National Health Expenditure National Health Expenditure Accounts (NHEA)Accounts (NHEA)

Stephen HefflerStephen HefflerDirector, National Health Statistics GroupDirector, National Health Statistics Group

Office of the ActuaryOffice of the Actuary

National Economic Accounts Data Users’ ConferenceNational Economic Accounts Data Users’ ConferenceApril 13, 2007April 13, 2007

What are the NHEA?What are the NHEA?

The National Health Expenditure Accounts (NHEA) are a system of The National Health Expenditure Accounts (NHEA) are a system of production-based accounts that estimate total U.S. health care spending by production-based accounts that estimate total U.S. health care spending by type of service/good consumed, by who funds and sponsors this care, by type of service/good consumed, by who funds and sponsors this care, by which age group receives this care, and by which states’ residents consume which age group receives this care, and by which states’ residents consume and which states’ providers provide this care.and which states’ providers provide this care.

The NHEA are:The NHEA are:– ComprehensiveComprehensive– MultidimensionalMultidimensional– Consistent over timeConsistent over time

http://www.cms.hhs.gov/NationalHealthExpendData/01_Overview.asp

What is NHE?What is NHE?The National Health Expenditures (NHE) represent the total amount The National Health Expenditures (NHE) represent the total amount spent in the U.S. to purchase health care goods and services during spent in the U.S. to purchase health care goods and services during the year as well as the amount invested in the medical sector to the year as well as the amount invested in the medical sector to produce health care services in the future.produce health care services in the future.

Medical services on NAICS basisMedical services on NAICS basisMedical goods on product-line basisMedical goods on product-line basisSources of Funding by Private (out-of-pocket, private insurance, Sources of Funding by Private (out-of-pocket, private insurance, other) and Public (Federal and State and Local)other) and Public (Federal and State and Local)Sponsors (Households, Businesses, Governments)Sponsors (Households, Businesses, Governments)

Account 1. National Income and Product Account

Personal Consumption Expenditures Durable goods Nondurable goods ServicesGross private domestic investment Fixed investment Nonresidential Structures Equipment and software Residential Change in private inventoriesNet exports of goods and services Exports ImportsGovernment consumption expenditures

and gross investment Federal Defense Nondefense State and local

GROSS DOMESTIC PRODUCT

Compensation of employees Wage and salary accruals Disbursements Wage accruals less disbursements Supplements to wages and salariesTaxes on Production and ImportsLess subsidies Profits tax liability Net Operating Surplus Private enterprises Current surplus of government

enterprisesConsumption of fixed capital

Gross domestic income

Statistical discrepancy

GROSS DOMESTIC PRODUCT

Selected NIPA Health Expenditures

Personal Consumption Expenditures for medical care

Gross private domestic medical care investment

Fixed investment

Nonresidential

Producers Durable Equipment

Government Health Care consumption expenditures and gross investment

Federal

State and local

National Health Expenditures

Personal Health Care

Hospitals

Physicians Services

Dental Services

Other Professional Services

Home Health Care

Non-durable Medical Products Durable

Medical Equipment

Nursing Home Care

Other Personal Health Care

Government Public Health Activity

Admin. and Net Cost of PHI

Non-commercial Research

Investment in medical sector capital

NIPA Compared to NHEANIPA Compared to NHEA

0200400600800

100012001400160018002000

$ (b

illio

ns)

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

NHE and NIPA Health Expenditures

NHE NIPA

What makes the NHEA useful?What makes the NHEA useful?

