Date: Tuesday, Jan. 13, 1998
FOR IMMEDIATE RELEASE
Contact: HCFA Press Office (202) 690-6145
Health Care Spending Rise at Record Low
Health care spending increased by 4.4 percent in 1996, the lowest rate in 37 years, according to a report released today by Health and Human Services Secretary Donna E. Shalala.
Public sector health care spending growth has also slowed. Medicare outlays increased in 1996 by 8.1 percent, down from 10.6 percent in 1995. Changes being implemented through the Balanced Budget Act of 1997 should slow Medicare growth even further.
The Health Care Financing Administration actuaries who wrote the report project that Medicare spending growth per enrollee should drop from the 1996 rate of 6.5 percent to 2.5 percent in 1998.
"This report shows significant national progress in slowing the growth of health care spending," said Shalala. "The new balanced budget will help control spending even more, and in the right way, so this trend can continue."
Total national health care spending topped the $1 trillion mark for the first time ever. National health expenditures in 1996 reached $1.04 trillion, up from $991.4 billion in 1995.
The study also shows taxpayers picking up more of the nation's health care tab. The portion of health care paid for by government rose from 40 percent in 1989 to 47 percent in 1996. Between 1989 and 1996, public sector health spending increased an average of 9.7 percent per year, vs. 5.8 percent in the private sector. The disparity is due to increased Medicare enrollment, more Medicaid coverage, and slow growth in private sector insurance premiums.
Employer-sponsored insurance premium growth reached a low of 3.6 percent in 1996. During the 1990s, employers have continued to
shift a greater share of health insurance cost to employees, especially for coverage of dependents, including children. This shift took an additional $3.6 billion out of working Americans' pockets in 1996, according to the study.
Medicare and Medicaid together financed $351 billion in health care services in 1996--more than one-third of the nation's total health care bill, and nearly three-fourths of public health care spending. Medicaid spending by the federal and state governments totaled $147.7 billion, providing coverage to 36.1 million low-income Americans. Medicare, the largest public health care payer, funded $203.1 billion in benefits for its 38.1 million aged and disabled enrollees.
"The new balanced budget agreement keeps Medicare solvent until the year 2010," said Nancy-Ann Min DeParle, administrator of the Health Care Financing Administration, which runs Medicare and Medicaid. "The Bipartisan Commission on the Future of Medicare will examine long-term solutions to insure that the Baby Boom and future generations can continue to rely on this essential public program."
Health care spending as a share of gross domestic product remains at 13.6 percent, where it has been since 1993, after almost a decade of increases.
The data are in an annual report to be published in the Health Care Financing Review, and in a separate article in the January/February issue of Health Affairs.
Note: HHS press releases are available on the World Wide Web at: http://www.dhhs.gov.