Did You Know?

Health Care Cost and Economic Impact

Health care costs account for 13.8% of the economy in 1997 and will reach 15% by the year 2000. (Changes in the Growth in Health Care Spending: Implications for Consumers, National Coalition on Health Care)

Overall health spending in 1994 and 1995 grew over 5% in each of those two years (2 – 2 1/2 times the rate of inflation.) (Health Care Financing Administration and Changes in the Growth in Health Care Spending: Implications for C onsumers, National Coalition on Health Care)

Total health care spending in the U.S. increased over 50 billion dollars, or 5.5% in 1995 to reach nearly one trillion dollars. National health expenditures in 1995 were $988.5 billion, up from $937.1 billion in 1994. (Department of Health and Human Ser vices)

Overall, the growth in private health insurance premiums increased from 0.6% to 1.0% per year from 1993-1995. Families earning $40,000 to $60,000 per year (middle-income families), however, experienced between 5.6% and 8.5% increase in their expenditures during the same time period. (Changes in the Growth in Health Care Spending: Implications for Consumers, National Coalition on Health Care)

Middle-income families pay a higher percentage of their incomes for health care than the wealthy. The percent of pre-tax income spent on health care for a family of four in 1995 earning $17,500 is 6.3% while the same family earning $100,000 will spend on ly 3.9%. (Changes in the Growth in Health Care Spending: Implications for Consumers, National Coalition on Health Care)

The slowing of health care cost increases for 1996, the lowest level in three decades at 3%, is attributed to high enrollment in managed-care. Costs, however, are predicted to increase by 3 to 5 percent in 1997, with larger jumps in 1998, estimated as hi gh as 10%. (Bureau of Labor Statistics)

Health care costs are likely to increase for the following reasons: aging population; managed care has already achieved most of the easiest cost savings; enrollment in HMOs, the most organized form of managed care, appears to have peaked; prescription dru g costs are rising faster than inflation; a backlash against managed care has resulted in longer hospital stays and higher costs; and patients are demanding the latest technologies, which often are the most costly. (Bureau of Labor Statistics and the Nati onal Coalition on Health Care)

A breakdown of sources of the nation’s health insurance dollar by type of insurance: Private health insurance .31 cents; Medicare .19 cents; Out of Pockets payments .19 cents; Medicaid .14 cents; Other government programs .13 cents and other private money .04 cents. (Health Care Financing Administration)

In a breakdown of the health care dollar spent in 1995, .36 cents was spent on hospital care, .25 cents on other personal health care, .20 cents on physician services, .11 cents on other health care spending, and .8 cents on nursing home care. (Health Car e Financing Administration)

Employers’ medical costs rose 3% in 1996 while the overall Consumer Price Index was up 3.3%. (Department of Labor)

Spending on health care will continue to consume a growing share of the typical family budget and employer payroll. In 1996, health spending made up 8.3% of employers’ payroll and 4.4% of employees’. In 2002, it is predicted that these percentages will rise to 9% for employers and 5.1% for employees. (Changes in the Growth in Health Care Spending: Implications for Consumers, National Coalition on Health Care)

In a projection of employer expenditures on health care for 1997-2002, larger employers’ increase is low, while health care cost inflation for smaller firms is on the rise. A firm with 1-9 employees will experience a cost increase of 7.4%. A firm with 5000+ workers will experience an increase of only 3.0%. The average projected increase for all firms is 5.0%. (Changes in the Growth in Health Care Spending: Implications for Consumers, National Coalition on Health Care)

A study found that on average a stay in a for-profit hospital in 1994 cost $625 more than care for the same illness in a private nonprofit hospital and $1,608 more than in a public hospital, with the average stay in a for-profit hospital costing $8,115, $ 7,490 at a private nonprofit hospital and $6,507 at a public hospital. (Costs of Care and Administration at For-Profit and Other Hospitals in the United States, New England Journal of Medicine)

The average daily inpatient costs for short-term hospital stays by type of hospital are: for-profit hospitals $1,403, nonprofit hospitals $1,040, and public hospitals $895. The national average is $1,053. (Costs of Care and Administration at For-Prof it and Other Hospitals in the United States, New England Journal of Medicine)

About 800 public and nonprofit hospitals have converted to for-profit ownership since 1980. Of the 6,225 hospitals in the USA, 1,288 are for-profit, 1,555 are public (owned by states or the federal government) and 3,382 are private non-profit. (Costs of Care and Administration at For-Profit and Other Hospitals in the United States, New England Journal of Medicine)

Medicare and Medicaid cover about 60%, or $22 billion of the $36 billion Americans spent on home care last year. (Bureau of Labor Statistics, National Association for Home Care)