1.1. Captures all spending for health care goods and Captures all spending for health care goods and servicesservices

2.2. Allows policy makers to evaluate Medicare and Allows policy makers to evaluate Medicare and Medicaid spending relative to other health spendingMedicaid spending relative to other health spending

3.3. Reconciles data sources (program data, government Reconciles data sources (program data, government statistical data, private sector data)statistical data, private sector data)

4.4. Serves as basis for development of predictive and Serves as basis for development of predictive and analytic modelsanalytic models

5.5. Allows states to compare spending to each otherAllows states to compare spending to each other6.6. Provides basis for developing projections consistent Provides basis for developing projections consistent

with official Medicare and Medicaid program projectionswith official Medicare and Medicaid program projections

Regular NHEA ProductsRegular NHEA Products

Historical NHE Historical NHE – Released annually in JanuaryReleased annually in January– Currently available for 1960-2005Currently available for 1960-2005

• By type of service/good and source of fundingBy type of service/good and source of funding• By sponsor (household, business, government) for 1987-By sponsor (household, business, government) for 1987-

20052005

Short-Run ProjectionsShort-Run Projections– Released annually in FebruaryReleased annually in February– Currently available through 2016Currently available through 2016

• By type of service/good and source of fundingBy type of service/good and source of funding

Periodic NHEA ProductsPeriodic NHEA Products

Personal Health Care Spending Estimates by State Personal Health Care Spending Estimates by State – By provider: currently available for 1980-2004By provider: currently available for 1980-2004

• By type of service/good and major source of funding By type of service/good and major source of funding (Medicare, Medicaid, and other)(Medicare, Medicaid, and other)

– By residence: to be released late-Summer 2007By residence: to be released late-Summer 2007

Personal Health Care Spending Estimates by Age Personal Health Care Spending Estimates by Age – Currently available for selected years (1987, 1996, 1999)Currently available for selected years (1987, 1996, 1999)

• By type of service/good and source of fundingBy type of service/good and source of funding• Seven age groups (0-18, 19-44, 45-54, 55-64, 65-74, 75-Seven age groups (0-18, 19-44, 45-54, 55-64, 65-74, 75-

84, 85+)84, 85+)– Updated information through 2004 to be released late-2007Updated information through 2004 to be released late-2007

Completed Estimates/ResearchCompleted Estimates/Research

Comprehensive Revision in 2005Comprehensive Revision in 2005– Added medical equipmentAdded medical equipment– Benchmarked to 2002 Economic Census and AHA dataBenchmarked to 2002 Economic Census and AHA data– Methodological and definitional changesMethodological and definitional changes

Paper on “Reconciling Medical Expenditure Estimates from the MEPS Paper on “Reconciling Medical Expenditure Estimates from the MEPS and NHEA”and NHEA”Paper on “Monitoring Health Spending Increases: Incremental Budget Paper on “Monitoring Health Spending Increases: Incremental Budget Analyses Reveal Challenging Tradeoffs”Analyses Reveal Challenging Tradeoffs”

http://www.cms.hhs.gov/HealthCareFinancingReview/ http://www.cms.hhs.gov/HealthCareFinancingReview/

Paper on “Refining Estimates of Public Health Spending as Measured in Paper on “Refining Estimates of Public Health Spending as Measured in the NHEA: The U.S. Experience” in the the NHEA: The U.S. Experience” in the Journal of Public Health Journal of Public Health Management and PracticeManagement and Practice

Ongoing ProjectsOngoing Projects

Reconciliation of NIPA and NHEReconciliation of NIPA and NHE

Legislatively-required 75-year health spending projectionsLegislatively-required 75-year health spending projections

Methodological changes to reflect Part DMethodological changes to reflect Part D

Measuring private health insurance by stateMeasuring private health insurance by state

OECD supportOECD support– Estimating spending by functionEstimating spending by function– System of Health Accounts (SHA) revisionSystem of Health Accounts (SHA) revision

Ongoing Projects, cont.Ongoing Projects, cont.

Data source improvement effortsData source improvement efforts– Census (Service Annual Survey, Quarterly Services Survey, Census (Service Annual Survey, Quarterly Services Survey,

NAPCS)NAPCS)– Government Public HealthGovernment Public Health– Industry (Drugs and private health insurance)Industry (Drugs and private health insurance)

Contributions to other health measurement workContributions to other health measurement work– Nonmarket (CNSTAT and academics)Nonmarket (CNSTAT and academics)– Disease and Outcomes (HHS involvement in investigating Disease and Outcomes (HHS involvement in investigating

issues)issues)