APPENDIX C. NATIONAL AND INTERNATIONAL HEALTH CARE EXPENDITURES AND HEALTH INSURANCE COVERAGE CONTENTS National Health Expenditures Expenditures for Hospital Care Trends in Hospital Utilization Admissions Average Length of Stay Hospital Occupancy Hospital Employment Expenditures for Physicians' Services Supply of Hospital Beds Supply of Physicians Health Insurance Status in 1995 Health Insurance Coverage and Selected Population Characteristics Characteristics of the Uninsured Population Under Age 65 Trends in Health Insurance Coverage Uncompensated Care Costs in PPS Hospitals, 1980-95 International Health Spending References NATIONAL HEALTH EXPENDITURES In 1965, the year prior to the beginning of the Medicare and Medicaid Programs, national health expenditures were only $41.1 billion. After adjusting for inflation, this spending figure represented $199.1 billion, or $975.60 per capita in constant 1995 dollars. Health care expenditures increased substantially over the next 30 years. In 1995, the Nation's health care bill was $3,621.20 per capita, or $988.5 billion for the 273 million persons residing in the United States (see tables C-1 and C-2). The annual rate of increase in inflation-adjusted per capita expenditures was 4.8 percent from 1980 to 1985 and 5.0 percent from 1985 to 1990 (table C-3). After increasing by 5.8 percent between 1991 and 1992, however, health expenditure growth per capita decelerated to 2.8 percent for 1992 to 1993 and 1.5 percent for 1993 to 1994. This figure increased slightly to 1.6 for 1994-95. Growth in spending between 1993 and 1995, however, remains the slowest in more than three decades. TABLE C-1.--NATIONAL HEALTH EXPENDITURES, SELECTED CALENDAR YEARS 1960-95 [Dollar amounts in billions] -------------------------------------------------------------------------------------------------------------------------------------------------------- Spending category 1960 1965 1970 1975 1980 1985 1990 1991 1992 1993 1994 1995 -------------------------------------------------------------------------------------------------------------------------------------------------------- Health services and supplies.................. $25.2 $37.7 $67.9 $122.3 $235.6 $411.8 $672.9 $736.3 $806.7 $863.1 $906.7 $957.8 Personal health care...................... 23.6 35.2 63.8 114.5 217.0 376.4 614.7 676.6 740.5 786.9 827.9 878.8 Hospital care......................... 9.3 14.0 28.0 52.6 102.7 168.3 256.4 282.3 305.4 323.3 335.0 350.1 Physicians' services.................. 5.3 8.2 13.6 23.9 45.2 83.6 146.3 159.2 175.7 182.7 190.6 201.6 Dentists' services.................... 2.0 2.8 4.7 8.0 13.3 21.7 31.6 33.3 37.0 39.2 42.1 45.8 Other professional services........... 0.6 0.9 1.4 2.7 6.4 16.6 34.7 38.3 42.1 46.3 49.1 52.6 Home health care...................... 0.1 0.1 0.2 0.6 2.4 5.6 13.1 16.1 19.6 23.0 26.3 28.6 Drugs and other medical nondurables... 4.2 5.9 8.8 13.0 21.6 37.1 59.9 65.6 71.2 75.0 77.7 83.4 Vision products and other medical durables............................. 0.6 1.0 1.6 2.5 3.8 6.7 10.5 11.2 11.9 12.5 12.9 13.8 Nursing home care..................... 0.8 1.5 4.2 8.7 17.6 30.7 50.9 57.2 62.3 67.0 72.4 77.9 Other personal health care............ 0.7 0.8 1.3 2.5 4.0 6.1 11.2 13.6 15.4 17.9 21.7 25.0 Program administration and net cost of private health insurance................. 1.2 1.9 2.7 4.9 11.8 23.8 38.6 38.8 42.7 50.9 50.6 47.7 Government public health activities....... 0.4 0.6 1.3 2.9 6.7 11.6 19.6 21.4 23.4 25.3 28.2 31.4 Research and construction of medical facilities................................... 1.7 3.4 5.3 8.4 11.6 16.4 24.5 24.9 27.5 29.0 30.4 30.7 --------------------------------------------------------------------------------------------------------- Total................................... 26.9 41.1 73.2 130.7 247.2 428.2 697.5 761.7 834.2 892.1 937.1 988.5 ========================================================================================================= Percent of GDP.......................... 5.1 5.7 7.1 8.0 8.9 10.2 12.1 12.9 13.4 13.6 13.5 13.6 -------------------------------------------------------------------------------------------------------------------------------------------------------- Note.