Health Economics Information Resources: A Self-Study Course

Module 2 - Sources and Characteristics of Information Relating to Health Care Financing in the US  

Private funds

Funds in this category of “private insurers” include premiums paid to commercial carriers, Blue Cross/Blue Shield and managed care plans, as well as self-insured employers.

Other private funding sources include, among other things, privately funded construction, and additional non-patient revenues, including philanthropy. Out-of-pocket expenditures come from private sources in that they include direct spending by consumers for all health care goods and services, such as co-insurance, deductibles, and any amounts not covered by insurance.

As we have seen in the pie chart in the previous section, private insurance accounts for 34% of the funds while out-of-pocket accounts for 15% and "other" private accounts for 6%.

Table: National health expenditures aggregate, per-capita, percent distribution

Source: Centers for Medicaid and Medicare Services, Office of the Actuary

So what has the trend been with private insurance?

Taking a long term view, that is, over the past 50 years, we can say that we have come to depend less on funds from private sources, especially with the inception and implementation of Medicare, in the 60’s – as this table shows.

Note that in 1960, 75.2% of total health expenditures were funded from private sources, whereas, in 2000, the percentage of privately funded health expenditures is at 54.8%.

Over the shorter term, the past 10 years, there has been a decrease from nearly 60% in 1990 to the 54.8% level in 2000.

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