Academic journal article Health Care Financing Review

National Health Expenditures, 1991

Academic journal article Health Care Financing Review

National Health Expenditures, 1991

Article excerpt


The Nation spent $751.8 billion, or $2,868 per person, for health care in 1991. Total health care expenditures exceeded the aggregate amount spent in 1990 by 1 1.4 percent, continuing to increase at a rapid rate, despite the slowdown in the general economy. Highlights from the 1991 update to the national health accounts (NHA) include:

* Americans spent 13.2 percent of the Nation's gross domestic product (GDP)(1) on health care, up from 12.2 percent I year earlier. Slow growth in GDP was largely responsible for the 1.0-percentage-point increase in the share

of the Nation's resources going for health care.

* Almost 88 percent of all health care expenditures go for the purchase of medical care services or products (Figure 1). In 1991, these purchases of personal health care (PHC) amounted to $660.2 billion, 11.6 percent higher than in 1990.

* Expenditures for hospital services of $288.6 billion in 1991 are the largest single component of PHC expenditures, 43.7 percent. Consumers funded only 3.4 percent of these purchases from out-of-pocket sources, down from 4.0 percent in 1990.

* The Health Care Financing Administration's (HCFA) Medicare and Medicaid programs paid for 33.8 percent of all PHC benefits in 199 1, up from 30.5 percent in 1990. Most of the increase came from Medicaid.

* In 1991, Federal and State and local expenditures for Medicaid benefits amounted to $96.5 billion, an increase of 34.4 percent from the 1990 level. Recent expansions in recipient eligibility, expanded outreach efforts by States to establish eligibility for qualified poor persons, and the recession caused increases in the number of persons with coverage under Medicaid.

* Of all benefits paid by Medicaid, hospital expenditures grew the most, up 49.9 percent from the 1990 level. Creative financing by State governments, using provider tax and donation (T & D) programs, and payments to hospitals serving a disproportionate share of Medicaid recipients and other poor persons contributed to these large increases in Medicaid spending for hospital services.

* Medicare spent $120.2 billion on health care benefits in 1991, an increase of 10.9 percent from the 1990 levels. Medicare funded 18.2 percent of all personal health care services in 1991.

In 1990 and 1991, the health care share of GDP grew 0.7 and 1.0 percentage points, respectively. On average, the share of GDP going for health care increased 0.2 percentage points each year between 1960 and 1989. The rapid growth experienced over the past 2 years signals the dramatic change in pressure health care costs are exerting on the Nation's resources, which have been growing at an abnormally slow rate for the past 2 years. Changes in State financing over the past few years illustrate the reactions of health care financers who are being confronted with continually rising costs and limited resources. Faced with slower growth in tax revenue and increases in Medicaid responsibilities through rising prices, Federal mandates, and the recession, States have resorted to alternative financing methods to extend the purchasing power of their limited resources.

In this article, we present an overview of health spending in the United States for 1991. We also discuss the reasons for the explosive growth in Medicaid expenditures and explore various issues and trends in hospital expenditures. We conclude with detailed Tables 13-22 of health expenditures by type of service and source of funds. Data figures from the detailed tables are highlighted throughout this article.

Previously published articles explain the importance of the NHA for the formulation of public policy and for international comparisons. These articles also provide specific information on definitions, data sources, and methods used to create the system of NHA for the United States (Lazenby et al., 1992; Office of National Cost Estimates, 1990). …

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