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

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.

Conflict of interest statement

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.

Figures

Figure 1.. Estimated Health Care Spending by Aggregated Age Group, Type of Payer, and Aggregated Health Category in 2016

Reported in 2016 US dollars. Each of the 3 columns sums to the estimated $2.7 trillion of 2016 spending disaggregated in this study. The width of each line reflects the relative share of the estimated $2.7 trillion attributed to that age group, type of payer, or aggregated health category. Table 2 and Table 3 list the aggregated health category to which each health condition was classified. aIncludes maternal, neonatal, and nutritional disorders.

Figure 2.. Estimated Health Care Spending by Age Group, Sex, and Payer in 2016

Reported in 2016 US dollars. Increases in spending along the x-axis show more spending.

Figure 3.. Six Health Conditions With the Highest Spending by Sex and Payer and Across Age Groups in 2016

Reported in 2016 US dollars. Increases in spending along the x-axis show more spending.

Figure 4.. Four Health Conditions With the Highest Spending by Sex and Payer and Across Age Groups in 2016

Reported in 2016 US dollars. Increases in spending along the x-axis show more spending.

Figure 5.. Estimated Health Care Spending by Payer and Type of Care in 2016

Reported in 2016 US dollars. The 11 conditions that were in the top 5 for 1 or more payers are depicted with the top 5 in the gray shaded box. Numbers to the left of each entry represent the rank for that payer. The solid lines join the health conditions by payer.

Figure 6.. Estimated Health Care Spending by Payer and Type of Care and Across Time

Spending reported in 2016 US dollars.

Figure 7.. Population Standardized Annualized Rate of Change in Health Care Spending for Health Conditions With More Than $10 Billion in Spending for 2016

The aggregated health categories and health conditions are listed in descending order relative to their rates of change. The 1996 estimated spending growth was adjusted to reflect 2016 population sizes, ages, and sex. Data for all health conditions appear in eTable 12.2 in the Supplement. aOut-of-pocket payments. bDue to a preexisting condition.