--Numbers may not add to totals due to rounding. Source: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics. TABLE C-2.--NATIONAL HEALTH EXPENDITURES IN CONSTANT 1995 DOLLARS, SELECTED CALENDAR YEARS 1960-95 [Dollar amounts in billions] -------------------------------------------------------------------------------------------------------------------------------------------------------- Spending category 1960 1965 1970 1975 1980 1985 1990 1991 1992 1993 1994 1995 -------------------------------------------------------------------------------------------------------------------------------------------------------- Health services and supplies................ $129.6 $182.4 $266.7 $346.6 $435.8 $583.3 $784.7 $824.4 $876.3 $910.3 $932.4 $957.8 Personal health care.................... 121.7 170.1 250.7 324.4 401.4 533.2 716.7 757.0 804.4 829.9 851.4 878.8 Hospital care....................... 47.8 67.9 110.0 148.9 189.9 238.4 299.0 315.8 331.7 340.9 344.5 350.1 Physicians' services................ 27.2 39.6 53.3 67.7 83.7 118.4 170.6 178.1 190.9 192.6 196.0 201.6 Dentists' services.................. 10.1 13.5 18.3 22.5 24.6 30.7 36.8 37.3 40.2 41.4 43.3 45.8 Other professional services......... 3.1 4.2 5.5 7.7 11.7 23.6 40.4 42.8 45.7 48.9 50.5 52.6 Home health care.................... 0.3 0.4 0.9 1.8 4.4 8.0 15.3 18.0 21.3 24.2 27.0 28.6 Drugs and other medical nondurables. 21.9 28.5 34.6 36.9 40.0 52.5 69.9 73.4 77.3 79.1 79.9 83.4 Visions products and other medical durables........................... 3.3 4.8 6.4 7.2 7.0 9.6 12.2 12.5 12.9 13.2 13.2 13.8 Nursing home care................... 4.4 7.1 16.6 24.6 32.6 43.5 59.4 64.0 67.7 70.7 74.5 77.9 Other personal health care.......... 3.6 4.0 5.1 7.0 7.4 8.7 13.1 15.2 16.7 18.9 22.4 25.0 Program administration and net cost of private health insurance............... 6.0 9.3 10.7 13.9 21.9 33.7 45.1 43.4 46.4 53.7 52.0 47.7 Government public health activities..... 1.9 3.0 5.3 8.3 12.5 16.5 22.9 24.0 25.4 26.7 29.0 31.4 Research and construction of medical facilities................................. 8.8 16.6 21.0 23.7 21.5 23.2 28.6 27.9 29.9 30.6 31.3 30.7 ----------------------------------------------------------------------------------------------------------- Total................................. 138.4 199.1 287.7 370.3 457.3 606.5 813.3 852.3 906.2 940.8 963.7 988.5 -------------------------------------------------------------------------------------------------------------------------------------------------------- Note.--Constant dollar expenditures are calculated using the Consumer Price Index for all Urban Consumers (CPI-U). Totals may not equal sum of rounded components. Source: Health Care Financing Administration, Office of the Actuary. Data from the Office of National Health Statistics. TABLE C-3.--NATIONAL HEALTH EXPENDITURES: PER CAPITA AMOUNTS IN CONSTANT 1995 DOLLARS AND AVERAGE ANNUAL PERCENTAGE INCREASES, SELECTED CALENDAR YEARS 1960-95 [Dollar amounts per capita] -------------------------------------------------------------------------------------------------------------------------------------------------------- Spending category 1960 1965 1970 1975 1980 1985 1990 1991 1992 1993 1994 1995 -------------------------------------------------------------------------------------------------------------------------------------------------------- Health services and supplies...... $682.1 $894.1 $1241.6 $1543.4 $1853.3 $2360.1 $3018.3 $3139.7 $3303.7 $3398.3 $3447.9 $3508.9 Personal health care.............. 640.5 833.8 1167.2 1444.5 1707.2 2157.3 2757.0 2883.2 3032.8 3098.4 3148.2 3219.3 Hospital care................. 251.5 332.9 512.1 663.2 807.8 964.4 1150.2 1202.9 1250.6 1272.9 1273.7 1282.6 Physicians' services.......... 143.3 194.2 248.3 301.6 355.8 479.2 656.4 678.3 719.6 719.2 724.9 738.6 Dentists' services............ 53.2 66.2 85.4 100.4 104.8 124.1 141.6 142.1 151.6 154.5 160.0 167.9 Other professional services... 16.4 20.5 25.7 34.4 50.0 95.4 155.5 163.1 172.4 182.4 186.9 192.7 Home health care.............. 1.5 2.1 4.0 7.8 18.7 32.3 58.8 68.4 80.4 90.5 100.0 104.7 Drugs and other medical nondurables.................. 