Personal Health Care Expenditures

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Personal Health Care Expenditures

Out-of-pocket spending for personal health care expenditures grew less rapidly than Medicare, Medicaid, and private insurance spending from 1998–2008.

Between 1998 and 2008, total personal health expenditures (PHCE) nearly doubled, growing from $1.0 trillion to nearly $2.0 trillion. During this period, the average annual growth for Medicare was 9%, for Medicaid and private health insurance 8%, and for out-of-pocket expenditures 5%.

In 2008, more than one-half of PHCE were paid by private funds (data table for Figure 23). The bulk of private expenditures were paid by private health insurance, for which the portion of private spending increased from 60% in 1998 to 66% in 2008. The share of private spending paid out of pocket declined from 30% in 1998 to 27% in 2008.

Government funds paid for 47% of PHCE in 2008. About one-half of government funds spent on PHCE was from Medicare, which is largely financed by the federal government. Medicaid expenditures are shared by the federal and state governments; the federal contribution varies by state (1). Medicaid accounted for about one-third of government funds spent on PHCE in 2008. The Children’s Health Insurance Program, included with Medicaid funds, was less than 1% of total PHCE (Table 127).

Much of the increase in government expenditures was due to increased enrollment and use of services (2). Medicare Part D prescription drug coverage, begun in 2006, and increased enrollment since 2004 in Medicare Advantage plans (private health plan options that are part of the Medicare program) accounted for much of the increase in Medicare expenditures (3). In contrast, enrollment in private health insurance plans has declined in recent years but expenditures continue to rise.

Figure 23 is a line graph showing trends in personal health care expenditures, by source of funds, for 1998 through 2008.

Figure 23Personal health care expenditures, by source of funds: United States, 1998–2008

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NOTE: See data table for Figure 23.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group, National Health Expenditure Accounts.


Office of the Actuary, Centers for Medicare & Medicaid Services (CMS) 2008 Actuarial report on the financial outlook for Medicaid. Baltimore MD: CMS; 2008. Available from: http://www​​/ActuarialStudies/downloads​/MedicaidReport2008.pdf.
Zuckerman S, McFeeters J. Report prepared for the Commonwealth Fund/Alliance for Health Reform 2006 Bipartisan Congressional Health Policy Conference, Commonwealth Fund pub no 914. New York, NY: The Commonwealth Fund; 2006. Recent growth in health expenditures. Available from: http://www​.commonwealthfund​.org/~/media/Files​/Publications/Fund%20Report​/2006/Mar​/Recent%20Growth%20in​%20Health%20Expenditures​/Zuckerman_recentgrowth_914%20pdf​.pdf.
Hartman M, Martin A, Nuccio O, Catlin A. National Health Expenditure Accounts Team. Health spending growth at a historic low in 2008. Health Aff (Millwood) 2010;29(1):147–55. [PubMed: 20048374]