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1991.10.02 :  Health Care Expenditures

Contact:  Bob Hardy (202) 245-6145
October 2, 1991

       The nation's spending on health reached $666.2 billion in 
1990, an increase of 10.5 percent from the 1989 level, according
to information released today by HHS Secretary Louis W. Sullivan,
M.D.
       It was the third consecutive year in which national health
expenditures increased at approximately the same double-digit
rate.       "Rapid spending growth places a severe strain on the
resources of families, businesses and government alike,"
Secretary Sullivan said.  "We need to slow the growth of health
care costs without reducing the quality of care, and we need an
active partnership of business, medical professionals,
government, the insurance industry and private citizens to
achieve those goals."
       Health spending in 1990 increased more than twice as fast
as the 5.1 percent growth rate of the economy as measured by the
GNP. National health expenditures claimed 12.2 percent of the
gross national product in 1990, up from 11.6 percent in 1989.
       The percent of GNP absorbed by health care increased at a
high rate in 1990 because of a slowdown in the general economy,
while the growth of health expenditures continued at a strong
pace.
       The report on 1990 national health expenditures will
appear in the fall edition of Health Care Financing Review, the
quarterly journal of the federal Health Care Financing
Administration.
       Secretary Sullivan said that "achieving access to quality
health care for all Americans depends on our ability to moderate
the rapid growth of health care costs. 
       "To date, most of the major health care reform proposals
lack any -- or at least any meaningful -- cost containment
measures, thus promising to drive up costs even higher and
faster.  The Administration, on the other hand, is actively
exploring measures that would both contain costs, and provide
wider access to high quality health care.
       "One of the most promising strategies for obtaining better
value for investment in health care is the wider use of
coordinated care plans, which we are vigorously promoting," he
said. "There are strong incentives for these plans to operate
efficiently while providing quality health care.  They operate in
a competitive marketplace and offer a full range of health care
services for payments fixed in advance."
       Almost three-fourths of the annual per-capita increases in
personal health expenditures from 1980 to 1990 were consumed by
price increases. General inflation in the economy accounted for
half of the growth of personal health care costs per capita from
1980 to 1990.  Medical inflation in excess of economywide
inflation added another 25 percent.  The remaining growth came
from increases in the volume and intensity of services.
       Government programs in 1990 funded 42.4 percent of
national health expenditures, a larger share than in any previous
year.
Health expenditures are taking larger shares of government
budgets. Spending on health in 1990 absorbed 15.3 percent of
federal expenditures, up from 14.7 percent in 1989. The health
share of state and local expenditures increased from 11 percent
in 1989 to 11.4 percent in 1990.
       Benefit payments by the federal-state Medicaid program,
which finances health care for the poor, increased at a rate of
20.6 percent in 1990. Health care spending by the federal
Medicare program for the elderly and disabled increased by 8.6
percent.

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NOTE TO CORRESPONDENTS:  Tables with additional data are
                         available from the Health Care Financing
                         Administration.