Health Care Expenditures in the National Health Expenditures Accounts and in Gross Domestic Product: A Reconciliation

This paper provides a most detailed reconciliation to date of the National Health Expenditure Accounts (NHEA), the official estimates of health care spending in the United States from the Centers for Medicare and Medicaid Services (CMS), and the estimates of health expenditures that are part of gross domestic product (GDP) produced by the Bureau of Economic Analysis (BEA) as part of the national income and product accounts (NIPAs). For the period from 1997-2008, the estimates of total national health spending in the NHEA and in the GDP data are relatively similar, differing by less than 2 percent annually. Well over 90 percent of the total estimated expenditures in the two accounts appear to consist of the same expenditures. The differences in the estimates of expenditures for specific categories of health care – physician services, hospitals, drugs, health insurance, investment in equipment, and government programs – are, however, proportionately larger. The differences in the estimates of spending for specific categories of health care partly reflect differences in the way CMS and BEA classify certain health-related expenditures that are included in both accounts. The differences in the two estimates of health care spending also reflect some differences in the composition of health care spending in the two accounts, the use of some different estimation methods, and the use of some different data sources.