Preventive Health Funding in Australia: The Policy Case for Investment

Australia operates one of the highest-performing universal health systems in the OECD, yet it persistently underinvests in the activity most likely to contain its long-run cost: prevention. According to the Australian Institute of Health and Welfare (AIHW), total health expenditure reached approximately $230 billion in 2023-24, of which an estimated $3.5 to $4.2 billion — roughly 1.5% to 2% — was directed to public health and preventive activity. The World Health Organization recommends member states aim for at least 5% of total health spending on prevention. Australia is, on every credible accounting, less than half-way there.

This article makes the policy case for substantially expanding preventive health investment in Australia. It draws on AIHW data, the Productivity Commission's 2017 Shifting the Dial review, Deloitte Access Economics return-on-investment modelling, and international comparators including the Finnish North Karelia Project and the United Kingdom's Office for Health Improvement and Disparities (OHID). It is intended for clinicians, policymakers, advocates, and informed citizens seeking a non-commercial, evidence-anchored framing of the reform task.

The Current State of Preventive Health Spending

The AIHW's Health expenditure Australia series is the authoritative source for Commonwealth, state, and territory health outlays. The most recent edition (2024 release covering 2022-23) reports preventive and public health spending at approximately 1.8% of total recurrent health expenditure. This figure has been broadly stable — fluctuating between 1.3% and 2.2% — for more than a decade, with a transient spike during the COVID-19 pandemic that has since receded.

The Productivity Commission's Shifting the Dial: 5 year productivity review (2017) was unusually direct on the structural problem. The Commission concluded that "the funding of preventive health is small and has been consistently inadequate to address the burden of chronic disease," and noted that fragmentation between Commonwealth and state responsibilities created an institutional bias toward treating illness rather than preventing it. The Australian Medical Association, the Public Health Association of Australia, and successive editions of the Medical Journal of Australia have echoed this analysis.

By international comparison, Canada directs approximately 5.9% of health spending to prevention, New Zealand 6.4%, the United Kingdom around 5.0%, and Finland — long a global leader — 4.4%. Australia's underinvestment is not a measurement artefact; it is a sustained policy choice.

The Burden of Disease That Prevention Could Address

The AIHW Australian Burden of Disease Study quantifies disability-adjusted life years (DALYs) lost across the population. The 2024 release attributes the four largest shares of total disease burden as follows:

• Cancer: approximately 18% of total burden, with lung, colorectal, breast, and prostate cancers dominant. A substantial fraction is attributable to modifiable exposures: tobacco, alcohol, ultraviolet radiation, obesity, and inadequate screening uptake.
• Mental health and substance use disorders: approximately 13% of burden, with anxiety, depressive disorders, and alcohol use disorders accounting for the largest sub-shares. Early intervention and population-level mental health promotion remain underfunded relative to acute care.
• Cardiovascular disease: approximately 12% of burden. The AIHW estimates that roughly 80% of cardiovascular events are linked to modifiable risk factors — hypertension, dyslipidaemia, smoking, physical inactivity, and dysglycaemia.
• Musculoskeletal conditions: approximately 12% of burden, dominated by back pain, osteoarthritis, and rheumatoid arthritis. Physical activity, occupational ergonomics, and weight management are the principal preventive levers.

Together these four categories represent roughly 55% of all disease burden, and the AIHW estimates that around 38% of total burden is attributable to modifiable risk factors that prevention programs are designed to address. The implication is direct: a system that spends less than 2% of its budget on the activity most likely to reduce more than a third of its disease burden is structurally misallocated.

The Economic Case: Return on Investment in Prevention

Deloitte Access Economics has produced two influential reports for Australian commissioners — Returns on investment in public health (2003) and the updated The economic value of preventive health (2021). The headline finding has been broadly stable: each dollar invested in well-designed preventive programs returns substantially more than a dollar in avoided downstream healthcare and productivity costs. Specific program-level returns documented in Australian and international evaluations include:

• Tobacco control: approximately 50:1 over multi-decade horizons. Australia's combined excise, plain packaging, and cessation support package is among the highest-yielding public health investments ever evaluated.
• Childhood immunisation (National Immunisation Program): approximately 16:1, accounting for averted hospitalisations, lost productivity, and lifetime disability.
• Road safety (Vision Zero-style packages): approximately 6:1, including infrastructure, vehicle standards, and enforcement.
• Brief alcohol interventions in primary care: approximately 4:1 to 12:1 depending on setting.
• Cardiovascular absolute-risk screening with statin and antihypertensive optimisation: approximately 3:1 to 5:1 in the first decade, rising thereafter.

