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Health Care Economics, Insurance, Payment

US Health Care Spending by Payer and Health Condition, 1996-2016

Educational Objective
To understand recent changes in US health care spending.
1 Credit CME
JAMA
March 3, 2020
Original Investigation
Joseph L. Dieleman, PhD1;
Jackie Cao, MS1;
Abby Chapin, BA1;
Carina Chen, MA1;
Zhiyin Li, MS1;
Angela Liu, MPH1;
Cody Horst, MPH1;
Alexander Kaldjian, MS1;
Taylor Matyasz, MS1;
Kirstin Woody Scott, MPhil, PhD2;
Anthony L. Bui, MD, MPH3;
Madeline Campbell, BS4;
Herbert C. Duber, MD, MPH1,5;
Abe C. Dunn, PhD6;
Abraham D. Flaxman, PhD1;
Christina Fitzmaurice, MD1,7;
Mohsen Naghavi, MD, MPH, PhD1;
Nafis Sadat, MA8;
Peter Shieh, MS6;
Ellen Squires, MPH9;
Kai Yeung, PharmD, PhD10;
Christopher J. L. Murray, MD, DPhil1
Author Affiliations
  • 1Institute for Health Metrics and Evaluation, Seattle, Washington
  • 2Harvard Medical School, Boston, Massachusetts
  • 3Department of Pediatrics, University of Washington, Seattle Children’s Hospital, Seattle
  • 4Facebook, Menlo Park, California
  • 5Department of Emergency Medicine, University of Washington, Seattle
  • 6Bureau of Economic Analysis, Suitland, Maryland
  • 7Division of Hematology, Department of Medicine, University of Washington, Seattle
  • 8Microsoft, Redmond, Washington
  • 9The Improve Group, St Paul, Minnesota
  • 10Kaiser Permanente Washington Health Research Institute, Seattle
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Key Points

Question  How does spending on different health conditions vary by payer (public insurance, private insurance, or out-of-pocket payments) and how has this spending changed over time?

Findings  From 1996 to 2016, total health care spending increased from an estimated $1.4 trillion to an estimated $3.1 trillion. In 2016, private insurance accounted for 48.0% (95% CI, 48.0%-48.0%) of health care spending, public insurance for 42.6% (95% CI, 42.5%-42.6%) of health care spending, and out-of-pocket payments for 9.4% (95% CI, 9.4%-9.4%) of health care spending. After adjusting for population size and aging, the annualized spending growth rate was 2.6% (95% CI, 2.6%-2.6%) for private insurance, 2.9% (95% CI, 2.9%-2.9%) for public insurance, and 1.1% (95% CI, 1.0%-1.1%) for out-of-pocket payments.

Meaning  Understanding how much each payer spent on each health condition and how these amounts have changed over time can inform health care policy.

Abstract

Importance  US health care spending has continued to increase and now accounts for 18% of the US economy, although little is known about how spending on each health condition varies by payer, and how these amounts have changed over time.

Objective  To estimate US spending on health care according to 3 types of payers (public insurance [including Medicare, Medicaid, and other government programs], private insurance, or out-of-pocket payments) and by health condition, age group, sex, and type of care for 1996 through 2016.

Design and Setting  Government budgets, insurance claims, facility records, household surveys, and official US records from 1996 through 2016 were collected to estimate spending for 154 health conditions. Spending growth rates (standardized by population size and age group) were calculated for each type of payer and health condition.

Exposures  Ambulatory care, inpatient care, nursing care facility stay, emergency department care, dental care, and purchase of prescribed pharmaceuticals in a retail setting.

Main Outcomes and Measures  National spending estimates stratified by health condition, age group, sex, type of care, and type of payer and modeled for each year from 1996 through 2016.

Results  Total health care spending increased from an estimated $1.4 trillion in 1996 (13.3% of gross domestic product [GDP]; $5259 per person) to an estimated $3.1 trillion in 2016 (17.9% of GDP; $9655 per person); 85.2% of that spending was included in this study. In 2016, an estimated 48.0% (95% CI, 48.0%-48.0%) of health care spending was paid by private insurance, 42.6% (95% CI, 42.5%-42.6%) by public insurance, and 9.4% (95% CI, 9.4%-9.4%) by out-of-pocket payments. In 2016, among the 154 conditions, low back and neck pain had the highest amount of health care spending with an estimated $134.5 billion (95% CI, $122.4-$146.9 billion) in spending, of which 57.2% (95% CI, 52.2%-61.2%) was paid by private insurance, 33.7% (95% CI, 30.0%-38.4%) by public insurance, and 9.2% (95% CI, 8.3%-10.4%) by out-of-pocket payments. Other musculoskeletal disorders accounted for the second highest amount of health care spending (estimated at $129.8 billion [95% CI, $116.3-$149.7 billion]) and most had private insurance (56.4% [95% CI, 52.6%-59.3%]). Diabetes accounted for the third highest amount of the health care spending (estimated at $111.2 billion [95% CI, $105.7-$115.9 billion]) and most had public insurance (49.8% [95% CI, 44.4%-56.0%]). Other conditions estimated to have substantial health care spending in 2016 were ischemic heart disease ($89.3 billion [95% CI, $81.1-$95.5 billion]), falls ($87.4 billion [95% CI, $75.0-$100.1 billion]), urinary diseases ($86.0 billion [95% CI, $76.3-$95.9 billion]), skin and subcutaneous diseases ($85.0 billion [95% CI, $80.5-$90.2 billion]), osteoarthritis ($80.0 billion [95% CI, $72.2-$86.1 billion]), dementias ($79.2 billion [95% CI, $67.6-$90.8 billion]), and hypertension ($79.0 billion [95% CI, $72.6-$86.8 billion]). The conditions with the highest spending varied by type of payer, age, sex, type of care, and year. After adjusting for changes in inflation, population size, and age groups, public insurance spending was estimated to have increased at an annualized rate of 2.9% (95% CI, 2.9%-2.9%); private insurance, 2.6% (95% CI, 2.6%-2.6%); and out-of-pocket payments, 1.1% (95% CI, 1.0%-1.1%).

