…and Who Pays
The United States continues to spend more on health than any other industrialized country.
Major payers for health care include public programs such as Medicare and Medicaid, and private health insurers such as health maintenance organizations and other managed care entities.
In 2003 national health care expenditures in the United States totaled $1.7 trillion, a 7.7 percent increase compared with about 9 percent per year increases in 2001 and 2002. In the mid-1990s annual growth had slowed somewhat, following an average annual growth rate of 11 percent during the 1980s.
The United States spends a larger share of the gross domestic product (GDP) on health than does any other major industrialized country.
In 2002 the United States devoted 15 percent of the GDP to health compared with 11 percent each in Switzerland and Germany and nearly 10 percent in Iceland, France, Canada, Norway, and Greece, countries with the next highest shares.
In 2003 national health expenditures grew 7.7 percent, compared with 4.9 percent growth in the gross domestic product (GDP). Health expenditures as a percent of the GDP increased to 15.3 percent in 2003, up from 14.9 percent
in 2002.
In 2004, the increase in the medical care component of the Consumer Price Index (CPI) was 4.4 percent, continuing to outpace overall inflation (2.7 percent). The CPI for hospital services showed the greatest price increase (6.0 percent) compared with other components of medical care.
Expenditures by Type of Care and Source of Funds
In recent years expenditures for prescription drugs have grown at a faster rate than any other type of health expenditure. Hospital care, however, continues to account for the largest share of health care spending.
Expenditures for hospital care accounted for 31 percent of all national health expenditures in 2003.
Physician services accounted for 22 percent of the total in 2003.
Prescription drugs accounted for 11 percent,
and nursing home care for 7 percent
Between 2000 and 2003 community hospital expenses increased at an average annual rate of 8 percent comparedwith a 5-percent increase between 1995 and 2000.
Between 1995 and 2003 the average annual rate of increase for prescription drug expenditures was 14 percent, higher than for any other health expenditure
Prescription drug expenditures increased 11 percent in 2003 and 15–16 percent in 2001 and 2002. Prescription drugs posted a 3-percent increase in the Consumer Price Index in 2003 and 2004 and a 5-percent price increase in 2001 and 2002.
In 2003, 46 percent of prescription drug expenditures were paid by private health insurance (up from 24 percent in 1990), 30 percent by out-of-pocket payments (down from 59 percent in 1990), and 19 percent by Medicaid.
Although Medicare is the Federal program that funds health care for persons age 65 years and over, and older Americans are the highest per capita consumers of prescription drugs, Medicare paid less than 2 percent of prescription drug expenses in 2003.
In 2002, 91 percent of persons age 65 years and over in the civilian non-institutionalized population had a prescribed medicine expense compared with 61 percent of younger people. Women 65 years of age and over averaged $920 out-of-pocket for prescribed medicine compared with $674 for men in 2002. Among those under 65 years of age, out-of-pocket expenses averaged $265 for women and $212 for men in 2002.
In 2002, 96 percent of persons age 65 years and over in the civilian non-institutionalized population reported medical expenses that averaged about $7,800 per person with expense. Seventeen percent of expenses were paid out-of-pocket, 14 percent by private insurance, and 66 percentby public programs (mainly Medicare and Medicaid).
The burden of out-of-pocket expenses for health care varies considerably by age. In 2002 about two-fifths of those 65 years of age and over with health care expenses paid $1,000 or more out-of-pocket, compared with one-quarter of those 45–64 years of age, and less than one-ninth of adults 18–44
years of age.
In 2003, 33 percent of personal health care expenditures were paid by the Federal Government and 11 percent by State and local government; private health insurance paid 36 percent and consumers paid 16 percent out-of-pocket
Enrollment in HMOs totaled 69 million persons or 23 percentof the U.S. population in 2004. HMO enrollment varied from16–19 percent in the South and Midwest to 30–34 percent in the Northeast and West. HMO enrollment increased steadily through the 1990s but has declined since then. Between 1998 and 2004 the number of HMO plans decreased from 651 to 412 plans.
In 2003 the major sources of funds for hospital care were Medicare (30 percent) and private health insurance (34 percent).
Physician services were also primarily funded by private health insurance (one-half) and Medicare (one-fifth). In contrast, nursing home care was financed primarily by Medicaid (almost one-half) and out-of-pocket payments (more than one-quarter). The Medicare share of nursing home expenditures has risen from 3 percent in 1990 to 12 percent in 2003.
Publicly Funded Health Programs
The two major publicly funded health programs are Medicare and Medicaid.
Medicare is funded through the Federal Government and covers the health care of persons 65 years of age and over and disabled persons.
Medicaid is jointly funded by the Federal and State Governments to provide health care for certain groups of low-income persons. In recent years, Medicaid has expanded to cover a greater proportion of the low-income adult population—and the State Children’s Health Insurance Program (SCHIP) now covers many low-income children. Medicaid benefits and eligibility vary by State.
In 2004 the Medicare program had 42 million enrollees and expenditures of $309 billion.
In 2004 hospital insurance (HI) accounted for 55 percent of Medicare expenditures. Expenditures for home health agency care continued to hover around 3 percent of HI expenditures, down from 14 percent in 1995. Expenditures for hospice care nearly doubled from 2 to 4 percent of HI expenditures between 2000 and 2004.
Source: Health, United States, 2005, page 15
