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National Health Expenditures Definitions


National health expenditure accounting begins with three broad expenditure categories:
* National Health Expenditures (NHE)
* Health Consumption Expenditures (HCE)
* Personal Health Care Expenditures (PHC).


The final category, PHC, currently accounts for about 85 percent of total health care spending and includes expenditures across ten types of goods and services listed below. The database further breaks down expenditures on goods and services by funding source and program.
* Hospitals
* Physician and clinical
* Dental
* Other professional services
* Home health care
* Non-durable medical products
* Prescription drugs
* Durable medical equipment
* Nursing care facilities
* Other health, residential, and personal care.


Table—Medical Goods and Services
Good or Service Definition
Hospital Care Covers all services provided by hospitals to patients. These include room and board, ancillary charges, services of resident physicians, inpatient pharmacy, hospital-based nursing home and home health care, and any other services billed by hospitals in the United States. The value of hospital services is measured by total net revenue, which equals gross patient revenues (charges) less contractual adjustments, bad debts, and charity care. It also includes government tax appropriations as well as non-patient and non-operating revenues. Hospitals fall into NAICS 622 – Hospitals.
Physician and Clinical Services Covers services provided in establishments operated by Doctors of Medicine (M.D.) and Doctors of Osteopathy (D.O.), outpatient care centers, plus the portion of medical laboratories services that are billed independently by the laboratories. This category also includes services rendered by a doctor of medicine (M.D.) or doctor of osteopathy (D.O.) in hospitals, if the physician bills independently for those services. Clinical services provided in freestanding outpatient clinics operated by the U.S. Department of Veterans’ Affairs, the U.S. Coast Guard Academy, the U.S. Department of Defense, and the U.S. Indian Health Service are also included. The establishments included in Physician and Clinical Services are classified in NAICS 6211-Offices of Physicians, NAICS 6214-Outpatient Care Centers, and a portion of NAICS 6215-Medical and Diagnostic Laboratories.
Dental Services Covers services provided in establishments operated by a Doctor of Dental Medicine (D.M.D.) or Doctor of Dental Surgery (D.D.S.) or a Doctor of Dental Science (D.D.Sc.). These establishments are classified as NAICS 6212 Offices of Dentists.
Other Professional Services Covers services provided in establishments operated by health practitioners other than physicians and dentists. These professional services include those provided by private-duty nurses, chiropractors, podiatrists, optometrists, and physical, occupational and speech therapists, among others. These establishments are classified in NAICS-6213 Offices of Other Health Practitioners.
Home Health Care Covers medical care provided in the home by freestanding home health agencies (HHAs). Medical equipment sales or rentals not billed through HHAs and non-medical types of home care (e.g., Meals on Wheels, chore-worker services, friendly visits, or other custodial services) are excluded. These freestanding HHAs are establishments that fall into NAICS 6216-Home Health Care Services.
Other Non-Durable Medical Products Covers the 'retail' sales of non-prescription drugs and medical sundries.
Prescription Drugs Covers the 'retail' sales of human-use dosage-form drugs, biological drugs, and diagnostic products that are available only by a prescription.
Durable Medical Equipment Covers 'retail' sales of items such as contact lenses, eyeglasses and other ophthalmic products, surgical and orthopedic products, hearing aids, wheelchairs, and medical equipment rentals.
Nursing Care Facilities and Continuing Care Retirement Communities Covers nursing and rehabilitative services provided in freestanding nursing home facilities. These services are generally provided for an extended period of time by registered or licensed practical nurses and other staff. Care received in state & local government facilities and nursing facilities operated by the U.S. Department of Veterans Affairs are also included. These establishments are classified in NAICS 6231-Nursing Care Facilities and NAICS 623311-Continuing Care Retirement Communities with on-site nursing care facilities.
Other Health, Residential, and Personal Care This category includes spending for Medicaid home and community based waivers, care provided in residential care facilities, ambulance services, school health and worksite health care. Generally these programs provide payments for services in non-traditional settings such as community centers, senior citizens centers, schools, and military field stations. The residential establishments are classified as facilities for the intellectually disabled (NAICS 62321), and mental health and substance abuse facilities (NAICS 62322). The ambulance establishments are classified as Ambulance services (NAICS 62191).

Source: Centers for Medicare & Medicaid Services, retrieved June 17, 2013.


HCE includes these 10 PHC expenditure types and adds two: administration and the net cost of private insurance, and public health activity. Administration reflects the cost of running government health care programs. The net cost of private insurance reflects the difference between premiums earned by insurers and the claims or losses incurred for which insurers become liable. Administration and the net cost of private insurance account for about 7 percent of total health care spending, and public health activity reflect about 3 percent of that total.


Finally, NHE, the broadest expenditure category, adds investment in research, structures, and equipment. This includes spending for noncommercial biomedical research and expenditures by health care establishments on structures and equipment. Investment reflects about 6 percent of total health care expenditures. The figure below illustrates the relationship among NHE, HCE, and PHC.


Relationship Among NHE, HCE, and PHC
Figure: Relationship Among NHE, HCE, and PHC

NHE, HCE, PHC, and each of the ten types of goods and services break out expenditures by fund source and program.

Fund sources include:
* Out of pocket
* Health insurance (private plus government programs, as indicated below)
* Other third party payers and programs (Workers╒ compensation, Indian Health Services, and other sources).

The type of program is included under fund sources. For example, Health Insurance includes Private Health Insurance, Medicare, Medicaid, and other programs. A complete breakdown of fund sources and programs is illustrated by the hierarchy in the table below.


Table: Heirarchy of Health Expenditure Fund Sources and Programs
  1. Out of pocket
  2. Health Insurance
    1. Private Health Insurance
    2. Medicare
    3. Medicaid (Title XIX)
      1. Federal
      2. State and Local
    4. CHIP (Title XIX and Title XXI)
      1. Federal
      2. State and Local
    5. Department of Defense
    6. Department of Veterans Affairs
  3. Other Third Party Payers and Programs
    1. Worksite Health Care
    2. Other Private Revenues
    3. Indian Health Services
    4. Workers' Compensation
    5. General Assistance
    6. Maternal/Child Health
      1. Federal
      2. State and Local
    7. Vocational Rehabilitation
      1. Federal
      2. State and Local
    8. Other Federal Programs
    9. SAMHSA
    10. Other State and Local Programs (including state and local subsidies and Temporary Disability Insurance)
    11. School Health

With this breakdown, users can view and retrieve data, for example, on total national expenditures on dental services, but also on dental service expenditures by source, i.e., private health insurance, Medicaid, Veterans Affairs, and so on.


For additional information, see the Centers for Medicare & Medicaid Services.