The gap in health spending between metropolitan and rural Australia has blown out to $9.23 billion, an increase of almost $2.7 billion in two years, according to a report warning that millions of country residents face chronic doctor shortages and poorer health outcomes.
The National Rural Health Alliance's Forgotten Health Spend report found the shortfall in health expenditure between metropolitan and rural Australia grew from $6.55 billion in 2023 to $9.23 billion in its latest assessment.
Rural Australians receive an average of $1218 less per person in annual healthcare expenditure than city residents, a gap that widened by $138 in real terms in just one year. The disparity is greatest in small rural towns with populations under 5000, where the shortfall exceeds $6600 per person and residents face some of the country's most severe shortages of GPs, specialists and allied health professionals.
The report found metropolitan areas now have more than 20 times as many specialist doctors per head as small rural towns, while country communities are increasingly relying on nurses to deliver essential care. It said millions of rural Australians were facing worsening funding shortfalls, chronic doctor shortages and poorer health outcomes.
The alliance warned that Medicare's traditional reliance on payments for individual consultations cannot sustain services in communities with small populations, higher operating costs and further workforce shortages.
The findings will intensify pressure on federal and state governments, the majority of them Labor, to overhaul rural health funding. Independent MP Helen Haines said the expansion of Medicare urgent care clinics had done little to resolve the rural health divide in her electorate.
Analysis
Why This Matters
- The widening gap means rural Australians are receiving significantly less health funding per person in communities already short of GPs, specialists and allied health professionals.
- In small rural towns the shortfall exceeds $6600 per person, the communities the report says face some of the country's most severe workforce shortages.
- The findings raise the question of whether Medicare's per-consultation funding model can deliver equitable care to low-population communities with higher operating costs.
Background
Australia's health system splits funding between the federal government, which runs Medicare, and state governments, which manage public hospitals and community health services. Medicare's payment model rewards individual consultations, a structure that has long been considered weaker for rural practices where patients are fewer and costs are higher. The National Rural Health Alliance has tracked the metropolitan-rural spending gap across successive assessments, and the latest report records a sharp widening between 2023 and the current figure.
Key Perspectives
National Rural Health Alliance: The report warns that the consultation-based Medicare model cannot sustain services where populations are small, costs are higher and workforce shortages persist.
Independent MP Helen Haines: Says the expansion of Medicare urgent care clinics has done little to close the divide in her electorate, indicating new programs are not reaching the communities most in need.
Federal and state governments: Mostly Labor administrations, they now face intensified pressure to overhaul rural health funding. The test will be whether any response moves beyond per-consultation payments toward a model that accounts for population size and operating costs.
What to Watch
- Whether federal or state governments announce changes to rural health funding, and how any response addresses the per-consultation payment model.
- How the Medicare urgent care clinic program fares as a rural policy response, given criticism that it has not closed the divide.
- The next edition of the Forgotten Health Spend report, to see whether the spending gap continues to widen.