Total health expenditure

Total health expenditure has risen by an estimated 5.2% in 2025-26, reaching $295.3 billion. Increases in Medicare expenses have strengthened medical services and benefits growth, mainly comprising Medicare and Private Health Insurance Rebate expenses. Additionally, the Australian Government's contribution to public hospital funding is growing in line with an increasing volume of services. Australia's ageing population has also been a continuing driver for health services, further contributing to rising health expenditure.

Besides the pandemic, Australia's ageing population has been the major driver of total health expenditure growth over the five years through the end of 2025-26. Older people are typically more susceptible to chronic illness and disease, conditions that necessitate frequent visits to healthcare professionals like general practitioners, specialists, allied health practitioners and general hospitals. Most of these practitioners and facilities are subsidised by Medicare or, in the case of general hospitals, through state government funding, boosting total health expenditure.

While Australia's population is trending towards a more health-conscious perspective, including reduced smoking rates, dipping alcohol consumption and, for some segments of society, more exercise, the population continues to expand through both new births and immigration. As the population expands, healthcare service expenditures must swell to keep pace.

The price of healthcare services typically increases at a faster rate than inflation. Both public and private general hospitals generally require significant funds for advancements and innovations in medical technology, as the effectiveness of medical procedures and treatments available to patients is constantly improving. New technologies are usually more expensive and higher prices are required to cover the cost of these upgrades and research. Higher prices for healthcare services, the ageing population and expanding private health insurance coverage have combined to drive growth in total health expenditure. IBISWorld forecasts total health expenditure to strengthen at a compound annual rate of 5.8% over the five years through 2025-26.