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March, 1987, Vol. 110, No. 3
Comparing medical care expenditures
of two diverse U.S. data sources
Most families in the United States spend some of their disposable income for medical care. The amount depends on the medical commodities and services obtained and also on the financing of these expenses. This article looks at the cost of health care to consumers, exclusive of financing by other partiesreferred to here as direct payments for personal health care or out-of-pocket expenditures for medical care.
The share of family expenditures spent on medical care actually declined over the 1960-61 to 1982-83 period, despite rising prices and greater utilization of physicians and ambulatory services. However, during the period, there was an expansion in the availability of health insurance and an equal or greater increase in employer-provided health benefits. Also, Federal programs for health care provision and financing were introduced which affected medical care costs to households. The introduction of medicare and medicaid payments in 1966 and their expansion in 1972 and 1978 are examples of this kind of legislative initiative.1 Such changes in the structure of health insurance coverage have affected the proportion of health care costs paid by consumers.
Consumer spending for medical care rose rapidly between the 1960s and the 1980s. However, the consumer share of total personal health care costs, which include payments by third parties, declined. In 1960, these consumer costs accounted for 55 percent of total personal health costs; in 1984, they accounted for only 28 percent.2 Third parties are private health insurers, Federal, State, and local governments, and philanthropic organizations. The items covered by the costs include all health commodities and professional services.
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1 Medicare and medicaid are Federal health insurance programs. Medicare, initially established in 1966 for the aged, was expanded in 1973 to include disabled beneficiaries under the Social Security and railroad retirement programs. It was again expanded in 1978 to include persons under 65 years of age who require dialysis or a kidney transplant for end-stage renal disease. Medicaid was established in 1966 to provide health insurance for certain low-income families.
2 Katherine R. Levit, Helen Lazenby, Daniel R. Walso, and Lawrence M. Davidoff, "National Health Expenditures, 1984," Health Care Financing Review, Fall 1985, p. 16.
Related BLS programs
Consumer Expenditure Survey
Employee Benefits Survey
Trends in out-of-pocket spending on health care, 1980-92.—December 1995.
The effects of health insurance on consumer spending.—March 1995.
Employee payments for health care services.—Nov. 1992.
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