Last December's headlines blared the prospect that total national healthcare expenditures could top $1 trillion this year, based on just-released data from the federal government.
Soon after, that eye-popping figure began rolling off the tongues of healthcare policymakers and punctuating the remarks of speakers on the well-worn healthcare lecture circuit.
But a review of a decade's worth of expenditure figures by MODERN HEALTHCARE suggests that some policymakers and pundits may have to edit their prose. Although highly quotable, the government's figures also can vary significantly over time, the review discovered.
In 1989, for example, the government said total healthcare expenditures could hit $618.4 billion that year. But in the five years since, the estimate of how much was spent on healthcare in 1989 has been revised five times. According to the government's most recent report issued in December, total healthcare expenditures in 1989 were $605.4 billion, or $13 billion less than what originally was forecast (See chart).
The government releases its healthcare expenditure figures in the annual Industrial Outlook published by the Commerce Department. The outlook contains expenditure data from 51 major industry categories, including healthcare. The most recent Outlook issued by the Commerce Department in late December is the 35th such report.
The Commerce Department's main source of healthcare expenditure data is HCFA's actuarial office. HCFA supplies the department with data on preliminary and final expenditures by year. The Commerce Department's International Trade Administration then uses the HFCA data to make expenditure estimates and forecasts.
The figures contained in the report are the most widely and often-cited healthcare expenditure figures around.
"Everyone in America uses them. They are considered very reliable and accurate," said Simon Francis, a healthcare industry specialist with the Commerce Department in Washington.
But, as Mr. Francis acknowledged, the figures for one year can change in subsequent years because they're updated annually with new cost information that becomes available.
"It's an ongoing process," he said.
The Commerce Department typically issues an expenditure "forecast" for the year in which the Industrial Outlook is released. For example, in the 1994 report released in December, the Commerce Department forecast that total national healthcare expenditures could hit almost $1.1 trillion this year.
In the following year, a forecast typically is upgraded to an "estimate," and a year later, the estimate often becomes "preliminary." However, figures can stay "estimates" or "preliminary" for several years until better numbers come in. Hence, it takes a minimum of four years before a figure can be considered final, and even then, "final" figures are subject to annual updates.
What all this means is that numbers for any year can change no matter how long they've been on the books.
For instance, two years ago the Commerce Department forecast that total healthcare expenditures would reach $817.2 billion in 1992. A year later, the government estimated 1992 spending had been $838.5 billion. A second estimate released this year said total healthcare expenditures in 1992 were $840.4 billion, or nearly 3% more than the original forecast.
From 1984 through 1993, the government's healthcare expenditure figures changed every year new figures were released. The changes were small by percentage but high in actual dollars:
Figures for 1984 ranged from $384.3 billion to $391.1 billion. That's a $6.8 billion, or almost 2%, difference.
Figures for 1985 ranged from $422.6 billion to $426.9 billion. That's a $4.3 billion, or 1%, difference.
Figures for 1986 ranged from $458.2 billion to $466.0 billion. That's a $7.8 billion, or almost 2%, difference.
Figures for 1987 ranged from $492.5 billion to $511.9 billion. That's a $19.4 billion, or almost 4%, difference.
Figures for 1988 ranged from $544.0 billion to $558.7 billion. That's a $14.7 billion, or almost 3%, difference.
Figures for 1989 ranged from $599.2 billion to $618.4 billion. That's a $19.2 billion, or more than 3%, difference.
Figures for 1990 ranged from $661.3 billion to $676.3 billion. That's a $15 billion, or more than 2%, difference.
Figures for 1991 ranged from $737.9 billion to $756.3 billion. That's an $18.4 billion, or more than 2%, difference.
Figures for 1992 ranged from $817.2 billion to $840.4 billion. That's a $23.2 billion, or almost 3%, difference.
And figures for 1993 ranged from $939.9 billion to $942.5 billion. That's a $2.6 billion, or less than 1%, difference.
Finally, it's not only the government's numbers that change slightly every year but also the emphasis that the healthcare industry receives in the annual Commerce Department report.
The healthcare section in the 1994 report was eight pages long. The section in the 1984 report was four pages long. And it shared its space with a section on franchising opportunities that featured a photo of a home carpet-cleaning van.