In principle, the best way to obtain estimates of per capita health expenditure by income is to collect individual-level information on the usage and associated costs of health services, income, Indigenous origin, age and gender. Unfortunately no such Australian data exist, and we are therefore forced to combine estimates of utilisation rates of health services (for each income and demographic group) from the 1995 NHS with the average costs of medical services estimated from a variety of administrative and survey data sources. The following health services are included in the estimates of per capita health expenditure by equivalent income:
out-of-hospital visits to general practitioners or medical specialists;
other health professional services;
admitted hospital patient services;
non-admitted hospital patient services;
prescription medications; and
over-the-counter medications.
The 1995 NHS contains information on 53751 Australians of all ages and is representative of those living in all areas. It is important to note, however, that due to concerns about the quality of some of the responses from Indigenous participants who do not speak English at home, the estimates in this report exclude Indigenous and non-Indigenous people living in sparsely settled areas. In total, 539 records from survey participants in such areas were excluded, of which 461 were Indigenous. Thus, the final Indigenous sample upon which all NHS data contained in this report are based amounted to the 1753 respondents in non-sparsely settled areas. The estimates show that the Indigenous sample was representative of 82 per cent of the Australia-wide Indigenous population.
One drawback of the 1995 NHS is its inability to separate health expenditure into private and public components. Unlike the 1989 NHS which asked about hospital utilisation in the previous twelve months, the 1995 NHS asked about hospital utilisation in the previous two weeks. As a consequence, there were insufficient reported visits to hospitals to provide for the estimation of private and public hospital utilisation rates by equivalent income. Furthermore the 1995 hospital data were found to be unreliable, being based on a handful of respondents, especially for the high-income Indigenous population.
Another important caveat is that, by estimating health expenditure via the utilisation of health services recorded in the NHS, an important element of public health expenditure is excluded from the analysis—spending on the provision of environmental health infrastructure.