115.2 139.7 161.1 164.3 170.1 212.4 268.7 279.4 291.5 295.4 295.5 305.5 Vision products and other medical durables............. 17.6 23.7 29.7 32.2 29.6 38.7 46.9 47.7 48.7 49.2 48.9 50.5 Nursing home care............. 23.0 34.9 77.1 109.3 138.8 175.8 228.4 243.6 255.1 263.9 275.5 285.3 Other personal health care.... 18.8 19.5 23.7 31.3 31.6 35.1 50.4 57.8 62.9 70.4 82.7 91.5 Program administration and net cost of private health insurance. 31.6 45.7 49.8 61.9 93.1 136.2 173.3 165.2 175.0 200.3 192.4 174.6 Government public health activities....................... 10.0 14.6 24.6 36.9 53.0 66.6 88.0 91.3 95.9 99.5 107.2 115.0 Research and construction of medical facilities............... 46.1 81.5 97.8 105.8 91.5 93.8 110.0 106.2 112.8 114.2 115.7 112.3 --------------------------------------------------------------------------------------------------------------------- Total....................... 728.1 975.6 1,339.5 1,649.1 1,944.8 2,454.0 3,128.3 3,246.0 3,416.5 3,512.5 3,563.6 3,621.2 --------------------------------------------------------------------------------------------------------------------- Average annual percentage increase --------------------------------------------------------------------------------------------------------------------- 60-65 65-70 70-75 75-80 80-85 85-90 91-92 92-93 93-94 94-95 --------------------------------------------------------------------------------------------------------------------- Health services and supplies...... 5.6 6.8 4.4 3.7 5.0 5.0 5.2 2.9 1.5 1.8 Personal health care.............. 5.4 7.0 4.4 3.4 4.8 5.0 5.2 2.2 1.6 2.3 Hospital care................. 5.8 9.0 5.3 4.0 3.6 3.6 4.0 1.8 0.1 0.7 Physicians' services.......... 6.3 5.0 4.0 3.4 6.1 6.5 6.1 -0.1 0.8 1.9 --------------------------------------------------------------------------------------------------------------------- Total....................... 6.0 6.5 4.2 3.4 4.8 5.0 5.3 2.8 1.5 1.6 -------------------------------------------------------------------------------------------------------------------------------------------------------- Note.--Constant dollar expenditures are calculated using the Consumer Price Index for all Urban Consumers (CPI-U). Totals may not equal sum of rounded components. Source: Health Care Financing Administration, Office of the Actuary. Data from the Office of National Health Statistics. The majority of health spending is for personal health care services that treat or prevent illness and disease in individuals. In 1995, 88.9 percent of all health spending ($878.8 billion) was for personal health care. The remaining 11.1 percent ($109.7 billion) was spent on health program administration; administrative costs and profits earned by private health insurers; public health activities; noncommercial health research; and new construction of health facilities. Hospital care ($350.1 billion) and physician services ($201.6 billion) are the two largest categories of personal health care spending. They accounted for 35.4 percent and 20.4 percent of total national health expenditures. Two other major service areas, prescription drugs and other medical nondurables, and nursing home care, each added approximately 8 percent. The private sector, including private health insurance, out-of-pocket spending, and philanthropy, continues to finance the majority of personal health care expenditures (55.4 percent) with combined expenditures of $486.7 billion. Public sources, however, are responsible for an increasing portion of spending. Government's share has grown from 20.6 percent in 1965 to 44.6 percent in 1995 (see table C-4). The Federal Government is now the single largest contributor, accounting for 34.5 percent ($303.6 billion) of personal health spending in 1995. State and local governments funded another 10.1 percent ($88.5 billion). The initial growth in Federal Government spending is attributed to the beginning of the Medicare and Medicaid Programs and the expansion of Medicare to cover the disabled population in 1973. In 1965, before the enactment of these programs, the Federal Government contribution represented 8.4 percent of personal health spending. By 1970, the Federal Government's share had increased to 23 percent and to 27 percent by 1975. Between 1980 and 1990 the