A report released on Tuesday said the state will fall short of the $2 billion dollars needed by about $150 million, however, the government has questioned the methodology behind the findings.

Policy analyst and report author Martyn Goddard said the health system needs $2 billion to keep the sector going at its current level of dysfunction.

"This isn't going to make the system better. It's just to keep the system ticking over at its current level without it getting too much worse," Mr Goddard said.

Health and Community Services Union state secretary Tim Jacobson said he does not expect the required $2 billion to be in the upcoming budget because current and previous governments have notoriously underfunded health.

"This is the circular, ridiculous situation that we end up with each budget. The government will argue they put more money in, but not recognise it is chronically underfunded," Mr Jacobson said.

"The situation with health is dire right now. We are seeing adverse events on a regular basis."

Mr Jacobson said Premier Will Hodgman has admitted there has been a massive increase in demand.

"His own admission was that those people are more complex, so the costs are growing," he said.

"The government really does need to step up, put in what is required and plan for the future."

Australian Nursing and Midwifery Federation Tasmania director Andrew Brakey said he would be grateful for a $2 billion health budget.

"Nurses and midwives at the moment are already seeing FTE freezes which means that it's taking along time for nursing vacancies to come through all the requirements it takes to fill a vacancy, which is leading to more overtime, double shifts and staffing shortages," he said.

"Patients are going to suffer in hospitals across the state.

"We'd love to see a pay increase for nurses in the budget as well."

Health Minister Michael Ferguson said the budget would show the government was meeting the needs of the Tasmanian community.

"Tasmanians can look forward to this month's budget which will unveil the Hodgman Liberal government's funding commitments towards health," Mr Ferguson said.

"Today we are the second highest funder of health of all the states and territories as a percentage of our total budget."

Mr Ferguson said the government had concerns about the methodology of the report.

Premier Will Hodgman said Mr Goddard's claims in respect to GST and its application to the health budget were unfounded.

"The GST is appropriately distributed to states in a way that allows us to invest more into health and other essential services," Mr Hodgman said.

"Our record demonstrates increased health funding since we've come into government. We've invested not only in our hospital infrastructure but also employing more health professionals."

Mr Goddard said his belief that the government would allocate about $150 million less than the minimum funding required was based on credible evidence and figures given by concerned people in the public sector.

"I can't tell you who those people are, but they are highly credible," he said.

"That sort of black hole in the budget can not be achieved without further service downgrades, hundreds more patients being turned away and staff sackings. You can't take that amount out of the system without having that effect.

"Year after year after year we've had these massive cuts. The systems have been run-down."

Royal Hobart Hospital medical staff association spokesman Dr Frank Nicklason said health sector workers were already at the limit of what they could cope with.

Dr Nicklason said if the predicted bad flu season hits, because the system is already failing it could lead to desperate trouble not seen before.

"We have no spare in the system. It's scary," he said.