National Health Expenditures: Short-Term Outlook and Long-Term Projections

This paper presents projections of national health expenditures by type of expenditure and source of funds for 1981, 1985, and 1990. Rapid growth in national health expenditures is projected to continue through 1990. National health expenditures increased 400 percent between 1965 and 1979, reaching $212 billion in 1979. As a proportion of the Gross National Product (GNP), health expenditures rose from 6.1 percent to 9.0 percent between 1965 and 1979. They are expected to continue to rise, reaching 10.8 percent by 1990. This study projects that, under current legislation, national health expenditures will reach $279 billion in 1981, $462 billion in 1985, and $821 billion in 1990. Sources of payments for these expenditures are shifting. From 1965 to 1979, the percentage of total health expenditures financed by public funds increased 17 percentage points—from 26 to 43 percent. The Federal share of public funds during this same period grew rapidly, from 51 percent in 1965 to 67 percent in 1979. This study projects that in 1985 approximately 45 percent of total health spending will be financed from public funds, of which 68 percent will be paid for by the Federal government. Public funds will account for 46 percent of total national health expenditures by 1990.