portion remained steady at approximately 29 percent, but since 1990, this figure has gradually increased to 34.5 percent in 1995. In contrast, while the share paid by private sources also remained stable at about 60 percent from 1980 to 1990, this portion declined to 55.4 percent in 1995, reflecting the influence of increased enrollment in managed care plans (Levit, Lazenby & Braden, 1996). EXPENDITURES FOR HOSPITAL CARE In 1995, hospitals accounted for 35 percent of total national health expenditures, down from 42 percent in 1980. Table C-5 shows several measures of costs incurred by community hospitals, which include all non-Federal short-term general hospitals. These hospitals' total expenses (including inpatient and outpatient acute and postacute care, as well as nonpatient care activities) reached $320.8 billion in 1996. This was up 4.0 percent from the previous year, the smallest rise in hospital costs in at least 30 years. With the increases of 5.0 percent in 1994 and 5.3 percent in 1995, hospital costs have been growing more slowly than in any previous 3-year period. That inpatient expenses increased more slowly than total expenses reflects the growing share of activity in the hospital outpatient setting. TABLE C-4.--PERSONAL HEALTH CARE EXPENDITURES: AGGREGATE AMOUNTS AND PERCENTAGE DISTRIBUTION, SELECTED CALENDAR YEARS 1960-95 -------------------------------------------------------------------------------------------------------------------------------------------------------- Spending source 1960 1965 1970 1975 1980 1985 1990 1991 1992 1993 1994 1995 -------------------------------------------------------------------------------------------------------------------------------------------------------- Amount in billions of dollars ---------------------------------------------------------------------------------------------------------------- Private................................ $18.5 $27.9 $41.3 $69.2 $130.0 $228.4 $371.7 $400.0 $433.4 $453.0 $466.7 $486.7 Private health insurance........... 5.0 8.7 14.8 28.4 62.0 113.8 201.8 221.6 243.2 255.4 264.5 276.8 Out-of-pocket payments............. 13.1 18.5 24.9 38.1 60.3 100.6 148.4 155.0 165.8 171.6 176.0 182.6 Other private sources of funds..... 0.4 0.7 1.6 2.7 7.8 14.1 21.5 23.4 24.4 26.1 26.2 27.3 Public................................. 5.1 7.3 22.5 45.3 87.3 148.0 243.0 276.6 307.1 333.9 361.2 392.1 Federal............................ 2.1 3.0 14.7 30.9 63.4 111.3 178.1 205.8 233.5 255.9 278.1 303.6 State and local.................... 3.0 4.3 7.8 14.4 23.6 36.7 64.9 70.8 73.6 78.0 83.1 88.5 ---------------------------------------------------------------------------------------------------------------- Total.......................... 23.6 35.2 63.8 114.5 217.0 376.4 614.7 676.6 740.5 786.9 827.9 878.8 ---------------------------------------------------------------------------------------------------------------- Percentage distribution ---------------------------------------------------------------------------------------------------------------- Private................................ 78.3 79.4 64.7 60.4 59.9 60.7 60.5 59.1 58.5 57.6 56.4 55.4 Private health insurance........... 21.2 24.7 23.2 24.8 28.6 30.2 32.8 32.8 32.8 32.5 31.9 31.5 Out-of-pocket payments............. 55.3 52.7 39.0 33.3 27.8 26.7 24.1 22.9 22.4 21.8 21.3 20.8 Other private sources of funds..... 1.8 2.0 2.6 2.4 3.6 3.7 3.5 3.5 3.3 3.3 3.2 3.1 Public................................. 21.7 20.6 35.3 39.6 40.1 39.3 39.5 40.9 41.5 42.4 43.6 44.6 Federal............................ 9.0 8.4 23.0 27.0 29.2 29.6 29.0 30.4 31.5 32.5 33.6 34.5 State and local.................... 12.6 12.2 12.2 12.5 10.9 9.7 10.6 10.5 9.9 9.9 10.0 10.1 -------------------------------------------------------------------------------------------------------------------------------------------------------- Note.--Totals may not equal sum of rounded components. Percentage amounts are calculated on unrounded numbers. Source: Health Care Financing Administration, Office of the Actuary. Data from the Office of National Health Statistics. TABLE C-5.