Australian health expenditure topped 10 per cent of GDP for the first time in 2015-16, new data shows.

While growth in health spending is actually slowing down, it is doing so at a lesser rate than GDP growth.

Last year, the health spend was $170.4 billion was spent on health, $6 billion (3.6 per cent) more in real terms than in 2014–15.

The Australian Institute of Health and Welfare figures show it was the fourth consecutive year growth was below the 10-year average of 4.7 per cent.

Grattan Institute health economist Dr Stephen Duckett said it was good news that health spending was not growing as fast as it has before.

“But breaching that 10 per cent level is still important, because this means one in every $10 in the economy is being spent in the health sector. Almost 70 per cent of health spending is government spending,” he said.

“I think it’s a sign that the overall settings that the previous Labor government put in place for public hospital spending is working. No dramatic changes are necessary.

“We’ve had in the past discussions about healthcare being unsustainable and unaffordable, but the rate of that growth is slowing without any draconian steps like co-payments being required.”

Professor of health economics at the University of Melbourne, Philip Clarke, said state and federal governments need to come up with ways to avoid a spending and funding crisis.

“Inevitably this involves either spending less on other things and/or raising taxes,” Clarke said.

“The other option, which is the most politically difficult, is to look at ways of improving the efficiency of the system. In some cases this would involve tackling waste and reducing unnecessary care.”

The data shows that state and territory governments provided 26.1 per cent ($44.4 billion) in health expenditure in 2015–16, up from 25.9 per cent the year before.

In that same period, the nongovernment share of spending, including individuals and private health insurers, fell from 17.7 per cent to 17.3 per cent.

“I think as the economy slows down people are having second thoughts about purchasing over-the-counter medicines,” Dr Duckett said.

“We also know that when people don’t have as much money to spend sometimes they won’t get their prescription medications filled, as they can’t afford them.”

In 2015–16, 68 per cent of individual expenditure went to primary healthcare, while 19.5 per cent was spent on dental services.

Hospital costs accounted for 11.1 per cent, more than double the proportion in 2005–06.