After 25 years of double-digit annual growth in national health expenditures, the rate of growth slowed during the 1990s. At the end of the decade the rate of growth started edging up again. Since the millennium, the rate has accelerated.

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This high rate of growth combined with a sluggish economy has resulted in health care expenditures claiming a larger share of the gross domestic product (GDP).

The United States continues to spend more on health than any other industrialized country.

In 2001 national health care expenditures in the United States totaled $1.4 trillion, increasing 8.7 percent from the previous year compared with a 7.4 percent increase in 2000. 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 GDP on health than does any other major industrialized country. In 2000 the United States devoted 13.3 percent of the GDP to health compared with 10.6–10.7 percent each in Germany and Switzerland and 9.1–9.5 percent in Canada and France, countries with the next highest shares.

In 2001 health expenditures as a percent of the gross domestic product (GDP) increased to 14.1 percent, up from 13.3 percent the previous year.

The rate of increase in the medical care component of the Consumer Price Index (CPI) was 4.7 percent in 2002 and 4.6 percent in 2001, compared with 3.4 percent per year during 1995–2000. During the last 3 years, the CPI for hospital services showed the greatest price increases (6–7 percent in 2000 and 2001 and 9 percent in 2002), compared with other components of medical care.

Expenditures by Type of Care and Source of Funds

During the last few years expenditures for prescription drugs have grown at a faster rate than any other type of health expenditure. The sources of funds for medical care differ substantially according to the type of medical care being provided.

Expenditures for hospital care accounted for 32 percent of all national health expenditures in 2001. Physician services accounted for 22 percent of the total in 2001, prescription drugs for 10 percent, and nursing home care for 7 percent.

Since 1995 the average annual rate of increase for prescription drug expenditures (on average 15 percent per year between 1995 and 2001) was higher than for any other type of health expenditure. During the first half of the decade expenditures for home health care increased more rapidly (19 percent per year between 1990 and 1995) than other types of expenditures.

In 2001 prescription drug expenditures increased 16 percent, and prescription drugs posted a 5-percent rate of price increase in the Consumer Price Index in both 2001 and 2002.

In 2001, 47 percent of prescription drug expenditures were paid by private health insurance (up from one-quarter at the beginning of the decade), 31 percent by out-of-pocket payments (down from 59 percent in 1990), and 17 percent by Medicaid.

Although Medicare is the federal program that funds health care for persons age 65 years and over, and older persons are the highest per capita consumers of prescription drugs, Medicare paid only 2 percent of prescription drug expenses in 2001.

In 1999, 88 percent of persons age 65 years and over in the civilian noninstitutionalized population had a prescribed medicine expense. The average annual out-of-pocket prescribed medicine expense per older person with expense was $614, an increase of 16 percent over the previous year.

In 1999, 95 percent of persons age 65 years and over in the civilian noninstitutionalized population reported medical expenses averaging about $6,300 per person with expense. Sixteen percent of expenses were paid out-of-pocket, 14 percent by private insurance, and two-thirds by public programs (mainly Medicare and Medicaid).

The burden of out-of-pocket expenses for health care varies considerably by age. In 1999 one-third of persons 75 years of age and over with expenses paid $1,000 or more in out-of-pocket expenses compared with 18 percent of those 45–64 years of age.

Eight percent of those 18–44 years of age incurred out-of-pocket expenses of $1,000 or more in 1999, compared with only 1 percent of children under 6 years of age.

In 2001, 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 35 percent and consumers paid 17 percent out-of-pocket....


Private Health Insurance

More than 70 percent of the population under 65 years of age has private health insurance, most of which is obtained through the workplace. In private industry, the share of employees’ total compensation devoted to health insurance decreased in 2002.

Between 1995 and 2001 the age-adjusted proportion of the population under 65 years of age with private health insurance fluctuated between 71 and 73 percent after declining from 77 percent in 1984. More than 90 percent of private coverage was obtained through the workplace (a current or former employer or union) in 2001.

In 2002 private employers’ health insurance costs per employee-hour worked were $1.29, largely unchanged from $1.28 in 2001, and an increase from $1.09 in 2000. Among private employers the share of total compensation devoted to health insurance was 5.9 percent in 2002, down from 6.2 percent in 2001 but higher than the 2000 share, 5.5 percent.

Health Maintenance Organizations

An HMO is a prepaid health plan delivering comprehensive care to members through designated providers. More than one-quarter of all persons in the United States were enrolled in HMO in 2002. HMO enrollment peaked in 1999 and has declined slowly since then.

Enrollment in HMOs totaled 76 million persons or 26 percent of the U.S. population in 2002. HMO enrollment varied from 20–21 percent in the Midwest and South to 33 percent in the Northeast and 38 percent in the West. HMO enrollment increased steadily through 1999 but declined by more than 5 million between 1999 and 2002. The number of HMO plans decreased by 22 percent to 500 plans during these 3 years.

In 2002 the percent of the population enrolled in HMOs varied among the States, from 0 in Alaska to 51 percent in California. States with the next highest HMO enrollment were Massachusetts with 42 percent and Connecticut, Rhode Island, and Maryland, each with at least 35 percent.

In 2001, 27–29 percent of children under 18 years of age and adults age 18–44 and 45–64 years had health insurance coverage through a private HMO. Nine percent of children had coverage through a Medicaid HMO while less than 3 percent of adults under 65 years of age had this coverage.

Source: National Center for Health Statistics
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