Trends and Indicators in the Changing Health Care Marketplace Section 1: Trends in Health Spending and Costs, Including Prescription Drugs
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Trends and Indicators in the Changing Health Care Marketplace
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.
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).
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
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 1.2: National Health Expenditures per Capita, 1990-2004
Total health expenditures per capita were $6,280 in 2004, doubling (+123%) from $2,821 in 1990. The average annual increase in health expenditures per capita was 5.9% from 1990 to 2004.
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).
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
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 1.3: Percent Annual Increase in National Health Expenditures (NHE) per Capita vs. Increase in Consumer Price Index (CPI), 1980-2004
Growth in U.S. per capita health spending has been higher than the growth in the CPI since 1980. Changes in per capita health spending have for the most part corresponded to changes in CPI growth. Per capita health spending growth and CPI increases deviated from each other from 2000 to 2002 as per capita health spending growth accelerated and CPI increases declined. However, in 2004, per capita health spending growth dropped to 6.8% after peaking at a 12-year high of 8.0% in 2002, while CPI growth rose from 1.6% in 2002 to 2.7% in 2004.
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: Kaiser Family Foundation calculations using NHE data from 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), and CPI data from Bureau of Labor Statistics at ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt (All Urban Consumers, All Items, 1982-1984=100, Not Seasonally Adjusted, U.S. city average).
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
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 1.4: Annual Change in Private per Capita National Health Spending (Adjusted for Inflation), with Historical Health Spending Events, 1960-2004
The growth rate in the portion of national health expenditures paid from private funding has cycled upward and downward over the last forty years. During this period, public and private efforts to rein in accelerating costs through wage and price controls, voluntary hospital cost containment, and most recently through managed care and the threat of health reform have triggered sharp declines in private spending growth. But these periods of decline have always proven temporary and have been followed by rapid growth in costs. Average annual growth in private per capital health spending was 3.7% from 1960-2004.
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: Kaiser Family Foundation calculations using NHE data from 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), and CPI data from Bureau of Labor Statistics at ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt (All Urban Consumers, All Items, 1982-1984=100, Not Seasonally Adjusted, U.S. city average).
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
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 1.5: Distribution of National Health Expenditures, by Type of Service, 1994 and 2004
While remaining the largest contributor to spending on health services overall, the proportion of national health expenditures devoted to hospital care declined from 34.1% in 1994 to 30.4% in 2004. In the same period, the share spent on prescription drugs almost doubled from 5.6% to 10.0% of health spending in the U.S.
Notes: Percentages may not total 100% due to rounding. Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, and structures and equipment, etc. 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: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2004; file nhe2004.zip).
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
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 1.6: Annual Percentage Change in National Spending for Selected Health Services, 1994-2004
While increases in drug spending tracked closely to increases in spending on other health services in the early 1990s, this pattern changed in the latter half of the 1990s and the early 2000s. From 1995 to 2000, increases in drug spending were two to five times larger than increases in spending on hospital care and physician services. This trend has moderated since 2000, with the prescription drug spending increase in 2004 falling to 8.2% compared to higher increases in physician and clinical services spending (9.0%) and hospital services spending (8.6%).
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: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2004; file nhe2004.zip).
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
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 1.7: Relative Contributions of Different Types of Health Services to Total Growth in National Health Expenditures, 1994-2004
Hospital care contributed about one-quarter (26.4%), and physician services contributed about one-fifth (20.8%), of the total growth in national health expenditures between 1994 and 2004. Prescription drugs contributed 14.7% of the total spending growth over this period, although drug expenditures made up only 10.0% of total national health spending in 2004.
Notes: Percentages may not total 100% due to rounding. Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, and structures and equipment, etc. 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: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2004; file nhe2004.zip).
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
