Health expenditure and its impact on populations: HSC Health and Movement Science Focus Area 1

Definition (1 mark). Health expenditure is the total amount of money spent on health goods and services in a period - by governments (Commonwealth and state/territory) and non-government sources (individuals, private health insurers) combined.

Treatment vs prevention (2 marks). Treatment (curative) spending pays to diagnose and manage illness once it has occurred - e.g. a hospital admission, a Medicare-rebated GP consultation, or a Pharmaceutical Benefits Scheme (PBS) medicine. Prevention (preventive) spending acts before illness to stop it occurring or progressing - e.g. the National Immunisation Program, cancer screening programs (BreastScreen, the National Bowel Cancer Screening Program), or anti-smoking campaigns.

Award 1 mark for the definition, 1 mark for the contrast (after illness vs before illness), and 1 mark for one fitting Australian example on each side. A definition with no examples, or examples with no contrast, scores partial.

Award 1 mark per source correctly named WITH what it funds.

Commonwealth (federal) government - 1 mark

The largest single funder. Pays Medicare rebates (the Medicare Benefits Schedule, MBS), the PBS, the private health insurance rebate, and grants to states for public hospitals.

State and territory governments - 1 mark

Co-fund and run public hospitals, ambulance and community health services, and much of public health/prevention.

Individuals (out-of-pocket) - 1 mark

Gap fees, most dental, many allied-health services, over-the-counter medicines and non-subsidised costs - roughly $1 in every $7 of health spending (about 14 per cent; AIHW, 2022-23).

Private health insurance - 1 mark

Funds private hospital care, some dental and allied health (extras/ancillary cover), and is itself subsidised by the Commonwealth rebate.

Full marks need all four sources named with a correct funding role. (Figures: AIHW Health Expenditure Australia, 2022-23; treat as current published estimates.)

A 5-mark "describe and explain" rewards (i) an accurate reading of the data with figures, and (ii) a reasoned equity implication, not just a restatement.

Describe (about 2 marks). Government is the dominant funder: the Commonwealth (about 43%) and the states/territories (about 27%) together fund roughly 70% of health, leaving non-government sources (out-of-pocket about 14%, private health insurance about 9%, other about 7%) funding the remaining roughly 30%. Out-of-pocket spending by individuals is the single largest non-government share. Quote at least the government total and the out-of-pocket figure.

Explain an equity implication (about 3 marks). Because about 14% of spending is paid directly out-of-pocket, cost falls hardest on those least able to absorb it. Out-of-pocket costs (specialist gap fees, most dental, most allied health) are regressive - they take a larger share of a low income - so lower-income and chronically ill patients are more likely to delay or skip care. The AIHW has reported cost-related deferral of GP visits, dental care and prescriptions. This means the funding mix, despite a large government share, still produces unequal access along income lines unless equity adjustments (bulk-billing incentives, PBS safety nets, concession arrangements) offset it.

Marking spine: accurate description with figures and the government/non-government split (2), a correctly reasoned equity implication tied to the out-of-pocket share (2), and a link to a real consequence such as cost-related deferral or a safety-net mechanism (1). A pure description with no implication, or an equity claim that never refers to the data, caps at 3. (Figures are an ExamExplained dataset modelled on AIHW Health Expenditure Australia 2022-23; treat as illustrative.)

A 6-mark "explain... affects" needs a causal chain from the spending balance to future health outcomes, not just two definitions.

State the balance (about 1-2 marks)

Australia spends the large majority of the health dollar on treatment - hospitals are the single biggest category (roughly 40% of recurrent spend) and primary care and medicines add more curative cost - while dedicated public-health/prevention spending is a small slice, on the order of only about 2% of total health expenditure (AIHW). Most money therefore reaches people after they are already unwell.

Explain the future-population effect (about 3-4 marks)

The disease burden is increasingly chronic and preventable (cardiovascular disease, type 2 diabetes, many cancers, obesity-related illness), and these conditions are driven by modifiable risk factors. Under-investing in prevention now means more people develop chronic disease later, which raises future treatment costs, lengthens hospital queues and worsens outcomes - a costlier, sicker future population. Conversely, prevention spending (immunisation, screening, tobacco control, healthy-environment policy) tends to have a high return because it stops disease before the expensive treatment stage. So the current treatment-heavy balance is sustainable in the short term but stores up demand, whereas shifting some spend "upstream" to prevention improves the long-run health and affordability for future populations.

Tie it together

Conclude that the balance matters because today's prevention spending is tomorrow's avoided treatment cost; a treatment-dominated mix protects current patients but can leave future populations with a larger, more expensive chronic-disease load.

Marking spine: the balance stated with at least one figure (1-2), a clear cause-and-effect chain from low prevention spend to higher future chronic-disease burden and cost (3), and a forward-looking judgement about sustainability (1). Listing "treatment is curing, prevention is preventing" with no future link stays mid-band.

A 5-mark "outline and explain" rewards how the two are funded plus how the three policy levers protect sustainability.

