Federal Health Minister Peter Dutton says the Abbott government's Commission of Audit will help overhaul the country's "unsustainable" health system.
Mr Dutton stopped short of detailing what the audit might entail, but told delegates at a business lunch in Brisbane on Wednesday major changes were needed.
He said an ageing population, technological developments and obesity and diabetes rates would all increase financial pressures on the health budget.
Without any policy changes, the Commonwealth's health expenditure would balloon from four per cent of Australia's gross domestic product to seven per cent by 2050 - about $685 billion.
"I will seek to paint a picture of Australia's health system, highlighting why our 1980s model is tracking on an unsustainable path with no prospect of meeting the needs of the health of our nation in the 21st century," Mr Dutton told the Committee for a Economic Development of Australia (CEDA) lunch.
Mr Dutton said his main focus was modernising and strengthening Medicare, because "the public know all is not well with our health system".
He said subsidies through the Medicare Benefits Schedule, Pharmaceutical Benefits Scheme and Private Health Insurance Rebate were the major contributors to health expenditure.
National Health Reform payments to states and territories for public hospitals were also a key cost, he said.
Mr Dutton said the government would look to the private sector to provide more services and help train staff.
"At the moment we are awaiting the findings and recommendations of the Commission of Audit and we will respond accordingly," he said.
"It will be a tough first budget and I don't think any Australian is surprised by that.
"The Australian public needs to know the facts."
