*This is an archive page. The links are no longer being updated. 1992.02.27 : Health Care Expenditure Data Contact: Bob Hardy (202) 245-6145 February 27, 1992 HHS Secretary Louis W. Sullivan, M.D., today released a report on health expenditures in 1990 by households, business and government. The nation spent a total of $643.4 billion on health services and supplies in 1990, a 10.5 percent increase over 1989. For the third consecutive year, health care spending, excluding research and construction, increased at double-digit rates. The spending report, "Business, households and governments: Health care costs, 1990," is published in the winter edition of Health Care Financing Review, a quarterly journal of the Health Care Financing Administration. Households accounted for the largest share of the spending at $224.7 billion, a 6.8 percent increase from 1989. The American families' principal health payments were for out-of-pocket expenses, including services not covered by insurance, and copayments and deductibles required by insurers. In 1990, federal, state and local government had health care expenditures of $212.9 billion, while business spent $186.2 billion. The federal government's health spending as a share of federal revenues rose from 3.5 percent in 1965 to 17.2 percent in 1990, up from 15.2 percent in 1989. For state and local governments, the share of their revenues increased from 7.5 percent to 16.3 percent between 1965 and 1990. Government contributions to Medicare and Medicaid, through general revenues, accounted for more than half of public spending, the report says. Medicaid expenditures, jointly funded by federal and state governments, rose from $62.3 billion in 1989 to $75.2 billion in 1990. Among businesses, about three of every four dollars, or $139.1 billion of $186.2 billion, was spent on premiums for employee health insurance, a 10.6 percent increase over 1989. The premiums provided coverage to 140.4 million workers and their dependents, and another 11.4 million non-workers and their dependents. Business also paid $29.7 billion for contributions to the Medicare hospital insurance trust fund, as part of employer- paid Federal Income Compensation Act taxes. The pressure of rising health care costs has been building on business and government for several decades, but for households "increasing health care cost burdens are only beginning to be felt," the report states. Household health care spending, as a proportion of adjusted personal income, remained unchanged at about 4 percent from 1965 until 1980, then grew slightly, reaching 5 percent in 1990. Households spent $136.1 billion in 1990 to purchase services not covered by insurance or paid for the deductible and coinsurance amounts of covered service required by third parties. An additional $42.6 billion went for health insurance premiums. Households had accounted for 61 percent of health care spending in 1965, the public sector 21 percent and business 17 percent. By 1990, the breakdown had changed so that expenditures for households dropped to 35 percent, and public and business spending on health care had risen to 33 percent and 29 percent, respectively. In the past quarter century, employer-sponsored insurance plans have reallocated health care expenses from the household to private and public employers, the report states. Moreover, the cost of health care funded by employers has nearly tripled in the past decade from $64.8 billion in 1980. Health spending by business in 1990 accounted for 45.5 percent of fringe benefits, compared with 22.4 percent in 1965. This spending in 1990 equaled 61.1 percent of corporate profits before taxes and was 8 percent greater than the amount of corporate profits after taxes. ###