National Health Spending Trends In 1996

PROLOGUE: Spending for personal health care services in the United States remains far higher than that of any other industrialized country. (See Health Affairs, November/December 1997, page 163, for the latest international health expenditure estimates. ) Nevertheless, in the past five years spending increases have slowed dramatically, as a result of low general and medical-specific inflation, the growth of managed care enrollment, and the capacity of health plans to negotiate discounts from a provider system weakened by overcapacity. Of course, analysts are already asking a leading question: How long will this welcome trend last? Recent media reports have headlined that health insurance premiums are on the rise because plans, particularly those that must deliver profitable results to Wall Street, can no longer afford to operate without larger premium increases. On the other hand, private and public purchasers have become accustomed to this steady premium state. Now the competitive marketplace and its potential implications for access and coverage become more interesting. The estimates of 1996 spending were prepared, as they are annually, by the twelve-person National Health Accounts team, which is a part of the National Health Statistics Group of the Health Care Financing Administration's Office of the Actuary. Katharine Levit, who directs the National Health Statistics Group, and her colleagues on the National Health Accounts Team provided the analysis of these estimates. The National Health Accounts are composed of all of the services rendered and sources of funding—private and public—for each type of service. Thus, they represent the most comprehensive snapshot available of health care expenditures in relation to the national economy. ABSTRACT: The National Health Accounts, produced annually by the Health Care Financing Administration's Office of the Actuary, present estimates for 1960–1996 of nationwide spending for health care and the sources funding that care. This year's estimates set two records: Spending topped 1 trillion for the first time, and expenditure growth slowed to the lowest rate seen in thirty-seven years of measuring health care spending—4. 4 percent. The combination of decelerating health spending and a growing economy has kept national health spending as a share of the nation's gross domestic product unchanged for the fourth consecutive year.