National Health Expenditure Accounts

1. Building the Foundation: Health Care CostsPresentation to the Citizen’s Health Care Working GroupMay 13, 2005Richard S. Foster and Stephen HefflerOffice of the Actuary, CMS

2. National Health Expenditure Accounts National Health Expenditure Accounts Businesses, Households & Governments Projections State Health Accounts-- Provider and Residence Health Spending byAge

3. What Are National Health Expenditure Accounts? Funding sources Two dimensional matrix of expenditures • Services/products Private Public National Health Expenditures Health Services and Supplies Personal Health Care

4. National Health Expenditures (NHE) as a Share of GDP, 1965-2003 15.3% Total NHE 7.0% Private Funding Public Funding Sources: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group

5. Growth in NHE, 1980-2003 Sources: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group

6. Factors Accounting for Growth in Personal Health Care Expenditures Per Capita 9.4 2 1 6.9 5.0 Average Annual Percent Change Selected Calendar Year Periods 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.

7. The Nation’s Health Dollar: Where It Came From 1980 2003 Other Public 1 17% Other Private 2 6% Medicaid 10% Medicare 15% Private Insurance 28% Out-of-pocket 24% 1Other 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.

8. Medicare and Medicaid Spending Trends, 1980-2003 Medicaid Medicare SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

9. 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. The Nation’s Health Dollar: Where It Went 1980 2003 Program Administration and Net Cost 5% Other Spending 22% Prescription Drugs 5% Nursing Home Care 7% Hospital Care 41% Physician and Clinical Services 20% NOTE: Other Spending includes dental services, other professional services, home health, durable medical 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.

11. Hospital and Prescription Drug Spending Trends, 1980-2003 Prescription Drugs Hospital SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

12. Sponsors of Health Care, 2003 Health Services and Supplies $1,614 Billion Private Health Insurance $601 Billion Households $513 Billion Out-of-pocket $230 Billion Other Private $61 Billion Businesses $423 Billion Medicare $283 Billion Medicaid $267 Billion Governments $622 Billion Other Federal $67 Billion Other Private $57 Billion Other State and Local $105 Billion

13. Health Spending as a Percent of Revenue or Income Sources: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group

14. National Health Expenditure Accounts National Health Expenditure Accounts Businesses, Households & Governments Projections State Health Accounts-- Provider and Residence Health Spending byAge

15. Personal Health Care Spendingand Population by Age, 1999 Personal Health Care Population Children 12% Elderly 12% Children 29% Elderly 36% Working-age Adults 52% Working-age Adults 59% Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

16. Where It Came From, 1999 Children, Working-age Adults, and Elderly Children (Ages 18 and under) Working-age Adults (Ages 19 to 64) Elderly (Ages 65 and over) Other Pub 10% Other Pub 4% Other Pub 8% OOP 18% OOP 18% OOP 15% Medicare 5% Medicaid 27% Medicaid 15% PHI 14% Other Priv 6% Other Priv 3% Medicare 46% Other Priv 8% PHI 42% Medicaid 15% PHI 46% Average per capita PHC spending: $1,649 Average per capita PHC spending: $3,352 Average per capita PHC spending: $11,089 Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

17. Where It Went, 1999 Children, Working-age Adults, and Elderly Children (Ages 18 and under) Working-age Adults (Ages 19 to 64) Elderly (Ages 65 and over) Home Health 5% All Other 9% All Other 9% All Other 5% Other Pers 5% Dental 8% Dental 7% Nursing Home 3% Other Prof 5% Nondurables 3% Other Prof 4% Hospital 37% Nursing Home 19% Hospital 37% Drugs 7% Drugs 12% Hospital 37% Drugs 8% Physician 33% Physician 28% Physician 19% 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% Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

18. Per Capita Health Care Expenditures, by State: CY 1998 Location-of-Provider (before border-crossing adjustment) U.S. Per Capita: $3,759 ND: $4,182 MN: $4,230 NJ: $4,038 High (above $4,117) Medium ($3,425-$4,117) Low (below $3,425) 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.

19. Per Capita Health Care Expenditures, by State: CY 1998 Location-of-Residence (after border-crossing adjustment) U.S. Per Capita: $3,759 ND: $3,881 MN: $3,986 NJ: $4,197 High (above $4,117) Medium ($3,425-$4,117) Low (below $3,425) 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.

20. National Health Expenditures (NHE) as a Share of GDP, 1965-2014 18.7% Total NHE 9.2% Private Funding Public Funding Sources: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group

21. 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

22. Public vs. Private Sector Spending Trends, 1980-2014 Public spending Private spending Sources: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group

23. Projected Prescription Drug Spending by Payer, 2005 and 2006 2005 ($223.5B) 2006 ($249.3B) Medicaid 18% Medicare 2% Medicare 28% Other Public 4% Other Public 4% Medicaid 9% Out-of-pocket 29% Private Insurance 39% Out-of-pocket 20% Private Insurance 47% Sources: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group

24. National Health Expenditure Accounts Website http://www.cms.hhs.gov/statistics/nhe/