It took two years longer than the experts had predicted, but national spending on healthcare finally topped $1 trillion in 1996.
In a 1993 report, the U.S. Commerce Department first predicted the trillion-dollar ceiling would be broken in 1994, but low inflation and the growth of cost-controlling managed care rendered the government's projection inaccurate.
National healthcare spending rose just 4.4% in 1996 compared with 4.8% in 1995. The Consumer Price Index, or the measure of general inflation, was 3.3% in 1996 and 2.8% in 1995.
The 4.4% increase in 1996 was the smallest annual increase in national healthcare spending since 1960.
The estimates of 1996 spending are part of an annual report put together by a team from HCFA's actuarial office. The report appears in the January/February issue of Health Affairs published this week.
On average, the report found that individuals spent an average of $3,759 on healthcare in 1996 compared with $3,633 in 1995.
Overall, healthcare spending accounted for 13.6% of the gross domestic product, a number that has been unchanged since 1993.
Of the $1 trillion spent, almost 88% went for personal healthcare services and supplies. The balance was spent on research, construction and public health services.
Other key findings in the report:
Spending on hospital and physician services as a percentage of total healthcare spending has declined in the past six years to 54.1% in 1996 from 57.6% in 1990.
Spending on both hospital and physician care grew at a smaller rate, 3.4% and 2.9%, respectively, than overall spending in 1996.
Spending on nursing homes, home healthcare and prescription drugs rose 6.4% to $170.9 billion in 1996 from $160.6 billion in 1995. Of those, spending on prescription drugs grew the fastest, increasing 9.2% in 1996.
The report said Medicare, the largest public payer for healthcare, spent $203.1 billion in 1996 for its 38.1 million elderly and disabled enrollees. However, the annual growth rate in spending by Medicare declined to 8.1% in 1996 from 10.6% in 1995.
Despite slower spending growth, Medicare still outpaced spending by private payers, whose expenditures rose just 3.2% in 1996.
"This recent disparity raises the concern that Medicare is not as capable of controlling growth in spending as private health insurers are, thereby hastening depletion of the Medicare hospital insurance trust fund," the report said.