Introduction to Health Economics

Per Capita Total Current Health Care Expenditures,

U.S. and Selected Countries, 2007

$2,851

$4,417

$3,180

$2,578

$4,463

$3,527

$2,569

$3,295

$3,319

$2,626

$3,463

$3,496

$2,677

$3,362

$3,715

$3,462

$3,581

$3,172

$6,956

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000

United States

United Kingdom

Switzerland^

Sweden

Spain

Norway

Netherlands

Italy

Ireland

Iceland*

Greece

Germany

France

Finland

Denmark

Canada

Belgium^

Austria

Australia

^OECD estimate.

*Differences in methodology.

Notes: Amounts in U.S.$ Purchasing Power Parity, see www.oecd.org/std/ppp; includes only countries over $2,500. OECD defines Total Current Expenditures on Health as the sum of expenditures on personal health care, preventive and public health services, and health administration and health insurance; it excludes investment.

Source: Organisation for Economic Co-operation and Development. OECD Health Data 2009, from the SourceOECD Internet subscription database updated November 2009. Copyright OECD 2009, http://www.oecd.org/health/healthdata. Data accessed on 11/13/2009.

$148 $356

$1,100

$2,814

$4,295$4,522

$4,789$5,150

$5,564$5,973

$6,327$6,701

$7,071$7,423

$7,681

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

1960 1970 1980 1990 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

NHE as a Share of GDP

National Health Expenditures per Capita and Their Share of Gross Domestic Product, 1960-

2008

Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2008; file nhegdp08.zip).

5.2% 7.2% 9.1% 12.3% 13.5% 13.5% 13.6% 14.3% 15.1% 15.6% 15.6% 15.7% 15.8% 15.9% 16.2%

National Health Expenditures per Capita, 1990-2018

Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (Historical data from NHE summary including share of GDP, CY 1960-2007, file nhegdp07.zip; Projected data from NHE Projections 2008-2018, Forecast summary and selected tables, file proj2008.pdf).

$8,160

(2009)

$13,100

(2018)

$2,814

(1990)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Per Capita

Projected Per Capita

Actual Projected

Cumulative Changes in Health Insurance Premiums, Inflation, and Workers’ Earnings, 1999-2009

131%

38%

28%

0%

20%

40%

60%

80%

100%

120%

140%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Health Insurance Premiums

Workers' Earnings

Overall Inflation

Note: Due to a change in methods, the cumulative changes in the average family premium are somewhat different from those reported in previous versions of the Kaiser/HRET Survey of Employer-Sponsored Health Benefits. See the Survey Design and Methods Section for more information, available at http://www.kff.org/insurance/7936/index.cfm.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2009; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2009 (April to April).

Federal Programs

• Medicare– 100% federal pay– run by the feds– old people, disabled people under SSI

• Medicaid– 1/3-1/2 cost share by the states - about 25% of LA

budget– run by states– poor people, often old, nursing homes– falls apart when folks need it most

• Tricare and military health programs– Getting to be big dollars, usually left off the graph

Distribution of Personal Health Care Expenditures by Source of Payment, 1998

and 2008

Notes: Personal health care expenditures are spending for health care services, excluding administration and net cost of insurance, public health activity, research, and structures and equipment. Out-of-pocket health insurance premiums paid by individuals are not included in Consumer Out-of-Pocket; they are counted as part of Private Health Insurance. Medicaid spending for the State Children's Health Insurance Program (which began in 1998) is included in Other Government Programs, not in Medicaid.

Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2008; file nhe2008.zip).

Other Private 3.9%

Medicare22.8%

Medicaid16.2%

Consumer Out-of-Pocket

14.2%

Private Health Insurance

35.4%

Other Government

Programs7.5%

2008Public 46.5% Private

53.5%

Other Private 5.5%

Private Health Insurance

34.1%

Medicare20.0%

Medicaid15.7%

ConsumerOut-of-Pocket

17.4%

Other Government

Programs7.4%

1998Public 43.1% Private

56.9%

$1.2 Trillion $2.3 Trillion

Medicare Spending as a Share of Total Federal Outlays, FY2010

Medicaid and SCHIP

8%Other16%

Nondefense Discretionary

19%

Defense Discretionary

19%

Social Security20%

Medicare13%

Net Interest5%

SOURCE: OMB, Fiscal Year 2010 Budget, February 2009. Budget Summary by Category.

2010 Total Outlays = $3.5 trillion

Distribution of National Health Expenditures, by Type of Service, 2008

Note: Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, and structures and equipment, etc.

Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2008; file nhe2008.zip).

Physician/ Clinical Services 21.2%

Hospital Care 30.7%

Other Personal Health Care

12.9%

Nursing Home Care, 5.9%

Prescription Drugs10.0%

Home Health Care, 2.8%

Other Health Spending 16.5%

22.9%

49.5%

65.2%

74.6%81.2%

97.0%

3.0%

0%

20%

40%

60%

80%

100%

Top 1% Top 5% Top 10% Top 15% Top 20% Top 50% Bottom50%

Percent of Population, Ranked by Health Care Spending

Note: Dollar amounts in parentheses are the annual expenses per person in each percentile. Population is the civilian noninstitutionalized population, including those without any health care spending. Health care spending is total payments from all sources (including direct payments from individuals, private insurance, Medicare, Medicaid, and miscellaneous other sources) to hospitals, physicians, other providers (including dental care), and pharmacies; health insurance premiums are not included.

Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2007.

Concentration of Health Care Spending in the U.S. Population, 2007

(≥$44,482)

(≥$15,806)

(≥$8,716) (≥$5,798) (≥$4,064) (≥$786)(<$786)

Perc

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Distribution of Average Spending Per Person, 2006

Average Spending Per Person

Age (in years)

<5 $1,508

5-17 1,267

18-24 1,441

25-44 2,305

45-64 4,863

>64 8,776

Sex

Male $3,002

Female 3,886

Notes: Includes individuals without any spending in 2006.

Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2006.

Putting Off Care Because of Cost

6%

17%

22%

26%

30%

34%

34%

53%

Relied on home remedies or over the counter drugs instead of seeing a

doctor

Skipped dental care or checkups

Put off or postponed getting health care you needed

Skipped recommended medical test or treatment

Not filled a prescription for a medicine

In the past 12 months, have you or another family member living in your household… because of the COST, or not?

Did ANY of the above

Percent saying “yes”

Cut pills in half or skipped doses of medicine

Had problems getting mental health care

Source: Kaiser Family Foundation Health Tracking Poll (conducted November 5-12, 2009)