Academic journal article Health Care Financing Review

National Health Expenditures, 1990

Academic journal article Health Care Financing Review

National Health Expenditures, 1990

Article excerpt


Health care expenditures reached $666.2 billion in 1990. During the last three decades, health care expenditures grew at a substantially faster pace than did the overall economy, consuming an increasing percentage of gross national product (GNP). Following are several highlights from the 1990 numbers:

* National health expenditures (NHE) rose 10.5 percent from 1989 to 1990, approximately the same growth rate as for the prior 2 years.

* In 1990, NHE absorbed 12.2 percent of GNP, compared with 11.6 percent for the preceding year. The abnormally high increase in the share of GNP spent for health care in 1990, the second largest jump since 1960, is the result of a slowdown in the general economy rather than an acceleration in the growth of health care costs.

* Per capita expenditures of $2,566 in 1990 were almost 1.5 times as great as expenditures 10 years earlier. Personal health care expenditures accounted for 88 percent of that amount, or $2,255 per person.

* In 1990, spending for hospital services returned to the double-digit growth experienced in 1982 and earlier, prior to the advent of the prospective payment system (PPS). Expenditures for this category increased 10.1 percent from 1989 to $256.0 billion in 1990. Hospital spending, 38.4 percent of total health expenditures, is the largest category in NHE (Figure 1).

* Expenditures for professional services, which consist of physician services, dental services, and services of other professionals, totaled $191.3 billion for 1990, 28.7 percent of all health spending. This is an increase of 11.0 percent from 1989.

* Public programs contributed 42.4 percent of the funding for health care, with private payments funding the other 57.6 percent. Public programs funded a larger share of NHE in 1990 than in any previous year. Medicaid was the single largest contributor to the rising public share. Medicaid payments grew 20.7 percent from 1989 through 1990, the highest growth since the mid-1970s.

* Medicaid and Medicare combined paid for 28.0 percent of NHE in 1990, up from 27.3 percent during 1989. These two programs financed 37.8 percent of hospital care and approximately one-third of physician services.

* Consumers continued paying for a little more than one-half of all health care expenditures through private health insurance and out-of-pocket payments, a share that has changed very little during the past 16 years. The private health insurance share remained relatively constant for the last 2 years, after steadily increasing since 1960. Out-of-pocket payments dropped slightly as a percent of total expenditures in 1989 and 1990.

Health care costs continue to rise faster than GNP, a measure of total output of the United States. Despite an increasing share of GNP devoted to health care, a large and increasing number of people (33.4 million in 1989) remain uninsured by private health insurance or by public programs; additionals persons are underinsured. Without sufficient insurance coverage, many Americans find access to the health care system limited for many services.

Extensive debate on various proposals that attempt to address the questions of access and rising health care costs is under way. The NHE estimates provide a backdrop for understanding health care financing issues and the factors that account for cost increases during the past three decades.

Detailed Tables 8-13 at the end of this article show expenditures for health care for selected years 1960 through 1990, both by type of service and by source of funds. Data figures from the detailed tables are highlighted throughout this article.

National health expenditures

NHE reached a level of $666.2 billion in 1990. Spending grew 10.5 percent, the third consecutive year of similar growth. In 1990, health expenditures absorbed 12.2 percent of GNP, compared with 11. …

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