These returns are not speculative. They are derived from longitudinal health and cost data in Australia, the United Kingdom, the Nordics, and Canada. They are also conservative; most exclude productivity, carer, and quality-of-life gains.

What Preventive Health Includes

A common reason policy debate stalls is imprecision about what "prevention" means. For costing and program design purposes, Australian preventive health activity comprises six broad categories:

1. Population screening programs. BreastScreen Australia, the National Bowel Cancer Screening Program, the National Cervical Screening Program, and pilot abdominal aortic aneurysm screening in selected jurisdictions.
2. Vaccination programs. The National Immunisation Program (NIP), HPV (Gardasil 9), shingles (Shingrix from 2023 for cohorts at risk), seasonal influenza, and the ongoing COVID-19 program.
3. Health promotion campaigns. Eat for Health, Move it AUS, Head to Health, and skin cancer campaigns coordinated with Cancer Council.
4. Brief interventions in primary care. The 5As model (Ask, Assess, Advise, Assist, Arrange) for smoking, alcohol, weight, and activity.
5. Allied health rebated access. Exercise physiology, dietetics, psychology, and podiatry under chronic disease management plans (formerly Enhanced Primary Care).
6. Early intervention pathways. Cardiac rehabilitation, mental health stepped care, addiction medicine, and pulmonary rehabilitation.

Each is necessary; none alone is sufficient. The Productivity Commission has repeatedly observed that Australia's preventive architecture is fragmented across these six streams, with no single agency holding accountability for population outcomes since the abolition of the Australian National Preventive Health Agency (ANPHA) in 2014.

Preventive Spending vs Disease Burden It Addresses

| Prevention category | Approx. annual spend | Burden addressed | Funded by | |---|---|---|---| | Population cancer screening | $480M | Cancer (~18% burden) | Commonwealth + states | | National Immunisation Program | $560M | Infectious disease (~3% burden) | Commonwealth | | Allied health under CDM plans | $410M | CVD, MSK, mental health (~37% combined) | Commonwealth (MBS) | | Health promotion campaigns | $90M | Modifiable risk factors broadly | Commonwealth + states | | Brief interventions / 5As | Not separately costed | All chronic disease | Bundled into MBS items | | Early intervention (cardiac, MH, addiction) | $640M | CVD, mental health | Mixed | | Total preventive | ~$3.5–4.2B (1.8%) | ~38% of burden modifiable | |

The mismatch is the policy story. Allied health under chronic disease management plans receives roughly $410 million annually but addresses conditions accounting for more than a third of disease burden, while session caps and rebate levels limit utilisation to a fraction of clinical need.

MBS Rebate Gaps for Allied Health

Under the Medicare Benefits Schedule (MBS) chronic disease management framework, eligible patients can access up to five rebated allied health sessions per calendar year (combined across exercise physiology, dietetics, psychology in this stream, podiatry, and other allied disciplines) once a GP Management Plan (GPMP, item 721) and Team Care Arrangement (TCA, item 723) are in place. Five sessions per year is, on every clinical measure, inadequate for managing type 2 diabetes, established cardiovascular disease, persistent musculoskeletal pain, or moderate-severity mental health conditions.

The rebate levels themselves create access barriers. As of the 2025 MBS, exercise physiology under item 81115 attracts a Medicare rebate of $60.85 per session against typical practitioner fees of $110 to $150. Patients in the bottom income quintile face an effective out-of-pocket cost of $50 to $90 per session, which empirical work in Australian Health Review has consistently shown deters utilisation.

The 2023 reduction of subsidised psychology sessions under the Better Access initiative from 20 to 10 per year has been particularly contentious. The University of Melbourne evaluation commissioned by the Department of Health found measurable clinical benefit at the 11- to 20-session range for moderate-to-severe presentations, and the rollback has been criticised by the Australian Psychological Society and the Royal Australian and New Zealand College of Psychiatrists as inconsistent with the evidence base. For the broader policy context on chronic disease management plan utilisation and reform, see our analysis of Medicare and PBS obesity treatment reform.

