This article reports on the State Health Expenditure Account (SHEA) project which

developed procedures States can use in track-ing their health care expenditures. The pur-poses, priorities, and concepts of SHEAs were designed to meet the needs of State policymak-ers. The resulting methods are discussed and illustrated using calculations of SHEAs for California. Contrasts with the National Health Expenditure (NHE) framework are provided. Recommendations for cooperation between the Health Care Financing Administration (HCFA) and the States that would facilitate the adoption and estimation of SHEAs are offered. Details of the methods used for the California estimates can be found in the Technical Note of this article