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National Information Center on Health Services Research and Health Care Technology (NICHSR)

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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

Item

2000

1990

1960

Amount in Billions

     

National Health Expenditures

$1,299.50

$696.00

$26.70

Private

712.30

413.50

20.10

Public

587.20

282.50

6.60

Federal

411.50

192.70

2.89

State and local

175.80

89.80

3.80

       

Per Capita Amount

     

National Health Expenditures

$4,637

$2,738

$143

Private

2,542

1,627

108

Public

2,096

1,111

36

Federal

1,468

758

15

State and local

627

353

20

       

Percent Distribution

     

National Health Expenditures

100

100

100

Private

54.8

59.4

75.2

Public

45.2

40.6

24.8

Federal

31.7

27.7

10.6

State and local

13.5

12.9

14.2

       

National Health Expenditures as a Percent of GDP

13.2

12

5.1

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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