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Section 1: Health Spending and Costs, Including Prescription Drugs

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Exhibit 1.1: National Health Expenditures and Their Share of Gross Domestic Product, 1960-2004

Expenditures in the United States on health care were nearly $1.9 trillion in 2004, more than two and a half times the $717 billion spent in 1990, and more than seven times the $255 billion spent in 1980. The approximately $1.9 trillion in national health expenditures (NHE) in 2004 represents 16.0% of the Gross Domestic Product (GDP), three times larger than the industry’s share in 1960. About half of this increase occurred from 1980 to 1993, when health as a share of the GDP rose from 9.1% to 13.8%. Health care as a share of GDP remained roughly constant during the rest of the 1990s, began to rise fairly rapidly after 2000, but leveled off in 2004.

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Notes: With the 2004 estimates, the Centers for Medicare and Medicaid Services (CMS) incorporated new concepts, methods, and data sources in the National Health Expenditure Accounts and revised the entire time series back to 1960. According to CMS, the most important revisions were the introduction of estimates of investment in medical equipment and software, expanded estimates of investment in medical-sector structures, and the use of updated data from the U.S. Census Bureau’s 2002 Economic Census and other sources. Overall, these changes raised the estimates of health spending 3-4% for nearly all years prior to 2004.

Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2004; file nhegdp04.zip).

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Trends and Indicators in the Changing Health Care Marketplace
Information provided by the Health Care Marketplace Project.
Publication Number: 7031
Information Updated: 02/08/06