National Health Spending Up 5.6 Percent Between 1997 and 1998; Public Spending for Health CareUnderstated

Finances of Employee Benefits

July 2000, Vol. 21, No. 7
Paperback, 12 pp.
PDF, 72 kb
Employee Benefit Research Institute, 2000

Download Notes PDF pdf

Executive Summary

National Health Spending Up 5.6 Percent Between 1997 and 1998; Public Spending for Health Care
Understated—According to the Health Care Financing Administration (HCFA), national health expenditures increased 5.6
percent between 1997 and 1998, reaching a record high of more than $1.1 trillion.  The private sector accounted for 54.5
percent of national health spending, and the public sector accounted for 45.5 percent of national health spending, according
to HCFA. Recent analysis suggests that these estimates may be understating public spending for health care. For example, it has
been estimated that public-sector employers contributed $63.2 billion toward the purchase of employment-based health insurance,
but HCFA assigns this expenditure to the private sector. Furthermore, forgone tax revenue not collected because of the tax
preference for health care spending is not counted toward national health spending by HCFA.

Finances of Employee Benefits—In 1998, Americans received a gross total of about $1.4 trillion from major employee benefit programs. Retirement benefit payments of $780.4 billion accounted for 56.2 percent of total benefit payments Of that amount, $369.4 billion was paid by the Social Security Old-Age, Survivors and Disability Insurance (OASDI) program; $241.1 billion by private pension and profit-sharing plans; and $170.0 billion by public employer retirement plans. Health benefit payments of $500.6 billion accounted for 36.1 percent of total benefit payments. Fifty-eight percent of this, or $290.8 billion, was paid by private group health insurance programs, while $208.7 billion was paid by Medicare.