Chronic Disease Management Plan Utilisation Gaps

AIHW Medicare data reveal substantial inequity in GPMP and TCA utilisation. In 2022-23, residents of Major Cities accessed GPMP items at approximately 1.6 times the rate of those in Outer Regional and Remote areas. Indigenous Australians, despite carrying disproportionately high chronic disease burden, accessed allied health under TCA at rates approximately 25% to 30% lower than non-Indigenous Australians. Patients in the lowest socioeconomic quintile accessed GPMP-linked allied health at roughly 60% of the rate of those in the highest quintile.

This is the inverse of what need-based allocation would produce. It reflects a combination of workforce maldistribution, gap fees, transport barriers, and limited bulk-billing among allied health practitioners. Aboriginal Community Controlled Health Organisations (ACCHOs) consistently outperform mainstream services on preventive metrics for Indigenous populations, but receive only a fraction of the funding required to meet demand. For broader context on population-level metabolic disease in Australia, see our policy review of metabolic syndrome and Australian public health policy and the wider obesity crisis in Australia.

The Case for an ANPHA-2

The Australian National Preventive Health Agency was established in 2011 following the National Preventative Health Taskforce report and abolished in 2014 by the Abbott government's first budget, with most functions transferred to the Department of Health. Its dissolution is widely regarded — including by the Public Health Association of Australia and successive editorials in the Medical Journal of Australia — as a setback for coordinated national prevention policy.

The case for re-establishment (an "ANPHA-2") rests on three structural arguments. First, prevention is a long-cycle activity whose returns accrue on horizons of 10 to 30 years, longer than electoral cycles. An arms-length agency with multi-year hypothecated funding is institutionally better placed to sustain programs than a department subject to annual budget pressure. Second, prevention is cross-portfolio — touching health, social services, education, transport, urban planning, and treasury — and benefits from a single agency with convening authority. Third, the United Kingdom's experience with Public Health England (now reorganised into UKHSA and OHID) and New Zealand's Health Promotion Agency demonstrates that institutional persistence is associated with sustained policy progress.

A re-established agency would be most effective if funded through hypothecation — for example, ringfencing 0.5 percentage points of the Medicare levy or a defined share of tobacco and alcohol excise — rather than competing annually with acute care for general revenue.

State vs Commonwealth: The Coordination Problem

Australia's federation creates a structural disincentive to invest in prevention. The Commonwealth funds Medicare, the Pharmaceutical Benefits Scheme, the National Immunisation Program, and most preventive activity. The states and territories fund and operate public hospitals, where the costs of preventable illness ultimately materialise. A successful Commonwealth investment in cardiovascular risk screening reduces state hospital admissions; the Commonwealth bears the cost while the states capture much of the benefit.

The National Health Reform Agreement and the activity-based funding model partially address this through shared funding of public hospital services, but the underlying incentive misalignment persists. The Productivity Commission has recommended a Federal Financial Relations reform that would explicitly credit Commonwealth preventive investment against state hospital activity reductions, but no such mechanism has been implemented. Until it is, expect sub-optimal preventive investment as the equilibrium outcome of Australian fiscal federalism.

International Models Worth Studying

Finland — North Karelia Project. Beginning in 1972 in response to extreme cardiovascular mortality, the project combined population-wide dietary change (reduction in saturated fat and salt), aggressive hypertension management, and tobacco control. Over 30 years, age-adjusted cardiovascular mortality in working-age men fell by approximately 80%, with roughly half attributable directly to the program. Total cost was modest; total benefit, in averted mortality and healthcare costs, runs to billions of euros.

United Kingdom — UKHSA and OHID. The 2021 reorganisation separated health protection (UKHSA) from health improvement and inequalities (OHID within DHSC). OHID retains responsibility for tobacco, obesity, alcohol, and physical activity strategy. The model demonstrates that prevention can be embedded in central government when it has institutional permanence and explicit accountability for inequalities.

New Zealand — Health Promotion Agency. Now Te Hiringa Hauora, the agency operates with statutory independence, dedicated funding, and a Treaty of Waitangi-aligned mandate that has produced measurable progress on Maori health outcomes. Its alcohol levy hypothecation is a model directly transferable to Australia.

