June 1996 Fact Sheet

June 1996

State Health Expenditures: 1993

Personal health care spending in the United States reached $778.5 billion in 1993, having grown at an average annual rate of 10.4 percent from 1980 to 1993. This growth rate was uneven across the states. Personal health care spending grew fastest in the Southeast (11.4 percent from 1980 to 1993) and Southwest (11.0 percent from 1980 to 1993) and most slowly in the Great Lakes states (9.2 percent from 1980 to 1993) and the Great Plains (9.3 percent from 1980 to 1993).

The states with the fastest growth rate in personal health care spending from 1980 to 1993 were: New Hampshire (13.0 percent), Florida (12.4 percent), Nevada (12.2. percent), and Georgia (12.1 percent). The states with the slowest growth rates were: Iowa (8.3 percent), Michigan (8.5 percent), Illinois (8.7 percent), and Wyoming (8.7 percent).

A measure of how important health care spending is to a state's economy is how much of the state's gross state product (GSP) is consumed by health care spending. In 1992, personal health care spending accounted for 12.1 percent of the U.S. gross domestic product. The states with the lowest percentage of GSP consumed by health care spending were: Alaska (5.7 percent), Wyoming (7.0 percent), and Delaware (8.8 percent). The states with the highest percentage of GSP consumed by health care were: West Virginia (15.7 percent) and Florida (15.6 pecent).

Hospitals accounted for the largest component of personal health care spending in the United States, 41.6 percent in 1993. Hospital spending, as a percentage of total personal health care spending, varied greatly by state, ranging from 33.8 percent in Minnesota to 48.0 percent in Missouri.

Spending on hospital care slowed from 1980 to 1993. In 1980, hospital care accounted for 46.9 percent of total U.S. personal health care spending, compared with 41.6 percent in 1993. Some states showed a large decrease in hospital spending as a percentage of total health care spending between 1980 and 1993. The states with the largest decrease in hospital spending were: Massachusetts (12.0 percent), Rhode Island (11.0 percent), Maryland (10.8 percent), Nevada (10.0 percent), and Maine (9.5 percent). Three states saw an increase in hospital spending as a percentage of total personal health care spending between 1980 and 1993: Hawaii (2.7 percent), Arkansas (1.8 percent), and Idaho (0.7 percent).

Since 1965, with the introduction of Medicare and Medicaid, government spending on health care has grown from 20.4 percent of total personal health care expenditures to 43.1 percent in 1993. Medicare and Medicaid account for the largest share of total government spending, growing from 55.0 percent in 1970 to 78.3 percent in 1993. The share of total personal health care spending accounted for by Medicare and Medicaid varies greatly by state, ranging from 23.8 percent in Alaska to 44.6 percent in New York.

Several factors contribute to the variations in health care spending by state. One of the most important is demographics. States that saw slow growth in health care spending -- Iowa, Michigan, Illinois, and Wyoming -- had low population growth or lost population from 1980 to 1993, while states with fast growth in health care spending -- New Hampshire, Florida, Nevada, and Georgia -- saw a large increase in population between 1980 and 1993.

For more information, call Ken McDonnell, (202) 775-6342 or Carolyn Pemberton, (202) 775-6341.

Source: EBRI Databook on Employee Benefits, Third edition (1995); and Katharine R. Levit, et al., "State Health Expenditure Accounts: Building Blocks for State Health Spending Analysis," Health Care Financing Review (Fall 1995): 201-254.
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