CHART E. THE ROLE OF MEDICARE IN FINANCING HEALTH CARE EXPENDITURES FOR THE AGED DURING ITS FIRST YEAR

SOURCE: "Personal Health Care Expenditures of the Aged and
Nonaged," by Dorothy P. Rice, Arne Anderson, and Barbara S.
Cooper, Social Security Bulletin, August 1968, table 3, page 22.
TECHNICAL NOTE: Personal health care expenditures include all
expenditures for health and medical care services received by
individuals. Excluded are expenditures for medical-facilities
construction, medical research, public health activities not of
direct benefit to individuals (that is, disease prevention and con-
trol), and some expenses of philanthropic organizations. These
data also exclude the net cost of insurance (the difference between
health insurance premiums and benefits paid) as well as adminis-
trative expenses of several public programs.

Of the $9.2 billion in expenditures for the aged in fiscal year
1967, a total of $3.2 billion-or 34.6 percent-was expended
under the public program of Medicare. In the distribution by
source of funds, all expenditures under Medicare are classified as
"public" even though the aged individual pays a monthly pre-
mium for Part B Medical Insurance. This serves to understate the
amount financed by private funds and to overstate the public
share.

The $626 million expended for physicians' services under
Medicare in fiscal year 1967-its first year of operation-do not
fully reflect the charges incurred under the program because there
is a considerable lag between the time a patient visits a physican
and the time the carrier receives payment from the trust fund for
such a visit. (There are indications that incurred charges accruing
under Part B Medical Insurance in fiscal year 1967 amounted to
an estimated $1.1 billion instead of the $644 million actually
expended; this would raise the proportion of total expenditures
that were attributable to Medicare to roughly 37 percent.)
Public expenditures other than those under the Medicare pro-
gram were largely through public assistance programs, commonly
called Medicaid.

The category "all other" includes expenditures for dentists'
and other professional services, drugs and drug sundries, eye-
glasses and appliances, nursing-home care, and other health
services.
THE FINDINGS: Medicare benefits paid in the first year of operation
totaled $3.2 billion, 35 percent of the estimated personal health
care expenditures of $9.2 billion for all people 65 and older. Of
expenditures for hospital care, 57 percent was through the
Medicare program.

CHART F. AVERAGE HEALTH CARE EXPENDITURES PER PERSON: AGED AND YOUNGER

SOURCE: "Personal Health Care Expenditures of the aged and
Nonaged," by Dorothy P. Rice, Arne Anderson, and Barbara S.
Cooper, Social Security Bulletin, August 1968, table 2, page 21.
TECHNICAL NOTE: Personal health care expenditures include all
expenditures for health and medical care services received by
individuals. Excluded are expenditures for medical-facilities con-
struction, medical research, public health activities not of direct
benefit to individuals (that is, disease prevention and control),
and some expenses of philanthropic organizations. The data also
exclude the net cost of insurance (the difference between health
insurance premiums and benefits paid) as well as administrative
expenses of several public programs.

The category "other professional services" includes expenditures for dentists' services and other professional services. The

category "other health services" includes expenditures for eye-
glasses and appliances and other health services.

THE FINDINGS: Personal health care expenditures in fiscal year
1967 averaged $486 per person 65 and older, about 24 times the
average for younger persons ($177). The two age groups differ
considerably in the average spent for the various types of medical
care. For hospital care and for drugs, per capita expenditures of
the aged are about three times those of younger people. The
widest disparity is for nursing-home care; $64 was spent for the
average aged person, compared with only about $2 per person
under age 65.

PRIVATE SOURCES

1967

Chart G

Source. Social Security Bulgin, August 1968

CHART G. HEALTH CARE EXPENDITURES PER AGED PERSON, BY SOURCE OF FUNDS

SOURCE: "Personal Health Care Expenditures of the Aged and
Nonaged," by Dorothy P. Rice, Arne Anderson, and Barbara S.
Cooper, Social Security Bulletin, August 1968, table 2, page 21.
TECHNICAL NOTE: Personal health care expenditures include all
expenditures for health and medical care services received by
individuals. Excluded are expenditures for medical-facilities con-
struction, medical research, public health activities not of direct
benefit to individuals (that is, disease prevention and control),
and some expenses of philanthropic organizations. The data also
exclude the net cost of insurance (the difference between health
insurance premiums and benefits paid) as well as administrative
expenses of several public programs.

In classifying health care expenditures by source of funds, the
Social Security Administration attributes to public sources all
expenditures made through public programs. Thus, all expenditures

under Medicare are classified as "public," even though the aged
individual pays a monthly premium for Part B Medical Insurance.
The category "other professional services" includes expendi-
tures for dentists' services and other professional services. The
category "other health services" includes expenditures for eye-
glasses and appliances and other health services.

THE FINDINGS: The average health care expenditure per aged
person in fiscal year 1967 was $486, nearly 15 percent more than
in fiscal year 1966. Primarily as the result of Medicare, the
portion financed from public funds rose markedly in the first
year of operation-from $130 per aged person in fiscal year 1966
to $286 in fiscal year 1967. There was a less sharp drop-from
$294 per capita to $200-in expenditures classified as from
private sources.