Projections of National Health Expenditures, 1980, 1985, and 1990

Abstract

This paper presents projections of national health expenditures by type of expenditure and sources of funds for 1980, 1985, and 1990. A major purpose of these projections is to provide a baseline for health care expenditures in the absence of national health insurance and cost containment.

Rapid growth in health expenditures is projected to continue to 1990. National health expenditures increased 350 percent between 1965 and 1978, reaching $192 billion in 1978. They are projected to reach $245 billion in 1980, $440 billion in 1985 and $760 billion in 1990, under current legislation. As a proportion of the Gross National Product (GNP), health expenditures rose from 6.2 percent to 9.1 percent between 1965 and 1978. They are projected to continue to rise, reaching 10.5 percent by 1985 and 11.5 percent by 1990.

Sources of payments for these expenditures are also shifting. From 1965 to 1978, the percentage of total health expenditures that was government financed increased 16 percentage points, from 25 to 41 percent. The Federal share of public funds during the same period grew rapidly, from 53 percent in 1965 to 69 percent in 1978. In 1985, approximately 42 percent of total health spending is projected to be financed from public funds, of which 72 percent will be paid by the Federal government. Public funds are expected to account for 43 percent of total national health expenditures by 1990.