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Variation in the costs of surgery: seeking value

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Transparency is key to achieving affordability of health care

There is increasing concern about the sustainability of health care in Organisation for Economic Co-operation and Development (OECD) countries. Australia currently spends US$6140 per capita — or 9.1% of its gross domestic product — on health care.1 Moreover, there is evidence that health care costs, including out-of-pocket (OOP) expenses, are rising.2 In Australia, 68% of health care costs are funded through the public health system, with 32% from other sources, including private health insurers and OOP expenses.2 To encourage Australians to take out health insurance, the private health system is subsidised by a private health insurance rebate, which costs the public about $5 billion per year.2 Private health insurers derive their income from premiums, which have risen an average of just under 6% per year since 2012, well above the inflation rate or the consumer price index.3 Individual OOP expenses are also rising at an average rate of 6.2%; they have more than doubled in a decade and accounted for 17.8% of Australia’s $140 billion health care spending in 2013–14.2

Value is defined as the health outcomes achieved per dollar spent.4