Patients’ share of health spending is shrinking. Yes, really.

February 5, 2013

Medicine has changed a lot over the past 40 years. We've advanced in how we treat  serious diseases, such as cancer. And we've come up with new treatments for diseases that, a few decades ago, didn't even exist, such as AIDS.

Even with that revolution in treatment, we still essentially buy the exact same mix of medical services that we did in the 1970s. Planet Money uses National Health Expenditure data to look at how little has changed in the mix of health care services since 1970.

Hospitals take up a bit less of the overall health care dollar, as some services have moved into outpatient settings. The aging baby boom population has triggered a slight increase in health care spending on nursing homes. Overall, though, 1970 and 2010 look pretty similar. But there is one part of health care spending that has changed dramatically: Who is footing the bill. Another Planet Money chart:

Out-of-pocket spending -- what consumers spend on their own health care -- has fallen by more than half over the past four decades. Third-party payers -- such as private health insurers, Medicaid and Medicare -- now cover 73.7 percent of all health care spending in the United States. Back in 1970, that number stood at 41.7 percent.

This trend is continuing: In 2011, patient share of spending fell to the lowest level ever recorded. This is despite a movement in the insurance industry toward plans with higher deductibles. It's near certain that the Affordable Care Act will also put downward pressure on patients' share of spending, as it extends insurance coverage to 30 million Americans.

All this being said, consumers probably don't notice that their own share of health care spending has been dropping. That's because of the cost of health care has been growing so quickly: Even as consumers foot a smaller part of the overall health care bill, they're still seeing costs go up fast enough to wipe out a decade's worth of wage growth. As health care prices soar, consumers who have seen their share of the spending drop can also be seeing their overall bills go up.

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Brad Plumer · February 5, 2013