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The National Health Accounts, produced annually by the Health Care Financing Administration's Office of the Actuary, present estimates for 1960-1996 of nationwide spending for health care and the sources funding that care. This year's estimates set two records: Spending topped $1 trillion for the first time, and expenditure growth slowed to the lowest rate seen in thirty-seven years of measuring health care spending--4.4 percent. The combination of decelerating health spending and a growing economy has kept national health spending as a share of the nation's gross domestic product unchanged for the fourth consecutive year.

As the first step in a pioneering effort by the Health Care Financing Administration (HCFA) to measure interstate border crossing for services used by both Medicare and non-Medicare beneficiaries, the authors study the spending behavior of Medicare beneficiaries for 10 Medicare-covered services. Based on interstate flow-of-expenditure data developed for calendar year 1991, the authors analyze the spending patterns of State residents by studying the inflow and outflow rates and the netflow ratios of expenditures incurred by Medicare patients. The report also provides per capita expenditure estimates with residence-based adjustments and evaluates the impact of the border-crossing adjustment for individual services and States.

During 1990, health expenditures as a share of gross national product rose to 12.2 percent, up from 11.6 percent in 1989. This dramatic increase is the second largest increase in the past three decades. The national health expenditure estimates presented in this article document rapidly rising health care costs and provide a context for understanding the health care financing crisis facing the Nation today. The 1990 national health expenditures incorporate the most recently available data. They differ from historical estimates presented in the preceding article. The length of time and complicated process of producing projections required use of 1989 national health expenditures--data available prior to the completion of the 1990 estimates presented here.