Academic journal article Health Care Financing Review

Business, Households, and Government: Health Spending, 1994

Academic journal article Health Care Financing Review

Business, Households, and Government: Health Spending, 1994

Article excerpt

INTRODUCTION

In 1994, national health expenditures (NHE) consumed 13.7 percent of the gross domestic product (Levis et al., 1996), reaching $949.4 billion. The 6.4-percent growth from the previous year was the slowest growth in more than 3 decades.

The analysis presented in this article builds on the national health accounts (NHA), which present spending by health care bill payers such as Medicaid, Medicare, and private health insurance. The NHA estimates are rearranged and disaggregated to permit an examination of sponsors of health care who provide funding to bill payers. These major sponsors of health care are business, households, and governments, with a small amount of revenue coming from non-patient revenue sources, such as philanthropy. Sponsors' spending is measured as expenditures for health services and supplies (HSS) that represent the cost of health care excluding research and construction. Some payments for HSS by sponsors pass through health care bill payers such as insurance and government, while other payments flow directly into the health care system. In this article, one additional layer (a breakdown of business and household) is revealed beyond those presented in NHA. Ultimately, however, the individual bears the primary responsibility of paying for health care through health insurance premiums, out-of-pocket costs, philanthropic contributions to health organizations, income taxes, earnings reduced by employers' health insurance costs, and higher costs of products.

In 1994, $919.2 billion was spent on HSS (Table 1). The private sector, which includes business, households, and nonpatient revenues, accounted for 63 percent ($577.3 billion) of HSS. The public sector accounted for the remaining 37 percent ($342.0 billion). Expenditures by the public sector include only general revenue(1) expenditures by Federal, State, and local governments. These expenditures include funding of health care programs and government employer contributions to health insurance plans and to the Medicare Hospital Insurance (HI) Trust Fund for their employees.

Table 1 Health Services and Supplies, by Sponsor: United States, Selected Calendar Years 1965-94

Type of Sponsor                1965    1970     1975     1980

                                      Amount in Billions

Total                          $37.7   $67.9   $122.3   $235.6
Private                         29.8    48.9     83.7    158.4
  Private Business               5.9    13.6     27.5     61.7
  Household (Individual)        23.2    33.8     53.8     89.5
  Non-Patient Revenue            0.6     1.5      2.4      7.2
Public                           7.9    19.0     38.6     77.3
  Federal Government             3.4    10.4     21.2     42.4
  State and Local Government     4.5     8.6     17.4     34.8

                                     Percent Distribution

Total                            100    100      100      100
Private                           79     72       68       67
  Private Business                16     20       23       26
  Household (Individual)          62     50       44       38
  Non-Patient Revenue              2      2        2        3
Public                            21     28       32       33
  Federal Government               9     15       17       18
  State and Local Government      12     13       14       15

Type of Sponsor                 1985     1990     1991     1992

                                      Amount in Billions

Total                          $411.8   $672.9   $736.3   $806.0
Private                         282.2    450.8    481.9    520.1
  Private Business              108.6    185.8    198.2    215.9
  Household (Individual)        160.5    245.3    262.2    281.9
  Non-Patient Revenue            13.1     19.8     21.5     22.3
Public                          129.6     22.1    254.4    285.9
  Federal Government             68. … 
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