Ultimate Source of Funding in the United States, 1987-2003

1
Ultimate Source of Funding in the United States,
1987-2003

• Presented by
• Cathy A. Cowan
• National Health Statistics Group
• Office of the Actuary
• Centers for Medicare Medicaid Services
• September 30, 2005

2
National Health Expenditure Accounts
Businesses, Households and Governments
National Health Expenditures Accounts
Projections
State Health Accounts Residence and Provide
Health Spending by Age
3
SHA Definitions

• The first perspective, commonly used in National
  Health Accounts, aims a break down of expenditure
  on health into the complex range of third-party
  -payment arrangements plus the direct payments by
  households or other direct funders of , e.g.,
  government provided health care.
• The second perspective asks for the ultimate
  burden of financing born by sources of funding .
  In this kind of analysis, the sources of
  financing of the intermediary sources of funding
  ( social security funds private social and other
  private insurance NPISHs) are traced back to
  their origin. Additional transfers such as
  intergovernmental transfers, tax deductions
  subsidies to providers and financing by the rest
  of the world are included to complete the
  picture.

4
Structure of United States National Health
Expenditures Accounts

• Personal Health Care --
• therapeutic goods or services rendered to treat
  or prevent a specific disease or condition in a
  specific person.
• Health Services and Supplies
• personal health care expenditures plus
  government public health activity, and program
  administration.
• National Health Expenditures --
• the combined value of health services and
  supplies, research, and construction.

5
Ultimate Source of Funding

• Disaggregation of health services and supplies
• By sponsors of health care
• Businesses
• Households
• Governments
• Federal
• State and Local
• Other private funds

6
Crosswalk of National Health Expenditures Payers
to Business Households and Government Sponsors
 
  Private Private Private Government Government Government
  Businesses Households Non- Patient Revenues Federal Federal State and Local
Health Services and Supplies            
Private Sources of Funds            
Out-of-pocket Payments   x        
Private Health Insurance x x   x x x
Industrial Inplant x          
Other Private Revenues including Philanthropy     x      
Public Sources of Funds            
Medicare x x   x x x
Workers' Compensation x     x x  
Other Government Program            
Federal       x x  
State and Local           x
7
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
8
Data Sources

• Private Health Insurance
• Employer sponsored health insurance
• Agency for Healthcare Research and Quality
• Medical Expenditure Panel Survey
• Bureau of Labor Statistics
• National Compensation Survey
• Individually purchased insurance
• Bureau of Labor Statistics
• Consumer Expenditure Survey
• Private Firms
• Public
• Medicare
• Annual Report of the Boards of Trustees of the
  Federal Hospital Insurance and Federal
  Supplementary Medical Insurance Trust Funds

9
Businesses

• Businesses spent 423 billion for Health Services
  and Supplies in 2003.
• Included in business expenditures are
• Employers share of private health insurance
  premiums
• Medicare Taxes (FICA)
• Self-Employed
• Employer
• Payments to workers compensation and temporary
  disability insurance
• Industrial inplant health services

10

Percent of Business Expenditures for Health
Services and Supplies, 2003
Businesses Spent 423 Billion for Health Services
and Supplies in 2003
11
Employer and Employee Contributions As a Percent
of Employer-sponsored Health Insurance
1987
1997
2000
2003
12
Households

• Households spent 513 billion on health care in
  2003.
• Household spending includes
• Out-of-pocket spending for copayments,
  deductibles and services not covered by health
  insurance
• Private health insurance premiums, either for
  employer-sponsored or individually purchased
  policies
• Taxes paid to Medicare HI Trust Fund
• Medicare SMI premiums.

13
Components of Household Health Care
SpendingCalendar Years 1987 and 2003

Medicare
Out-of-Pocket
Insurance Premiums
2003
1987
14
Household Health Spending As a Percent of
Personal Income1
1 Adjustments to personal income include the
addition of contributions to social insurance for
Medicare, since they are included in individuals'
health spending, and the exclusion of health
benefit payments
SourcesCenters for Medicare Medicaid
Services, Office of the Actuary Data from the
National Health Statistics Group, 1987-2003 U.S.
Department of Commerce, Bureau of Economic
Analysis, Jan. 2005.
15
State and Local Governments

• State and local governments spent 278.1 billion
  on health care in 2003.
• State and Local government spending includes
• State and Local government as an employer
• Private health insurance
• Medicare HI payroll taxes
• Medicaid
• Hospital subsidies
• Other State and local programs

16
State and Local Government Health Spending, 2003
Other includes other public and general
assistance, maternal and child health, vocational
rehabilitation, public health activities, an
state Childrens Health Insurance Program (SCHIP).
17
Federal Government

• Federal government health care spending reached
  344 billion in 2003.
• Federal Government health spending includes
• Federal Government as an employer
• Private health insurance premiums
• Medicare HI payroll taxes
• Workers Compensation
• Medicare
• Medicaid
• Other Federal programs

18
Federal Health Care Spending, 2003
19
Government Health Expenditures as a Percent of
Federal, and State and Local Government Revenues
Sources Centers for Medicare Medicaid
Services, Office of the Actuary Data from the
National Health Statistics Group, 1993-2003 and
U.S. Department of Commerce, Bureau of Economic
Analysis, Oct. 2004.
20
Future Challenges Business Households and
Governments

• Changing structure of the health insurance
  industry
• 
  
• More timely information, especially from other
  government sources
• Greater coordination of employer and employee
  survey collection instruments
• Incorporation of the MMA provisions
• Incorporation into our annual release of the NHEA