How much, for what, by whom? Foundation breaks down healthcare spending
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How much?
National healthcare spending has grown from $27 billion in 1960 to $2.6 trillion in 2010 and is expected to reach $4.5 trillion in 2020.
Healthcare spending grew at an all-time low of 3.8 percent in 2009 and at a similarly low rate of 3.9 percent in 2010. Its 17.9 percent share of gross domestic product (GDP) didn’t budge from 2009 to 2010, marking the first time in 50 years that its share didn’t tick upwards. As a share of GDP, healthcare spending was 5.2 percent in 1960, 13.8 percent in 2000 and is expected to reach 19.2 percent in 2020.
While the growth of healthcare spending slowed over the last several years, a trend driven in part by the recession, the PPACA will drive new healthcare spending and a one-time spike of 7.4 percent growth is expected over 2013.
On what?
Nearly 85 percent of total spending is dedicated to personal healthcare and about one-half of total spending is spent on hospital care and physician services. Spending that falls outside the personal healthcare category is directed toward government administration, public health activities and investment. Prescription drugs represent the third largest portion of personal healthcare spending with smaller amounts going to home healthcare, dental services, nursing care facilities and other items.
The share of spending directed toward hospital care and physician services has declined over the past 20 years while share of spending directed toward prescription drugs has increased more than for any other item listed in the report.
- Hospital care accounted for $250 billion, or 34.6 percent, of total spending in 1990 and for $814 billion, or 31.4 percent, in 2010.
- Physician services accounted for $159 billion, or 21.9 percent, of spending in 1990 and for $515 billion, or 19.9 percent, in 20110.
- Prescription drugs accounted for $40 billion, or 5.6 percent, of spending in 1990 and for $259 billion, or 10 percent, in 2010.
By whom?
In 2010, the federal government surpassed households to become the biggest healthcare spender, accounting for 29 percent of all spending compared to households’ 28 percent. Other contributors included private business (21 percent), state and local governments (16 percent) and other private entities (7 percent).
The majority of federal healthcare spending was dedicated to Medicare and Medicaid; the majority of household spending was dedicated to out-of-pocket costs, insurance premiums and payroll taxes; and the majority of private business spending was dedicated to insurance premiums and payroll taxes.
As a share of these entities’ financial resources, healthcare spending accounted for:
- 6.2 percent of adjusted household incomes;
- 8.5 percent of private business’ compensation;
- 27.8 percent of state and local government revenues; and
- 50.9 percent of federal government revenues.
The California HealthCare Foundation’s 2012 healthcare almanac is available on their website.