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.
HEALTH CARE EXPENDITURES PER AGED PERSON BY SOURCE OF FUNDS
FY 1966 and 1967 (Before and after Medicare)
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.
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