Table 2. Medicare Population, Expenditures by Type of Coverage, and Service Distribution and Growth of Total Expenditures: Calendar Years 1990-97.
1997 growth in Medicare spending was the slowest in a decade.
- In 1997 Medicare spent $214.6 billion for health care, accounting for 19.6 percent of NHE. Annual growth in aggregate Medicare spending slowed from 12.2 percent in 1994 to 7.2 percent in 1997. This recent deceleration reflects, in part, slowing medical price increases, legislated limits that restrain growth in Medicare payments to providers, penalties in 1996 and 1997 in the form of stricter limits on the growth in physician fees imposed on physicians for exceeding the Medicare volume performance standards in 1994 and 1995, provider reaction to fraud and abuse activities, and decelerating growth in the Medicare population.
- Growth in Medicare spending decelerated in 1997 for most types of benefits. The most notable exception is spending for physician services, which accelerated from 7.3 percent in 1996 to 8.5 percent in 1997. This acceleration is primarily attributable to the growth in enrollment in Medicare managed care plans. Medicare managed care plans tend to spend a larger percent of capitated payments on physician services than are purchased under Medicare fee-for-service (FFS)arrangements.
| Type of Expenditure | 1990 | 1991 | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 |
|---|---|---|---|---|---|---|---|---|
| Number in Millions | ||||||||
| Enrollees1 | 34.2 | 34.9 | 35.6 | 36.3 | 36.9 | 37.5 | 38.1 | 38.4 |
| Percent | ||||||||
| Annual Percent Growth | 1.9 | 1.9 | 2.0 | 2.0 | 1.7 | 1.6 | 1.4 | 1.0 |
| Amount in Billions | ||||||||
| Health Services and Supplies | $111.5 | $121.1 | $136.2 | $148.7 | $166.9 | $185.2 | $200.1 | $214.6 |
| Fee-for-Service | 106.1 | 114.9 | 128.8 | 139.6 | 155.4 | 170.2 | 179.5 | 186.8 |
| Capitated Payments | 5.3 | 6.2 | 7.4 | 9.1 | 11.5 | 15.0 | 20.5 | 27.8 |
| Percent Distribution of Total | ||||||||
| Health Services and Supplies | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 |
| Personal Health Care | 97.4 | 97.3 | 97.4 | 97.3 | 97.4 | 97.6 | 97.4 | 97.3 |
| Hospital Care | 61.6 | 61.0 | 61.7 | 60.6 | 59.8 | 58.8 | 58.1 | 57.7 |
| Physician Services | 26.2 | 25.1 | 23.0 | 22.3 | 21.7 | 21.5 | 21.4 | 21.6 |
| Dental Services | (2) | (2) | (2) | (2) | (2) | (2) | (2) | (2) |
| Other Professional Services | 2.9 | 3.4 | 3.7 | 3.8 | 4.0 | 4.2 | 4.2 | 4.1 |
| Home Health Care | 2.7 | 3.5 | 4.3 | 5.2 | 6.0 | 6.4 | 6.6 | 5.9 |
| Drugs and Other Medical Non-Durables | 0.1 | 0.1 | 0.1 | 0.1 | 0.2 | 0.2 | 0.4 | 0.4 |
| Vision Products and Other Medical Durables | 2.3 | 2.6 | 2.6 | 2.6 | 2.5 | 2.7 | 2.7 | 2.8 |
| Nursing Home Care | 1.6 | 1.6 | 2.1 | 2.7 | 3.3 | 3.6 | 4.0 | 4.7 |
| Program Administration and Net Cost of Insurance3 | 2.6 | 2.7 | 2.6 | 2.7 | 2.6 | 2.4 | 2.6 | 2.7 |
| Annual Percent Change | ||||||||
| Health Services and Supplies | 8.9 | 8.6 | 12.4 | 9.2 | 12.2 | 11.0 | 8.0 | 7.2 |
| Personal Health Care | 9.1 | 8.5 | 12.6 | 9.1 | 12.4 | 11.1 | 7.8 | 7.2 |
| Hospital Care | 8.2 | 7.5 | 13.7 | 7.2 | 10.7 | 9.3 | 6.7 | 6.4 |
| Physician Services | 9.2 | 4.2 | 2.7 | 6.2 | 9.0 | 10.2 | 7.3 | 8.5 |
| Dental Services | — | — | — | — | — | — | — | — |
| Other Professional Services | 28.0 | 26.3 | 21.5 | 12.9 | 18.6 | 15.7 | 8.0 | 4.2 |
| Home Health Care | 50.1 | 39.9 | 39.0 | 31.8 | 28.9 | 19.5 | 10.3 | -3.0 |
| Drugs and Other Medical Non-Durables | 18.1 | 16.6 | 18.9 | 38.8 | 69.3 | 76.4 | 60.4 | 33.2 |
| Vision Products and Other Medical Durables | 17.5 | 22.3 | 13.0 | 10.8 | 7.2 | 18.7 | 9.4 | 11.4 |
| Nursing Home Care | -30.5 | 11.7 | 48.5 | 37.4 | 39.7 | 22.2 | 19.3 | 26.3 |
| Program Administration and Net Cost of Insurance3 | 1.7 | 13.6 | 5.6 | 15.0 | 7.4 | 5.0 | 16.0 | 9.4 |
1
Hospital Insurance and/or Supplementary Medical Insurance enrollees as of July 1.
2
Less than 0.05 percent.
3
Includes administrative costs for the fee-for-service programs and administrative and net cost of insurance for Medicare managed care plans.
SOURCE: Health Care Financing Administration, Office of the Actuary, National Health Statistics Group.