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Introduction

At the request of the nonprofit Texas Institute for Health Policy Research, the Texas Comptroller of Public Accounts has compiled data on the total cost of health care spending in Texas.

The project’s goal was to:

  • estimate health care spending in Texas;
  • include all identifiable sources of funds;
  • and avoid counting health care spending dollars twice.

The study–the first of its kind in Texas–estimates Texans spent more than $70 billion on health care in 1998–an average of $3,514 per person. These estimates rely on comprehensive data of Texas health care spending that captures federal, state, local, and private spending more fully than any predecessor. The estimate, moreover, adjusts health care data to eliminate duplication and count each dollar only once.

FIGURE 1
Figure 1 compares estimated health care costs as a percent of the gross state product and the gross national product.
Health care spending as a percent of:
  Texas Gross State Product for 1998 10.7%
  U.S. Gross National Product for 1998 13.5%
 
Sources: Carole Keeton Rylander, Texas Comptroller of Public Accounts, U.S. Department of Health and Human Services, Health Care Financing Administration.

FIGURE 2
Figure 2 compares the estimated per person costs of health care in Texas to the national average for 1998.
Average Annual Cost of Health Care Per Texan $3,514
Average Annual Cost of Health Care Per U.S. Citizen $4,261
Sources: Carole Keeton Rylander, Texas Comptroller of Public Accounts, U.S. Department of Health and Human Services, Health Care Financing Administration.

FIGURE 3
Figure 3 compares the estimated percent of health care provided by the private sector versus the public sector for 1998.
 TexasU.S.
Percentage of Health Care Provided by the Private Sector* 56% 52%
Percentage of Health Care Provided by the Public Sector 44% 48%
Sources: Carole Keeton Rylander, Texas Comptroller of Public Accounts, U.S. Department of Health and Human Services, Health Care Financing Administration.

FIGURE 5
Figure 5 compares 1998 state and federal health care spending using categories made as comparable as possible.
 
State and Federal Spending in Health Care in 199(1)
Private Sector Texas Percent U.S. Percent
Employer and Individual Private Insurance $24,700,165,991 36.1% $371,610,000,000 33.8%
Consumer Out-of-Pocket 14,000,000,000 20.5% 197,505,000,000 18.0%
Federal(2) 22,890,874,340 33.5% 380,076,000,000 34.6%
  State(3) 5,595,313,580 8.2%   0.0%
  Local 1,174,355,126 1.7%   0.0%
State and Local, subtotal 6,769,668,706 9.9% 149,339,000,000 13.6%
Total Comparable $68,360,709,037 100.0% $1,098,530,000,000 100.0%
Charity/Other(4) $1,080,462,063   $53,170,000,000  
Total with Charity $69,441,171,100   $1,151,700,000,000  
 
(1) State fiscal year 1998 and federal fiscal year 1998.
(2) Federal also includes Workers' Compensation because that is where it is counted in the national accounts.
(3) State includes only state portion of federal matching programs.
(4) The state "Charity" figure is not comparable to the "Other" federal figure which contains charity and other spending.
 
Sources: Carole Keeton Rylander, Texas Comptroller of Public Accounts, U.S. Department of Health and Human Services, Health Care Financing Administration.

Explanation of Texas Health Care Patterns Compared to National Patterns

A variety of factors could contribute to these health care expenditure patterns. Health care represents a significantly smaller proportion of Texas’ total economic activity than it does for the nation as a whole. Health services accounted for about 10.8 percent of the gross state product in 1998, compared to about 13.5 percent of the gross national product in 1998.

In addition, Texans tend to be younger than the general population and health care generally costs less for young people. According to the U.S. Bureau of the Census, the median age for Texans was 33.0 years as of July 1st, 1998, versus a national median of 35.2 years. About 12.7 percent of the national population are age 65 and older, while in Texas that age group accounts for only 10.1 percent of the population. Since a considerable amount of medical spending occurs in the last six months of each person’s life, and Medicare pays for a significant proportion of this, the age factor could contribute to lower spending from federal sources. Other differences may be attributable to variations in prices or reimbursement rates and to differences in data collection methods between national and state sources; access to care and services, especially in rural areas; utilization rates; levels of employer-sponsored health care coverage; and eligibility requirements for public programs.

This database includes direct spending on patient care, over the counter drugs, prescription drugs and related administrative costs. It does not include spending for education and regulation of health care providers, health inspections or activities such as spraying for mosquitoes.

The spending information in the database is sorted by purchaser, then by the service purchased. For state spending, funds are also sorted by state agency. Some agencies have multiple health care spending programs.

Some programs, such as Medicare, Medicaid and funds from the federal Health Resources Services Administration, may flow through multiple private and public entities. The first column in Table 1 includes these totals, the next column breaks down some of the summary categories and the third identifies duplicate spending to produce the final column, an unduplicated count of Texas health care spending.