The nation spent $425 billion on health care in 1985, an amount equal to 10.7 percent of gross national product, the highest share in U.S. history, the Department of Health and Human Services reported yesterday.
The total of public and private spending for health care rose 8.9 percent above the 1984 level, the lowest annual rate of increase in two decades.
But the increase in health spending far outstripped the low general inflation rate (3.9 percent) and GNP growth (5.6 percent). This continues a recent pattern, interrupted only in 1984, in which an increasingly greater share of U.S. resources is devoted to health care spending each year.
According to the new report, health-care spending as a proportion of GNP is nearly double that of two decades ago. Professor Uwe Reinhardt, a Princeton economist, said yesterday that the proportion is the highest for any developed nation in the world.
HHS expenditure experts, in an article released with the report, warned of "troubling signs" that health-care inflation has not been controlled completely and that outlays could continue to rise as a proportion of GNP. "Little relief appears to be in sight," they wrote.
Particularly disquieting, the article said, is a rise in basic prices of individual medical items and services, starting in mid-1985.
Moreover, despite Medicare's new cost-control system for hospitals, total benefit payments by Medicare increased 12.2 percent in 1985.
Of the $425 billion spent, $105.6 billion came out of consumers' pockets, $133.3 billion from private insurance, $124.4 billion from the federal government (four-fifths of it from Medicare and Medicaid) and $50.4 billion from state and local governments. Government expenditures thus accounted for more than two-fifths of all medical outlays.
Although outlays for hospital care rose slightly less than those for most other health-care items, they remained the single largest expenditure at $166.7 billion. Spending for physicians' services was next at $82.8 billion.
Nursing-home care ranked third at $35.2 billion, followed by drugs and medical supplies at $28.5 billion and dentistry at $27.1 billion.
The cost of administering medical programs and the net cost of health insurance -- the difference between premium charges and claims paid -- totaled $26.2 billion.
Spending for health-care practitioners other than physicians and dentists totaled $12.6 billion.
Eyeglasses and appliances accounted for $7.5 billion. Government expenditures for public health activities amounted to $11.9 billion. An additional $7.4 billion was spent on noncommercial research and $8.1 billion on construction of medical facilities.
Industrial on-site health services and school health programs and other miscellaneous health items accounted for $11 billion.
HHS estimated that two-fifths of the overall 8.9 percent increase in spending was due to basic inflation in the economy. Relatively low inflation moderated the increase in health-care costs compared with past years.
One-fourth of the 8.9 percent increase resulted from inflation in the cost of medical items and services above the national inflation rate.
Another one-fourth of the increase resulted from increased "intensity of care," such as more use of technology and services per patient and the population's higher proportion of aged patients, who use more care per capita. About one-tenth of the increase was the result of population growth.
The report said that the average length of a hospital stay is down to 5.5 days for patients under 65 and 8.8 days for those 65 and older, and that the number of hospital beds has declined 2.9 percent since 1983.
In 1983, when the United States was spending 10.5 percent of its GNP on health care, a slightly lower proportion than in 1985, Sweden was spending 9.6 percent of its GNP on health, France 9.3 percent, Canada 8.2 percent, and the United Kingdom 6.2 percent. In 1980, when the U.S. figure was 9.1 percent, West Germany was spending 9.6 percent.
Reinhardt said the United States has surpassed West Germany.