Using data from the 1995 NHS this report asks the question—what is the relationship between income, health expenditure and health status for the Indigenous and non-Indigenous populations? The analysis seeks to measure differences in health expenditure and reported health status between the Indigenous and non-Indigenous populations holding income level constant. This is important to the extent that income is seen as an indicator of ability to address the need for health expenditure, and as a factor in influencing health status. A previous study of the relationship between income and expenditure on health found that Indigenous people were in receipt of expenditure equivalent to others in a similar economic position. As for the relationship between income and Indigenous health status, no previous analysis has ever been undertaken. The expectation, though, from the international literature is that income and health status are positively related.
The key findings from this study were as follows:
The data refer to Indigenous and non-Indigenous populations in non-sparsely settled areas only. As such, they do not claim to be representative of the situation Australia-wide, especially in regard to the Indigenous population. They reflect the circumstances of the 82 per cent of the Indigenous population located in non-sparsely settled areas.
Notwithstanding the above, use of 1995 NHS data enables direct comparison between Indigenous and non-Indigenous Australians with respect to the links between income status, health expenditure and health status for the first time.
Previous studies have only managed to estimate the relationship between income status and expenditure. For this the Henderson measure of equivalent income was employed.
The present study indicates the importance of developing a range of measures of equivalent income, as substantial differences in relative income distribution are evident depending on the measure used. In order to simplify the analysis, people are ranked by income and classified into quintiles (i.e. an income group with 20 per cent of the population).
Per capita health expenditure on Indigenous people living in non-sparsely settled areas is estimated to be $2734 in 1995 (i.e. only for the comparable areas of health expenditure examined). This is some $500 higher than the estimate of $2277 for non-Indigenous people.
This expenditure gap between Indigenous and non-Indigenous people is not statistically significant. However, if spending on hospitals is excluded (due to unreliability), then Indigenous per capita expenditure is significantly lower ($930 compared with $1351).
As found in other Western countries, non-Indigenous health expenditure is significantly higher for low-income or poorer families. In contrast, no significant relationship between income and per capita health expenditure was found for Indigenous people.
According to the NHS measure of health service utilisation (whether used a health service in the previous two weeks), Indigenous people were found to use health services much less than other Australians despite experiencing higher rates of morbidity and mortality.
In line with expectation, the NHS data reveal a significantly positive relationship between non-Indigenous income and reported health status.
While Indigenous people were more likely to report being in poor or fair health than other Australians for each income group, more striking was the lack of significant difference in self-reported health status between low and high-income Indigenous families.
This lack of relationship remained even after adjusting for age difference between the low and high-income Indigenous families.
A good deal of attention is devoted in this report to establishing appropriate measures of income for the purpose of comparing Indigenous and non-Indigenous outcomes. Because the family circumstances of Indigenous Australians are so different from that of other Australians, simply comparing families with similar income is misleading. For example, if spending (either in health or other expenditure) enhances the well-being of all family members, then expenditure can be said to provide ‘public goods’ within the family. Alternatively, expenditure may provide purely private benefits for a particular family member, depending on whom (or even on what) the money was spent. The approach adopted is to use several measures of equivalent income which cover the range of possible assumptions about family circumstances from all expenditure being on public goods (raw income) to the other extreme where all expenditure is on private goods (per capita income). As with previous analysis of Indigenous health expenditure, the Henderson measure of equivalent income is also used.
Examination of the overall distribution of Indigenous income illustrates why it is important to consider alternative definitions of income. While Indigenous people are over-represented in the 20 per cent of Australian families with the lowest income (the bottom quintile), there are large differences between the alternative measures of income. For example, over one-half of Indigenous families are in the bottom quintile of per capita income compared with less than 30 per cent in the bottom quintile of raw family income. Furthermore a detailed analysis of Indigenous income indicates that there is substantial re-ranking within income quintiles, with as many as one-third of families changing income group when different income measures are used.