Can’t escape it: the out-of-pocket cost of health care in Australia

Farhat Yusuf and Stephen R Leeder
Med J Aust 2013; 199 (7): 475-478. || doi: 10.5694/mja12.11638


Objective: To analyse the annual out-of-pocket (OOP) expenditure on health care as directly reported by Australian households grouped into older households (those with a reference person aged ≥ 65 years) and younger households (those with a reference person aged < 65 years).

Design: Descriptive analysis of statutory data collected by the Australian Bureau of Statistics.

Setting and participants: Probability sample of 9774 households across all states and territories.

Main outcome measures: OOP expenditure on health care.

Results: The mean annual OOP expenditure on health care among the older households was estimated as $3585 ± $686 (9.4% of the total expenditure on all goods and services), and among the younger households, it was $3377 ± $83 (4.7% of the total expenditure on all goods and services). Cost of medicines (mainly non-prescription drugs and to a lesser extent the copayments for Pharmaceutical Benefits Scheme scripts) was the biggest item of expenditure for the older households, and the cost of private health insurance (PHI) was the most expensive item for the younger households. Overall, the OOP expenditure, as reported by the Australian households, was $28.7 ± $1.3 billion compared with $21.2 billion as reported by the Australian Institute of Health and Welfare. Unlike our estimate, the Institute’s figure was based on statutory data collections and did not include the cost of PHI premiums.

Conclusions: OOP expenses account for almost a quarter (22%) of the total health care costs in Australia. The mean annual OOP expenditure was slightly higher for the older households compared with the younger households, despite the fact that the older households had significantly lower income and had greater access to health care cards, which were used to defray additional health care costs associated with age.

  • Farhat Yusuf1,2
  • Stephen R Leeder1

  • 1 Menzies Centre for Health Policy, Sydney School of Public Health, University of Sydney, Sydney, NSW.
  • 2 Department of Marketing and Management, Faculty of Business and Economics, Macquarie University, Sydney, NSW.

Competing interests:

Stephen Leeder is currently Editor-in-Chief of the Medical Journal of Australia. The approval process for publication of this manuscript was completed before his appointment to this position.

  • 1. Australian Institute of Health and Welfare. Health expenditure, Australia 2009-10. Canberra: AIHW, 2011. (AIHW Cat. No. HWE 55.) (accessed Sep 2013).
  • 2. Ang JB. The determinants of health care expenditure in Australia. Appl Econ Lett 2010; 17: 639-644.
  • 3. Schofield D. Public hospital expenditure: how is it divided between lower, middle and upper income groups? Aust Econ Rev 2000; 33: 303-316.
  • 4. Barrett GF, Conlon R. Health care spending: family structure and family health. Econ Lab Rel Rev 2003; 14: 143-152.
  • 5. Jan S, Essue BM, Leeder SR. Falling through the cracks: the hidden economic burden of chronic illness and disability on Australian households. Med J Aust 2012; 196: 29-31. <MJA full text>
  • 6. Dewey HM, Thrift AG, Mihalopoulos C, et al. ‘Out of pocket’ costs to stroke patients during the first year after stroke – results from the North East Stroke Incidence Study. J Clin Neurosci 2004; 11: 134-137.
  • 7. Essue B, Kelly P, Roberts M, et al. We can’t afford my chronic illness! The out-of-pocket burden associated with managing chronic obstructive pulmonary disease in western Sydney, Australia. J Health Serv Res Policy 2011; 16: 226-231.
  • 8. Jones G, Savage E, van Gool K. The distribution of household health expenditures in Australia. Econ Rec 2008; 84: S99-S114.
  • 9. Australian Bureau of Statistics. Household Expenditure Survey and Survey of Income and Housing, User Guide, 2009-10. Canberra: ABS, 2012. (ABS Cat. No. 6503.0.) http://www.abs. (accessed Sep 2013).


remove_circle_outline Delete Author
add_circle_outline Add Author

Do you have any competing interests to declare? *

I/we agree to assign copyright to the Medical Journal of Australia and agree to the Conditions of publication *
I/we agree to the Terms of use of the Medical Journal of Australia *
Email me when people comment on this article

Responses are now closed for this article.