Social Security Bulletin

Private social welfare expenditures, 1972-87.

This article updates the private social welfare expenditures series with complete data through calendar year 1987. In the United States, private sector expenditures play a substantial role in the provision of social welfare services. The share of private social welfare expenditures, as a proportion of the gross national product (GNP), rose from 7.7 percent in 1972 to 12.0 percent in 1987. For purposes of this analysis, the focus is on four major categories of private sector expenditures: Health, education, welfare and related services, and income maintenance that includes private pensions, sickness and disability benefits, and group insurance. income-maintenance expenditures in the private sector had the highest rate of increase, from 1.3 percent of GNP in 1972 to 3.5 percent of GNP in 1987. The rise in private pension payments accounted for a majority of the increase in expenditures during this period. The smallest reported expenditure growth rate was in education, from 1.0 percent to 1.2 percent of GNP in 1972-87, followed by health, which increased from 4.8 percent to 6.5 percent of the GNP for the 16-year study. Private expenditures for social welfare services increased from 0.6 percent to 0.9 percent of GNP during the same period. In this analysis, private sector expenditures, which totaled $541.2 billion in 1987, are distributed by major category beginning in 1972 and are also related to public social welfare expenditures and GNP

In calendar year 1987, private social welfare expenditures were $541.1 billion-39.8 percent of the Nation's total social welfare expenditures, both public and private. Private expenditures were 12.0 percent of the gross national product (GNP), and public expenditures amounted to 18.8 percent of GNP (table 1).

This series (originated by the Social Security Administration (SSA) in 1955) was discontinued in 1978 due to difficulties associated with data collection and estimation. 1 It was resumed in 1987 after a redesign of the methodology for estimating several of its components. (2)The purpose of the series is to provide estimates of private expenditures for social welfare programs in the United States. The series indicates the significant role of the private sector in financing the Nation's social welfare programs and makes possible a comparison between public and private spending. The private sector assumes a large share in the provision of health and medical care as well as income-maintenance benefits in the form of employment-related pensions, group life insurance, and sickness payments. Financing educational and social services is also an important aspect of the private sector's involvement in financing social welfare programs.

The ability to make decisions on public policy related to social welfare spending is greatly improved when current and historical information are available for public and private programs in these areas. Data on private social welfare expenditures have been more difficult to gather over time than information on public expenditures. However, the former are essential for a complete picture of social welfare spending.

Private expenditures are grouped in four categories: Health and medical care, welfare and other services, education, and income maintenance. In 1987, the health and medical care expenditures category accounted for the highest portion-$293 billion (54.4 percent)-of the overall total.

The welfare and other services category includes individual and family social services, residential care, child day care, recreation and group work, and job training and vocational rehabilitation services. In 1987, expenditures for these items were $41.8 billion-7.7 percent of the year's private social welfare funding. …

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