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Executive Summary

DRUGS AND MEDICAL SUNDRIES SPENDING IN U.S. REACHES $25.8 BIL. in 1984, up 9%, according to figures from the Health Care Financing Administration's (HCFA) Office of the Actuary. Public funding represented 9% of total drug and medical sundries spending in 1984, or approximately $2.4 bil., while private funding from direct consumer spending and insurance companies accounted for 91% of total drug expenditures in 1984, or $23.5 bil., HCFA reported. Consumers spent approximately $19.7 bil. on drugs and medical sundries in 1984 and accounted for over 76% of all such expenditures in the U.S., the report indicates. Direct consumer spending represented 84%0 of all private funding for drugs and medical sundries with insurance companies accounting for the remaining 16%. However, while direct patient payments for drugs grew only 7%0 in 1984, insurance companies' $3.8 bil. expenditure for drugs and medical sundries represents an increase of approximately 20% over 1983, according to the HCFA figures. * Third party payments for drugs and medical sundries totalled $6.1 bil. last year, according to the report. Medicaid spending of approximately $2.1 bil. accounted for approximately one-third of third party payments for drug and medical sundries. Total U.S. health spending rose 9.1% in 1984 compared to 10.6% in 1983 and 15.3% in 1980. In a July 31 press release, HHS Secretary Heckler said overall spending last rose by a single digit percentage in 1965. Health expenditures totaled $387 bil. in 1984, according to the release. A decline in the use of hospital inpatient services was the most significant factor in the slowing rate of increase, according to the release. Total health spending for 1984 represented 10.6%0 of the gross national product, down from 10.7% in 1983. This is the first decrease in health spending as a percentage of the GNP since 1978, the department says. The new statistics are drawn from the fall issue of Health Care Financing Review, published by the Health Care Financing Administration. Information on the review may be obtained from the Division of National Cost Estimates, Office of the Actuary, Room LI,EQO5, 6325 Security Boulevard, Baltimore, Md. 21207.

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