Related BLS programs | Related articles
March 1995, Vol. 118, No. 3
Geoffrey D. Paulin and Wolf D. Weber
H ealth care expenditures in the United States are consuming an ever increasing portion of gross domestic product (GDP). In 1993, the Nation's health care costs amounted to $884.2 billion, up 7.8 percent from 1992, accounting for 13.9 percent of the GDP.1 This compares with the 5.9 percent in 1965,2 the year in which the Federal Government initiated two major health care programs-Medicare and Medicaid.3
As reliance on the health care system and the cost of health care have risen, responsibility for funding health care has shifted. In 1965, 50 percent of health services and supplies were paid for by household out-of-pocket spending.4 By 1993, the amount dropped to only 18 percent.5
In the late 1960's and early 1970's, much of the direct cost of funding health care shifted to business and government. The private business share of health services and supplies grew from 16 percent in 1965 to 28 percent in 1981 and has since remained fairly constant.6 But the Federal Government's share of health care expenditures continued to grow, increasing on average 12.2 percent a year over the 1989-93 period. In 1993, the Federal Government's share for health care amounted to 31.7 percent of the Nation's health care bill.7 Rising costs for health care, increased use, changing demographics, and the perennial initiative for fiscal austerity in the Federal Government are continually sparking debate over funding health care. Households, which have avoided much of the direct costs of increasing health care expenditures, are likely to contribute more to fund health care in the future. Such prospect makes it important to examine household expenditure patterns to establish a reference point for assessing how a transfer of health care costs to consumers may affect families.
This excerpt is from an article published in the March 1995 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
Read abstract Download full text in PDF (1,339K)
1 HHS News, U.S. Department of Health and Human Services, November 1994, p.1.
2 Health, United States, 1992, National Center for Health Statistics. MD, Hyattsville, Public Health Service, 1993, p. 161.
3 Medicare is a nationwide health insurance program providing health insurance protection to persons at least 65 years old, persons who are entitled to Social Security disability payments for at least 2 years, and all persons with end-stage renal disease, regardless of income. Medicare consists of two parts: hospital insurance (Part A) and supplementary medical insurance (Part B). However, the Consumer Expenditure Survey makes no distinction between parts A and B policies.
Medicaid is operated and administered at the State level, but includes Federal financial participation. Within federally mandated guidelines, States decide eligibility, the amount , duration, and scope of services covered, and other related issues. Medicaid provides coverage for certain low income persons, and categorically covers participants in the Aid to Families with Dependent Children program and in the Supplemental Security Income program. In most States it also covers certain other persons considered medically needy.
4 Health, United States, p. 170. These data are compiled by the Health Care Financing Administration and do not include consumer expenditures for health insurance premiums in the calculation of out-of -pocket health care expenditures. The current study, which uses Consumer Expenditure Survey data includes health insurance expenditures in out-of-pocket health care spending. The other components of out-of-pocket health care expenditures are medical care services, prescription drugs, nonprescription , and medical supplies.
5 HHS News. These data do not include health insurance premium payments in the calculation of out-of pocket health expenditures.
6 Cathy A. Cowan and Patricia A. McDonnell, "Business, Households, and Governments: Health Spending 1991." Health Care Financing Review, Spring 1993, p. 229.
7 HHS News, Table 1.
Within Monthly Labor Review Online:
Welcome | Current Issue | Index | Subscribe | Archives
Exit Monthly Labor Review Online:
BLS Home | Publications & Research Papers