Review of Cardiovascular Disease Programs

5.3 Rising health costs

Rising health costs - The current environment - Review of Cardiovascular Disease Programs

Page last updated: 03 May 2012

As prices rise generally, the cost for health care items in particular can rise. Health inflation in Australia has outpaced general inflation in most years during the last decade. From 1995-96 to 2005-06, the average rate of health inflation was 3.1% a year, whilst general inflation was 2.7%.

Many health reviews conducted across Australia suggest that due to increased life expectancy, an ageing population and advances in medical technology, health care costs are increasing out of proportion with government’s ability to pay. Population-based prevention of illness rather than individual treatment, particularly for chronic diseases, is the most economically-viable approach to maintaining the health of a population as we age.

Cardiovascular diseases generate a greater cost burden that any other disease group in Australia. AIHW estimates that in 2004-05, allocated direct health care expenditure on cardiovascular diseases totalled $5.94 billion, which was 11% of total allocated expenditure. These estimates do not include the indirect costs of CVD, such as costs related to the social and economic impacts of CVD on individuals, their families and communities. Expenditure on cardiovascular diseases has been increasing: from 2001-02 to 2004-05 expenditure increased, in real terms, by 18%.

Expenditure per person for CVD increases with age, with those aged 85 and over being responsible for the highest expenditure. Spending on hospital-admitted patients accounted for approximately half of all expenditure on cardiovascular diseases, with prescription pharmaceuticals being the next most expensive area of expenditure (28%). Out of hospital medical services account for 19% of expenditure, and research 3%.

Source: Australian Institute of Health and Welfare 2008. Health care expenditure on cardiovascular diseases 2004–05. Cardiovascular disease series no. 30. Cat. no. CVD 43. Canberra: AIHW.

Figure 1 illustrates the CVD expenditure per person and clearly illustrates the proportion of expenditure across different components of the health system.

Figure 1: Health care expenditure for all cardiovascular diseases, per person, by age and area of expenditure
This image shows expenditure on cardiovascular diseases per person, and shows a large increase in expenditure as age increases.

Source: Australian Institute of Health and Welfare 2008. Health care expenditure on cardiovascular diseases 2004–05. Cardiovascular disease series no. 30. Cat. no. CVD 43. Canberra: AIHW.

Data from image shown above:

Health care expenditure for all cardiovascular disease, per person, by age and area of expenditure
Age group (years)
0-4 5-14 15-24 25-34 35-44 45-54 55-64 65-74 75-84 85+
$ per person Hospital-admitted patients 5.74 1.39 7.3 16.53 38.76 98.62 236.26 541.45 953.68 1191.23
Prescription pharmaceuticals 3.13 0.73 1.69 5.42 19.48 66.82 168.63 328.52 450.57 376.17
Out-of-hospital medical services 0.44 1.39 4.30 12.48 24.38 57.13 113.78 192.15 269.41 253.56
Research 0.26 0.18 0.38 0.98 2.34 6.31 14.71 30.13 47.48 51.66


Expenditure is likely to increase into the future, despite the decreasing rates of cardiovascular disease in Australia. The main causes of this increase are the ageing population, and population growth.

As noted below, expenditure on cardiovascular diseases is projected to increase by $8.3 billion (105%) in the 30 years to 2032-33. 78

Table 2: Projected Health expenditure(a) 2002-03 dollars, 2002-03 to 2032-33
Expenditure (billions of 2002-03 dollars) Percent change 2002-03 to 2032-33
2002-03 2012-13 2022-23 2032-33
Cardiovascular diseases 7.91 10.28 13.00 16.18 105

(a) Includes expenditure on high-level residential aged care facilities.

Source: Australian Institute of Health and Welfare 2008. Health care expenditure on cardiovascular diseases 2004–05. Cardiovascular disease series no. 30. Cat. no. CVD 43. Canberra: AIHW.


78 Australian Institute of Health and Welfare 2008. Health care expenditure on cardiovascular diseases 2004–05. Cardiovascular disease series no. 30. Cat. no. CVD 43. Canberra: AIHW.