Conclusions and Relevance  Estimates of US spending on health care showed substantial increases from 1996 through 2016, with the highest increases in population-adjusted spending by public insurance. Although spending on low back and neck pain, other musculoskeletal disorders, and diabetes accounted for the highest amounts of spending, the payers and the rates of change in annual spending growth rates varied considerably.

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CME Disclosure Statement: Unless noted, all individuals in control of content reported no relevant financial relationships. If applicable, all relevant financial relationships have been mitigated.

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Health Care Economics, Insurance, Payment Health Policy
Article Information

Corresponding Author: Joseph L. Dieleman, PhD, Institute for Health Metrics and Evaluation, 2301 Fifth Ave, Ste 600, Seattle, WA 98121 (dieleman@uw.edu).

Accepted for Publication: January 21, 2020.

Author Contributions: Dr Dieleman had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.

Concept and design: Dieleman, Chen, Liu, Matyasz, Campbell, Naghavi, Sadat, Murray.

Acquisition, analysis, or interpretation of data: Dieleman, Cao, Chapin, Chen, Li, Liu, Horst, Kaldjian, Matyasz, Scott, Bui, Campbell, Duber, Dunn, Flaxman, Fitzmaurice, Naghavi, Sadat, Shieh, Squires, Yeung.

Drafting of the manuscript: Dieleman, Cao, Chen, Li, Horst, Kaldjian, Bui.

Critical revision of the manuscript for important intellectual content: Dieleman, Chapin, Liu, Horst, Matyasz, Scott, Bui, Campbell, Duber, Dunn, Flaxman, Fitzmaurice, Naghavi, Sadat, Shieh, Squires, Yeung, Murray.

Statistical analysis: Dieleman, Cao, Chen, Li, Liu, Horst, Kaldjian, Matyasz, Campbell, Flaxman, Sadat, Shieh, Squires.

Obtained funding: Dieleman, Chapin.

Administrative, technical, or material support: Dieleman, Chapin, Horst, Kaldjian, Matyasz, Duber, Dunn.

Supervision: Dieleman, Chapin, Naghavi, Murray.

Conflict of Interest Disclosures: Dr Dieleman reported receiving grants from the Bill and Melinda Gates Foundation, the National Institutes of Health, and the National Pharmaceutical Council; and receiving other funding from Gates Ventures. Dr Flaxman reported receiving personal fees from Kaiser Permanente, Sanofi, Merck for Mothers, Agathos Ltd, and NORC (formerly called the National Opinion Research Center); and receiving grants from the Bill and Melinda Gates Foundation, the Alfred P. Sloan Foundation, and the National Science Foundation. No other disclosures were reported.

Funding/Support: This research was supported by the Peterson Center on Healthcare and by grant P30AG047845 from the National Institute on Aging.

Role of the Funder/Sponsor: The funders had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.

Disclaimer: The views expressed in this article are those of the authors and do not necessarily represent the views of the US Bureau of Economic Analysis or the US Department of Commerce.

Additional Contributions: We acknowledge with gratitude the contributions of Maxwell Birger, MD, Hannah Hamavid, BA, Elizabeth Johnson, MPA, Jonathan Joseph, BS, Liya Lomsadze, BS, and Alex Reynolds, BA (all formerly with the Institute for Health Metrics and Evaluation). Their work was critical in developing the foundations of this research. From the Vitality Group, we thank Francois Millard, FIA, FSA, and Howard Bolnick, MBA, FSA, for contributions to the manuscript. We acknowledge Jay Want, MD, Jeffrey Selberg, MSc, Emily Zyborowicz, MPH, Emily Weisberger, MPH, and Frederica Stahl, MPhil, from the Peterson Center on Healthcare for their work advising the trajectory of this research. Finally, we thank Larry Levitt, MPP, from the Henry J. Kaiser Family Foundation for his contributions to this article and the research as a whole. No person was compensated for their contributions.

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