50 years of health spending in one animated chart

Total spending on health care has jumped from $23.4 billion in 1960 to $2.36 trillion dollars in 2012. And the amount of money spent isn’t the only thing that’s changed — who’s paying the bills has, too.

The graphic below is from the California HealthCare Foundation and accompanies their July 2014 report on health spending in the United States. You can find an interactive version of the CHCF infographic here.

When the chart starts, out-of-pocket payments — the dark orange dominating the chart in the early 1960s — represents almost all of the nation’s health care spending. Over time, that shrinks substantially across every kind of health care service.

Medicare and Medicaid, the nation’s two major public health insurance programs, were signed into law in 1965; you can see them appear in 1966 — Medicaid is shaded in dark green, and Medicare is the medium green to the left of Medicaid.
Hospital care has consistently commanded the largest share of health spending in the United States. It is also one of the few domains where private insurance has played a consistent role in payment: 36 percent of hospital expenses were paid by private insurance in 1960, and the same proportion is covered by private insurance today. Out-of-pocket payment fell from 21 percent to 3 percent over the same time period, while public insurance (like Medicare and Medicaid) filled the gap.

Prescription drugs — which make up a 11 percent of health spending now — briefly shrank as a share of total expenses during the ‘70s and ‘80s, then rebounded. But while 96 percent of prescriptions were paid for out-of-pocket in 1960, insurance now covers much more; only 18 percent of drug costs were paid out-of-pocket in 2012.

Under Obamacare, the share of out-of-pocket spending is expected to decrease while Medicaid spending goes up. Independent of health reform, the aging of the population means that Medicare will grow as a share of spending, too.