Economic Report of the President 1994 - The American Presidency ...

TABLE 4-3.- Sources and Uses of Health Care Funds, 1991[Billions of dollars!Private spendingGovernmentBusinessHouseholdUses of fundsTotalNonpatientrevenuePremiums'Workers'compensationPremiumsOutofpocketMedicareMedicaidEmployerOtherTotalHospital carePhysician careCther professionals,dental visitsHome health and nursinghome careDrugs, vision, otherpersonal careAdministrationPublic healthResearch and construction752289142737087442523153644218162200188710110052221460270014410263027520003315042210912373334733001014374311240040171150260091383117025141 Includes household and employer premiums.Source: Health Care Financing Administration.compensation. Households pay for health care through insurancepremiums ($52 billion in 1991) and out-of-pocket expenses ($144billion). Total household spending of $196 billion was 26 percent ofnational health spending. The average household spent about$2,100 on health care in 1991. The health care industry receivesadditional nonpatient revenues of $33 billion (4 percent of totalspending) from such activities as parking lot receipts.Finally, governments pay for 47 percent of all health spending($355 billion), most of it for medicare and medicaid. There is additionalspending on health insurance for government employees andon activities of the Department of Veterans Affairs, the Departmentof Defense, and the Public Health Service. About 21 percentof Federal Government revenues and over 21 percent of State andlocal government revenues are devoted to health care.Governments also subsidize health care indirectly, by excludingemployer-provided health insurance from taxable income. In 1991this tax expenditure cost the Federal Government an estimated$36 billion in individual income taxes. The government lost SocialSecurity revenues as well, although Social Security payments inthe future will also be somewhat lower.Chart 4-6 shows the evolution of these payment sources overtime. Between 1965 and 1991, payments by health insurers, medicare,and medicaid increased from 24 percent to 62 percent of totalhealth care spending. Other government spending fell from 25 to147