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1
Building the Foundation: Health Care Costs
Presentation to the Citizen’s Health Care Working GroupMay 13, 2005
Richard S. Foster and Stephen HefflerOffice of the Actuary, CMS
2
National Health Expenditure Accounts
National Health
ExpenditureAccounts
Health Spending
by Age
State HealthAccounts--Provider
and Residence
ProjectionsBusinesses,
Households &Governments
3
What Are National Health Expenditure Accounts?
Funding sources
National Health Expenditures
Private Public
Health Services and Supplies
Personal Health Care
Two dimensional matrix of expenditures
Services/products
4
02468
1012141618
1965 1970 1975 1980 1985 1990 1995 2000
Calendar Year
Per
cen
t o
f G
DP
National Health Expenditures (NHE) as a Share of GDP, 1965-2003
15.3%
Sources: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group
Total NHE
Private Funding
Public Funding
7.0%
5
0
2
4
6
8
10
12
14
16
18
1980 1983 1986 1989 1992 1995 1998 2001
Pe
rce
nt
Ch
an
ge
Growth in NHE, 1980-2003
Sources: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group
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2.31.4
3.2
3.1
1.5
1.8
4.1
2.0
1.9
0
1
2
3
4
5
6
7
8
9
10
1980-1990 1990-2000 2000-2003
Economy-wide PricesExcess Medical PricesUtilization
Factors Accounting for Growth in Personal Health Care Expenditures Per Capita
Selected Calendar Year Periods
Ave
rage
An
nu
al P
erce
nt
Ch
ange
1
1 Utilization includes quality and mix of services. As a residual, this factor also includes any errors in measuring prices or total spending.
2 Excess medical prices are calculated using the personal health care chain-type index constructed from the producer price index for hospital care, nursing home input price index for nursing home care, and consumer price indexes specific to each of the remaining personal health care components.
SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.
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5.0
9.4
6.9
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The Nation’s Health Dollar: Where It Came From
Medicare17%
Out-of-pocket14%
Medicaid andSCHIP16%
Other Private2
5%
Other Public1
12%
Private Insurance
36%
1 Other Public includes programs such as workers’ compensation, public health activity, Department of Defense, Department of Veterans Affairs, Indian Health Service, and state and local hospital and school health.2 Other Private includes industrial in-plant, privately funded construction, and non-patient revenues,including philanthropy.
NOTE: Numbers shown may not add to 100.0 because of rounding.
SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.
Medicaid 10%
Other Public 1
17%
Medicare15%
Out-of-pocket24%
Private Insurance28%
Other Private 2
6%
2003
1980
8
-5
0
5
10
15
20
25
30
1980 1983 1986 1989 1992 1995 1998 2001
Pe
rce
nt
Ch
an
ge
Medicare and Medicaid Spending Trends, 1980-2003
Medicare
Medicaid
SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.
9
0
2
4
6
8
10
12
14
16
18
1980 1983 1986 1989 1992 1995 1998 2001
Pe
rce
nt
Ch
an
ge
Per enrollee Private Health Insurance (PHI) Premium and Benefit Trends, 1980-2003
PHI Premiums
PHI Benefits
SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.
10
Physicianand Clinical
Services22%
HospitalCare31%
Program Administration
andNet Cost
7%
Prescription Drugs11%
Nursing HomeCare 7%
Other Spending
23%
The Nation’s Health Dollar: Where It Went
NOTE: Other Spending includes dental services, other professional services, home health, durablemedical products, over-the-counter medicines and sundries, public health, research and construction.SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.
Hospital Care41%
Physician and Clinical
Services20%
Nursing Home Care7%
Prescription Drugs
5%
Program Administration and Net Cost
5%
Other Spending22%
20031980
11
0
5
10
15
20
25
1980 1983 1986 1989 1992 1995 1998 2001
Pe
rce
nt
Ch
an
ge
Hospital and Prescription Drug Spending Trends, 1980-2003
Hospital
Prescription Drugs
SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.