The Metabolic Screening Gap

Australia has no population-wide screening program for early metabolic dysfunction. The Royal Australian College of General Practitioners (RACGP) Red Book recommends absolute cardiovascular risk assessment from age 45 (35 for Aboriginal and Torres Strait Islander people), incorporating fasting lipids, fasting glucose or HbA1c, blood pressure, and smoking status. It does not routinely recommend fasting insulin, HOMA-IR, or high-sensitivity C-reactive protein (hs-CRP), despite a substantial evidence base demonstrating that these markers identify metabolic dysfunction 5 to 15 years before standard markers become abnormal. Functional and integrative practitioners have long supplemented standard panels with tools such as organic acids testing to detect upstream metabolic and micronutrient imbalances, though these remain outside MBS rebate and are inaccessible to most patients without private funding.

The clinical case for adding fasting insulin and hs-CRP to a routine 40+ health check, repeated every three years, is strong. The cost is modest — roughly $25 to $40 per test under MBS pricing. The upside is earlier identification of insulin resistance and chronic inflammation, conditions for which lifestyle intervention has well-documented efficacy. ApoB is another chronically underutilised preventive biomarker — it outperforms LDL cholesterol in predicting cardiovascular event risk yet remains outside standard MBS screening panels. The Productivity Commission's recommendation for "expanded preventive screening with explicit cost-effectiveness thresholds" is, in this context, directly actionable.

Digital Health and Preventive Monitoring

Continuous glucose monitors (CGMs), home blood pressure devices, validated wearables, and remote monitoring platforms have matured to the point where they can support population-scale preventive programs at modest marginal cost. The MBS does not currently rebate CGM use outside type 1 diabetes and selected type 2 indications, despite emerging evidence that short-term CGM exposure in pre-diabetes and metabolic syndrome improves dietary self-regulation and glycaemic outcomes.

Equity is the binding constraint. Digital preventive tools risk widening rather than narrowing health inequalities unless explicitly designed for low-income, rural, and Indigenous populations. Any expansion of digital preventive monitoring should be paired with subsidised device access, data plan support, and integration with ACCHOs and rural primary care. Regulatory clarity also matters — see our analysis of TGA peptide regulation in Australia for the broader pattern of how Australian regulators balance access and safety in emerging therapeutic areas.

Six Costed Policy Proposals

The following six proposals are derived from Productivity Commission, AIHW, Deloitte, and MJA analyses, sized for a five-year implementation horizon, and modelled against the existing MBS and federal budget framework.

1. Allied health session expansion under chronic disease management. Lift the combined cap from 5 to 20 rebated sessions per year for patients with documented chronic disease, with structured outcome reporting. Estimated cost: $1.4 billion per year at full uptake. Estimated return based on Deloitte modelling: $4.2 to $5.6 billion per year in averted hospitalisations and productivity gains.

2. Metabolic screening additions to GP annual checks. Add fasting insulin, HbA1c (where not already done), and hs-CRP to the 45+ health check (item 715 and successors), repeated every three years. Estimated cost: $180 million per year. Expected impact: earlier identification of approximately 400,000 Australians with metabolic dysfunction not detected by current screening.

3. Lifestyle Prescription Program funding. Commonwealth co-funding for evidence-based group programs in diabetes prevention, cardiac rehabilitation, and stepped mental health care, delivered through Primary Health Networks. Estimated cost: $320 million per year. Models on the National Diabetes Prevention Programme (UK) and Diabetes Prevention Program (US), both of which have documented 25% to 58% reductions in progression to type 2 diabetes.

4. Hypothecated preventive health levy. Ringfence 0.5 percentage points of the Medicare levy (raising the rate from 2.0% to 2.5% for higher-income earners or as a uniform increment) explicitly for prevention, governed by an independent agency. Estimated revenue: approximately $2.8 billion per year, sufficient to fund proposals 1, 2, and 3 with margin.

5. Re-establish a national prevention agency (ANPHA-2). Statutory authority with five-year hypothecated funding cycle, board accountable to Parliament, explicit inequalities mandate. Estimated cost: $80 million per year for agency operations exclusive of program funding.

