov.au/igr/igr2010/