Issues

What the Nation Spends on Health Care: A Regional Comparison

U.S. Department of Labor

Bureau of Labor Statistics

Summary 99-6 July 1999

in Labor Statistics

Percent of total expenditures allocated to health care components, 1987 and 1997

Health

care

0

1

2

3

4

5

6

Percent Per cen t

Health

insurance

Medical

services

Drugs Medical

supplies

1987 1997

The average household in the United

States spent just over $700 more

on health care in 1997 than in 1987,

$1,841 compared to $1,135, respectively.1

During this period, health care expenditures rose at a greater rate in the Midwest

than in the other major regions. Midwestern consumer units spent 73 percent more

on health care in 1997 than in 1987, compared to increases in the Northeast, South,

and West of 63, 58, and 56 percent, respectively. Households in the Midwest and

South spent an average of about $1,900

on health care in 1997, between 6 and 11

percent more than their counterparts in the

Northeast and West.

The change in the share of total expenditures allocated to health care and its subcomponents—health insurance, medical

services, prescription and nonprescription

drugs, and medical supplies—reflects

changes in the spending habits of consumer

units over this period. In 1987, households

allocated a greater share of health care expenditures to medical services than to

health insurance; by 1997, health insurance was the largest component of health

care. Data from the Consumer Expenditure Survey provide a means to track regional expenditure patterns among the

Nation’s four census regions, and the distribution of health care dollars among the

subcomponents.

Health care expenditures, as a share of

total average annual expenditures, rose in

all regions to their highest levels in 1993

before declining somewhat. Despite the

declines, the shares still were higher in

1997 than in 1987 in all four regions. Consumer units in the South and Midwest

spent proportionately more for health care

than their counterparts in the West and

Northeast between 1987 and 1997. Households in the South, however, allocated the

greatest share of average annual expenditures to health care throughout the decade.

Shifting shares

As the share of dollars going to health care

increased in the regions, the distribution

of health care dollars among the subcomponents shifted. Between 1987 and 1997,

health insurance supplanted health services

as the largest subcomponent of health care

expenditures in all regions. The growth of

insurance expenditures contributed significantly to the growth in expenditures for

health care in general, and may reflect

changes in the way insurance costs are

shared between employers and their employees. In 1997, health insurance comprised between 43 and 51 percent of total

health care expenditures across the regions

compared to between 33 and 36 percent

in 1987. (See table 1.) Expenditures on

health insurance increased most rapidly in

the Northeast. In 1987, households in that

region spent 33 percent of their annual

health care budget on health insurance; this

proportion grew to 51 percent in 1997.

Health insurance grew at the slowest rate

in the West, where the proportion of health

care dollars increased about 11 percent.

The shares for both the Midwest and South

rose about 13 percent.

While the out-of-pocket share of health

care dollars going to insurance was increasing, the share spent on medical services declined throughout the Nation. The

proportion spent for medical services decreased in the Northeast, from 44 percent

of the total health care budget in 1987 to

28 percent in 1997. This same trend exists

1

 In this report, a consumer unit is defined as a

household that includes members related by blood,

marriage, adoption or other legal arrangement. A

consumer unit may also include a single person living alone or sharing a household with others but who

is financially independent; or two or more persons

living together who share responsibility for at least

two out of three major types of expenses—food,

housing, and other expenses. The terms "consumer

unit" and "household" are used interchangeably in

this summary.
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in the Midwest, South, and West, with each

region reporting decreases of at least 10

percent.

The share of total health care devoted

to prescription and nonprescription drugs

varied by region, ranging from 14 percent

in the Northeast to 19 percent in the Midwest and South in 1997. There was little

change in the shares between 1987 and

1997, except in the Northeast where households spent proportionately less on drugs

in 1997 than in 1987.

Medical supplies accounted for the

smallest share of total health care costs in

all regions. Expenditure shares ranged from

5 percent in the South in 1997 to 7 percent

in the Northeast. There was little change

over the period in the regions in the shares

spent on this subcomponent.

Additional information

For more information about the data presented here, contact Ginger Mortimer in

the Office of Economic Analysis and Information, Kansas City Regional Office,

Bureau of Labor Statistics at (816) 426-

6651, or by e-mail at mortimer_g@bls.gov.

Data highlighted here are from the Con-

 Table 1. Expenditures by region and percent distribution of health care dollars, 1987 and 1997

All consumer units Midwest West Northeast South

1987 1997 1987 1997 1987 1997 1987 1997 1987 1997

Average annual expenditures ............................. $24,414 34,819 23,021 33,791 27,309 39,037 25,079 36,070 $23,292 32,226

Health care .................................................... $1,135 1,841 1,099 1,903 1,152 1,793 1,051 1,709 1,204 1,902

Health care (percent of total average annual

 expenditures) ............................................... 4.6 5.3 4.8 5.6 4.2 4.6 4.2 4.7 5.2 5.9

 Percent distribution

Health care .................................................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Health insurance ............................................ 34.5 47.9 35.3 47.9 32.6 43.2 32.5 51.0 36.2 48.9

Medical services ............................................ 41.1 28.8 38.5 27.4 45.8 35.6 43.9 28.1 38.7 26.4

Prescription and nonprescription drugs ........ 17.9 17.4 18.7 18.8 14.8 15.4 16.9 14.0 19.8 19.3

Medical supplies ............................................ 6.4 5.9 7.6 5.9 6.8 5.7 6.8 7.0 5.4 5.4

sumer Expenditure Survey published annually by the Division of Consumer Expenditure Surveys, phone (202) 606-6900.

To find Consumer Expenditure data on the

Internet, go to http://stats.bls.gov/

csxhome.htm, the BLS Consumer Expenditure Survey homepage. Material in this

publication is in the public domain, and

with appropriate credit, may be reproduced

without permission. This information is

available to sensory impaired individuals

upon request. Voice phone: (202) 606-

7828; Federal Relay Service: 1-800-877-

8339.

Expenditure category