A list of its 20 most expensive federal programs published in May underscores this.

Medicare came in fourth on the list, just after the aged pension and family support. This year the federal government will spend more than $19 billion on Medicare services.

But it's not just the price tag for Medicare that makes budget managers twitch. It's also the rate of growth. Commonwealth spending on health care in general, and Medicare in particular, is rising more quickly than almost every other policy priority.

The budget in May forecast health spending by the federal government to balloon by more than $5 billion by 2016-17. And Medicare is one of the causes. Last financial year it cost $18 billion but by next financial year the Medicare bill will be nearly $21 billion.

The ageing of the population is one reason health costs are likely to grow rapidly in future. But an even bigger factor is the rapid improvement in health technology and medicines. These medical advances are delivering popular new treatments but they are also very expensive. The combination of a growing band of elderly patients wanting more expensive treatments means permanent upward pressure on health costs.