6. Aboriginal Community Controlled Health Organisations preventive expansion. Increase preventive funding flowing to ACCHOs by approximately 60% over five years, with funding flexibility to design locally relevant programs. Estimated cost: $240 million per year. Returns documented in successive evaluations of the Australian Government's National Aboriginal and Torres Strait Islander Health Plan.

The total annual cost of the package — approximately $5.2 billion at full implementation — is substantial in absolute terms but represents roughly 2.3% of current health expenditure and would lift Australia's preventive share from approximately 1.8% to approximately 4.0%, near international benchmark. Deloitte-style return-on-investment modelling suggests the package would pay for itself within 8 to 12 years, with continuing returns thereafter. For surgical and pharmaceutical complementarities to a strengthened preventive system, see our analyses of bariatric surgery access policy and Medicare/PBS obesity treatment reform.

Frequently Asked Questions

Why is Australian preventive spending below the WHO 5% benchmark? The shortfall reflects three structural factors: federation-driven misalignment between Commonwealth funders and state hospital operators; the long return horizon of preventive investment, which fits poorly with electoral cycles; and the 2014 abolition of the Australian National Preventive Health Agency, which removed a coordinating institution with explicit accountability for prevention outcomes. Successive Productivity Commission reviews have concluded that the underinvestment is a sustained policy choice rather than a measurement artefact, and that without institutional reform — particularly hypothecated funding and a re-established agency — the equilibrium outcome will continue to be sub-optimal preventive investment.

What evidence supports the claim that prevention pays for itself? Deloitte Access Economics has produced multiple Australian return-on-investment analyses since 2003, with program-specific returns including approximately 50:1 for tobacco control, 16:1 for childhood immunisation, and 6:1 for road safety. International evidence is consistent: the Finnish North Karelia Project achieved approximately 80% reduction in cardiovascular mortality in working-age men over 30 years at modest cost. AIHW data on chronic disease burden — approximately 38% attributable to modifiable risk factors — establish the upper bound of preventive opportunity.

Why expand allied health sessions from 5 to 20 per year? Five sessions per year is below the clinically effective dose for almost every condition for which chronic disease management plans are written. Type 2 diabetes management, cardiac rehabilitation, persistent musculoskeletal pain, and moderate-severity mental health all show evidence-based session requirements in the 12-to-30 range. The current cap is a budgetary artefact, not a clinical determination, and Deloitte modelling suggests the return on lifting the cap is approximately 3:1 to 4:1.

What is the case for re-establishing a national prevention agency? Three arguments: prevention's long return horizon requires institutional permanence beyond electoral cycles; cross-portfolio coordination (health, transport, education, urban planning) benefits from a single convening authority; and international experience — UKHSA/OHID in the United Kingdom, Te Hiringa Hauora in New Zealand — demonstrates that arms-length agencies sustain policy progress better than departmental units. Hypothecated funding is essential; without it, the agency will face the same budgetary erosion that affected ANPHA between 2011 and 2014.

How does state vs Commonwealth funding interact with prevention? Commonwealth funding dominates primary care and preventive activity (Medicare, PBS, NIP); states fund and operate public hospitals where preventable illness ultimately materialises. The result is an institutional disincentive: Commonwealth-funded prevention reduces state hospital costs, with little fiscal feedback to the original investor. The Productivity Commission has proposed crediting Commonwealth preventive investment against state activity reductions through the Federal Financial Relations framework. No such mechanism is yet in place, and reform is overdue.

Conclusion

Australia's preventive health architecture is not failing for want of evidence. AIHW, the Productivity Commission, Deloitte Access Economics, and successive MJA reviews have produced more than two decades of consistent analysis showing that the country underinvests in prevention by a factor of two to three relative to international benchmarks, and that the return on a well-designed expansion package would be substantial. The reform task is institutional: hypothecated funding, a re-established agency, expanded allied health access, metabolic screening additions, and explicit federal-state coordination. Each of these is implementable within the existing constitutional and budgetary framework. The policy question is not whether prevention works. It is whether Australia is prepared to organise itself to do it.

This article is provided for informational and advocacy purposes only. It is not medical advice, financial advice, or a substitute for clinical consultation. Coalition for Better Health does not provide individual medical guidance; readers are encouraged to discuss personal health decisions with their general practitioner or qualified specialist.