Medicare funding (about 1 mark)

Medicare is funded from general Commonwealth taxation plus the Medicare Levy - a levy of 2% of taxable income for most taxpayers - and delivers the universal MBS rebates and (with the states) public hospital care.

Private health insurance funding (about 1 mark)

Private health insurance is funded by members' premiums, partly offset by the Commonwealth private health insurance rebate (a means-tested subsidy on premiums).

The three levers (about 3 marks)

(1) The Medicare Levy spreads the cost of universal care across the working population by income. (2) The Medicare Levy Surcharge (an extra 1-1.5% on higher-income earners who do NOT hold private hospital cover) pushes higher earners to take private cover, easing demand on the public system. (3) The private health insurance rebate and Lifetime Health Cover loading encourage people to take and keep private cover earlier, broadening the insured risk pool and keeping premiums sustainable. Together these aim to balance the load between the public and private systems so neither becomes unsustainable.

Marking spine: funding sources for both correctly outlined (2), and each of the three levers explained in terms of sustainability/sharing the load between public and private (3). Naming the levers without explaining their purpose caps the response.

A 12-mark "analyse" extended response needs a sustained argument that shows HOW the funding arrangements shape sustainability, access AND equity - with named funding sources, the treatment-prevention balance and current data - not a description of Medicare.

Band 6 PLAN.

Thesis: Australia's health expenditure arrangements deliver strong universal access and reasonable equity by design, but their treatment-heavy balance and reliance on out-of-pocket costs create real pressures on long-run sustainability and on equity for the worst-off - so the system is sound but not self-correcting, and its future health impact depends on rebalancing spend toward prevention.

Argument 1 - the funding mix supports access but loads cost unevenly (equity). Evidence: government funds roughly 70% of health (Commonwealth about 43%, states about 27%), with out-of-pocket about 14% and private health insurance about 9% (AIHW, 2022-23). Mechanism: universal Medicare and the PBS remove most of the price barrier, but the out-of-pocket share is regressive, so specialist gap fees, dental and allied-health costs still produce cost-related deferral concentrated among lower-income and chronically ill people - equity adjustments (bulk-billing incentives, PBS safety nets) narrow but do not close this.

Argument 2 - the treatment-prevention balance threatens future sustainability. Evidence: hospitals are the largest spending category (around 40% of recurrent spend) while dedicated prevention is only around 2% of total health expenditure (AIHW); health spending is also a large and rising share of GDP (on the order of 10%). Mechanism: an ageing population and a rising chronic-disease burden push treatment demand up; spending overwhelmingly downstream means tomorrow's preventable disease becomes tomorrow's expensive admission, so the current balance stores up future cost.

Argument 3 - the public-private levers are designed to share the load (sustainability). Evidence: the Medicare Levy (2%), the Medicare Levy Surcharge on higher earners without cover, and the private health insurance rebate. Mechanism: these levers shift some demand and cost to the private system and broaden the insured pool, easing pressure on public hospitals - but they also direct public subsidy toward private cover, which critics argue is itself an equity and value-for-money question.

Counter-weight / judgement: By international standards Australia achieves good outcomes for its spend and broad access, so the arrangements are more sustainable and equitable than many comparable systems; the honest verdict is that they protect current populations well but, without a shift toward prevention and continued attention to out-of-pocket costs, will face mounting sustainability and equity pressure for future populations.

Model paragraph (Argument 2). The clearest long-run risk in Australia's expenditure arrangements is not where the money comes from but where it goes. Hospitals alone absorb roughly 40% of recurrent health spending, and once primary care and medicines are added the system is overwhelmingly curative; dedicated public-health and prevention spending sits at only around 2% of total health expenditure (AIHW). At the same time the disease burden is shifting toward chronic, largely preventable conditions - cardiovascular disease, type 2 diabetes and obesity-related illness - and the population is ageing, both of which push treatment demand upward, with total health spending already on the order of 10% of GDP. The cause-and-effect is direct: money spent downstream treats illness that better-funded prevention could have averted, so each dollar not invested upstream tends to return later as a more expensive admission. This is why the treatment-prevention balance is a sustainability question for future populations specifically: a treatment-dominated mix can keep current patients well while quietly enlarging the chronic-disease load the next generation must fund. Rebalancing even a small share toward immunisation, screening and risk-factor programs therefore improves both the future health profile and the affordability of the system - which is the structural reform the data point to.

Marker's note: markers reward a thesis that genuinely ANALYSES (links funding arrangements to sustainability, access AND equity, and shows trade-offs) rather than describing Medicare; explicit, correct use of the funding mix and the treatment-prevention balance; CURRENT data carrying a year (the roughly 70% government share and about 14% out-of-pocket, AIHW 2022-23; hospitals about 40% of recurrent spend; prevention about 2%; spending about 10% of GDP); named levers (Medicare Levy, Medicare Levy Surcharge, private health insurance rebate, PBS); and a calibrated judgement that distinguishes current from future populations. A "what Medicare covers" description, or data with no year, cannot reach the top band.