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Households$513 Billion
Governments$622 Billion
Businesses$423 Billion
Sponsors of Health Care, 2003
Private Health Insurance$601 Billion
Other Private$57 Billion
Out-of-pocket$230 Billion
Other Private$61 Billion
Medicare$283 Billion
Medicaid$267 Billion
Other Federal$67 Billion
Other State and Local$105 Billion
Health Services and Supplies $1,614 Billion
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Health Spending as a Percent of Revenue or Income
0
5
10
15
20
25
30
35
Federal State and local Households
Per
cent
1987 1992 1997 2003
Sources: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group
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National Health Expenditure Accounts
National Health
ExpenditureAccounts
Health Spending
by Age
State HealthAccounts--Provider
and Residence
ProjectionsBusinesses,
Households &Governments
15
Personal Health Care Spendingand Population by Age, 1999
PopulationPersonal Health Care
Children29%
Working-age Adults59%
Elderly12%
Children12%
Working-age Adults52%
Elderly36%
Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.
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Where It Came From, 1999
Children(Ages 18 and under)
Other Pub8%
Medicaid27%
OOP15%
Other Priv8%
PHI42%
Other Pub10%
Medicaid15%
OOP18%Medicare
5%
Other Priv6%
PHI46%
OOP18%
PHI14%
Other Priv3%
Medicaid15%
Medicare46%
Other Pub4%
Working-age Adults(Ages 19 to 64)
Elderly(Ages 65 and over)
Average per capita PHC
spending: $1,649Average per capita PHC
spending: $3,352Average per capita PHC
spending: $11,089
Children, Working-age Adults, and Elderly
Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.
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Where It Went, 1999Children, Working-age Adults, and Elderly
All Other
5%
Other Pers5%
Other Prof5%
Drugs7%
Dental8%
Physician33%
Hospital37%
All Other
9%Other Prof4%
Dental7%
Drugs12%
Physician28%
Hospital37%
Nursing Home
3%
Home Health
5%
Hospital37%
Physician19%
Drugs8%
Nondurables3%
Nursing Home19%
All Other
9%
All Other ---Nondurables: 2%Home Health: 1%Durables: 1%Nursing Home: 1%
All Other ---Nondurables: 3%Other Personal: 3%Home Health: 2%Durables: 1%
All Other ---Other Personal: 3%Dental: 2%Other Professional: 2%Durables: 2%
Children(Ages 18 and under)
Working-age Adults(Ages 19 to 64)
Elderly(Ages 65 and over)
Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.
18
Per Capita Health Care Expenditures, by State: CY 1998Location-of-Provider (before border-crossing adjustment)
SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.NOTE: Personal Health Care spending shown in this chart represents 88% of National Health Expenditures.
High (above $4,117)
Low (below $3,425)
Medium ($3,425-$4,117)
U.S. Per Capita: $3,759
MN: $4,230ND: $4,182
NJ: $4,038
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Per Capita Health Care Expenditures, by State: CY 1998Location-of-Residence (after border-crossing adjustment)
SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.NOTE: Personal Health Care spending shown in this chart represents 88% of National Health Expenditures.
High (above $4,117)
Low (below $3,425)
Medium ($3,425-$4,117)
U.S. Per Capita: $3,759
NJ: $4,197
ND: $3,881MN: $3,986
20
0
5
10
15
20
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Calendar Year
Per
cen
t o
f G
DP
National Health Expenditures (NHE) as a Share of GDP, 1965-2014
18.7%
Sources: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group
Total NHE
Private Funding
Public Funding
9.2%
21
0
2
4
6
8
10
12
14
16
18
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
Pe
rce
nt
Ch
an
ge
Growth in NHE slows from peak, but remains above lows of the past decade
Sources: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group
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Public vs. Private Sector Spending Trends, 1980-2014
-2
0
2
4
6
8
10
12
14
16
18
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
Pe
rce
nt
Ch
an
ge Public spending
Private spending
Sources: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group
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Projected Prescription Drug Spending by Payer, 2005 and 2006
Medicaid18%
Medicare2%
Out-of-pocket29%
Private Insurance47%
Other Public4%
2006 ($249.3B)2005 ($223.5B)
Sources: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group
Private Insurance39%
Out-of-pocket20%
Medicaid9%
Medicare28%
Other Public4%
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National Health Expenditure Accounts Website
http://www.cms.hhs.gov/statistics/nhe/
