US National Healthcare Expenditures, 1960-2000: Public and Private Cubic Growth Dynamics

US national healthcare expenditures (NHE) displayed cubic growth dynamics between 1960 and 2000. In any year, current NHE must equal population times consumer price index (CPI) times per capita CPI-adjusted constant dollar healthcare expenditures. Cubic growth dynamics are a consequence of the fact that essentially linear growth relationships were observed over time with total population, CPI, and per capita CPI-adjusted dollar healthcare expenditures. Similarly in any year, current private and public NHE must equal population times consumer price index (CPI) times private and public per capita CPI-adjusted constant dollar healthcare expenditures respectively. This study examined whether private and public per capita CPI-adjusted dollar healthcare expenditures displayed linear growth. Linear relationships were observed over this time period for both private per capita CPI-adjusted dollar healthcare expenditures and public per capita CPI-adjusted dollar healthcare expenditures. The finding that both of these factors were well described by linear equations suggests that that both private and public NHE growth should display cubic growth dynamics over time. From 1960 through 2000, cubic growth dynamics were observed for both private NHE and public NHE. This model suggests that shifting healthcare costs between the private and public domains will not alter the underlying cubic growth dynamics of U.S. NHE as long as per capita CPI-adjusted constant dollar private and public healthcare expenditures increase reasonably linearly over time.

• Consumer Price Index; Cubic Dynamics; Economic Modeling; National Healthcare Expenditures; Per Capita Healthcare Expenditures; Population; Private; Public; United States

1. Introduction

Rapidly rising national healthcare expenditures (NHE) severely challenge the economies of industrialized nations [1,2]. During the second half of the twentieth century many Western democracies showed a trend from public financing of healthcare to private financing, while the United States trended from private financing of healthcare to public financing [1-4]. In any given year, current NHE must equal population times consumer price index (CPI) times per capita CPI-adjusted constant dollar healthcare expenditures [5]. These three factors increased reasonably linearly in the United States between 1960 and 2000 suggesting that NHE should, and did, demonstrate cubic growth dynamics [5]. Since total NHE is the simply the sum of public and private NHE, this study examined the underlying growth dynamics of US public and private NHE from 1960 through 2000. Similarly by definition, in any given year, current public NHE must equal population times consumer price index (CPI) times per capita CPI-adjusted constant dollar public healthcare expenditures, and current private NHE must equal population times consumer price index (CPI) times per capita CPI-adjusted constant dollar private healthcare expenditures.

2. Methods

Three public and readily available sources of data for the years 1960 through 2000 were used in this analysis. Official estimates of the total US population for those years (Table 1) were obtained from the US Census Bureau (www.census.gov). Official estimates of the U.S. consumer price index (CPI) for those years (Table 1) were obtained from the US Department of Labor, Bureau of Labor Statistics (www.bls.gov). Official estimates of private and public U.S. NHE in current dollars for those years (Table 1) were obtained from the U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services (www.cms.hhs.gov). Di-

Table 1

United States private and public national healthcare expenditures (NHE) in millions of dollars, population, and consumer price index (CPI) for the years 1960-2000

viding the annual total private and public NHE by that year’s CPI gives the annual private and public NHE in CPI-adjusted dollars. Dividing the annual private and public NHE in CPI-adjusted dollars by the corresponding annual population gives the annual per capita CPI-adjusted private and public healthcare expenditures. The relationship of annual population, CPI, and per capita CPI-adjusted private and public healthcare expenditures over time, between 1960 and 2000, was examined.

3. Results

3.1. Population

Figure 1 illustrates the relationship between total US population and year. As shown, there is a strong linear relationship between total US population and year. Linear regression between total population and year yielded the following equation:

POP_x = 2293408.2X + 181774463(1)

where POP_x is the total US population in year X, and X is the year, which varied from 0 for year 1960 to 40 for year 2000. The r² value for this linear regression was >0.99. Thus, the total US population increased by approximately 2,293,408 individuals per year between the years 1960 and 2000. The least-squares estimate of the parameters in the regression equation:

POP_x = aX + A(2)

is therefore, a is 2293408.2, and A is 181774463.

3.2. Consumer Price Index

Figure 2 illustrates the relationship between CPI and year. As shown, there is a reasonably linear relationship between CPI and year. The linear regression between CPI and year yielded the following equation:

CPI_x = 0.040218641X + 0.0643875 (3)

where CPI_x is the consumer price index in year X, and X

is the year, which varied from 0 for year 1960 to 40 for year 2000. The r² value for this linear regression was >0.96. Thus, the CPI increased by approximately 0.0402 per year between the years 1960 and 2000. Since the numbers in Equation (3) are constants, the following equation will be used:

CPI_x = bX + B(4)

where b is 0.040218641, and B is 0.0643875.

3.3. Per Capital CPI-Adjusted NHE

Figure 3 illustrates the relationship between per capita CPI-adjusted private healthcare expenditures and year. As shown, there is a near linear relationship between per capita CPI-adjusted private healthcare expenditures and year. Linear regression between per capita CPI-adjusted private healthcare expenditures and year yielded the following equation:

priPCNHE_x = 30.947097X + 289.01514(5)

where priPCNHE_x is the per capita CPI-adjusted private healthcare expenditures in year X, and X is the year, which varied from 0 for year 1960 to 40 for year 2000. The r² value for this linear regression was >0.97. Thus, per capita CPI-adjusted private healthcare expenditures increased by approximately $30.95 per year between the years 1960 and 2000. Since the numbers in Equation (5) are constants, the following equation can be used:

priPCNHE_x = cpriX + Cpri(6)

where cpri is 30.947097, and Cpri is 289.01514.

Figure 4 illustrates the relationship between per capita CPI-adjusted public healthcare expenditures and year. As shown, there is a near linear relationship between per capita CPI-adjusted public healthcare expenditures and year. Linear regression between per capita CPI-adjusted public healthcare expenditures and year yielded the following equation:

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