--SELECTED DATA ON COMMUNITY HOSPITAL EXPENSES, 1965-96 ---------------------------------------------------------------------------------------------------------------- Total expenses Expenses per Expenses per Inpatient expenses -------------------- adjusted adjusted \1\ inpatient day admission ------------------- Year Amount Percent ------------------------------------ Amount (in change Percent Percent (in Percent billions) Amount change Amount change billions) change ---------------------------------------------------------------------------------------------------------------- 1965................................ $9.220 8.6 $41 7.5 $315 8.1 $8.414 8.7 1966................................ 10.497 13.8 46 11.4 356 13.1 9.611 14.2 1967................................ 12.624 20.3 53 15.3 425 19.1 11.551 20.2 1968................................ 14.720 16.6 59 11.5 482 13.4 13.372 15.8 1969................................ 17.247 17.2 68 15.4 551 14.5 15.636 16.9 1970................................ 20.261 17.5 78 13.8 608 10.3 18.329 17.2 1971................................ 22.496 11.0 87 12.3 670 10.1 20.269 10.6 1972................................ 25.223 12.1 96 10.3 729 8.8 22.622 11.6 1973................................ 28.248 12.0 105 9.2 784 7.5 25.173 11.3 1974................................ 32.759 16.0 118 12.3 873 11.4 29.077 15.5 1975................................ 38.492 17.5 138 16.4 1,017 16.5 33.971 16.8 1976................................ 45.842 19.1 158 15.0 1,168 14.8 40.321 18.7 1977................................ 53.006 15.6 181 14.3 1,312 12.3 46.437 15.2 1978................................ 59.802 12.8 203 12.1 1,466 11.8 52.131 12.3 1979................................ 67.833 13.4 226 11.5 1,618 10.4 59.060 13.3 1980................................ 79.340 17.0 256 12.9 1,836 13.5 68.962 16.8 1981................................ 94.187 18.7 299 16.9 2,155 17.4 81.634 18.4 1982................................ 109.091 15.8 348 16.2 2,489 15.5 94.346 15.6 1983................................ 120.220 10.2 391 12.4 2,742 10.2 103.361 9.6 1984................................ 126.028 4.8 443 13.3 2,947 7.5 107.005 3.5 1985................................ 134.043 6.4 493 11.3 3,226 9.5 111.416 4.1 1986................................ 146.032 8.9 535 8.6 3,527 9.3 119.286 7.1 1987................................ 161.322 10.5 581 8.6 3,860 9.5 129.824 8.8 1988................................ 177.770 10.2 632 8.8 4.194 8.7 140.482 8.2 1989................................ 195.378 9.9 690 9.3 4,586 9.3 152.147 8.3 1990................................ 217.113 11.1 765 10.7 5,021 9.5 165.792 9.0 1991................................ 238.633 9.9 844 10.3 5,461 8.8 178.401 7.6 1992................................ 260.994 9.4 927 9.9 5,905 8.1 191.401 7.3 1993................................ 278.880 6.9 1,000 7.8 6,188 4.8 202.055 5.6 1994................................ 292.801 5.0 1,060 6.0 6,312 2.0 207.918 2.9 1995................................ 308.411 5.3 1,127 6.3 6,427 1.8 214.594 3.2 1996................................ 320.789 4.0 1,188 5.4 6,553 2.0 218.013 1.6 ---------------------------------------------------------------------------------------------------------------- \1\ Inpatient expenses estimated from total expenses, based on the proportion of inpatient to total revenues. Note.--Admissions and inpatient days are adjusted to reflect the volume of outpatient visits as well as inpatient admissions and days. Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association National Hospital Panel Survey. The average cost of a day of hospital care (adjusted to reflect outpatient services) rose by 5.4 percent to $1,188 in 1996. The higher rate of growth in expenses per day reflects a decrease in the number of hospital days (see the discussion of average length of stay below). However, combined with the 6.0- percent increase in 1994 and 6.3 percent in 1995, this also produced the smallest 3 year growth rate in more than 3 decades. The average cost per case (also adjusted to reflect outpatient care) rose to $6,553 in 1996, an increase of only 2.0 percent. From 1994 through 1996, the increase in costs per case averaged 1.9 percent per year, compared with 9.1 percent from 1985 through 1992 and 14.0 percent from 1975 through 1982. Chart C-1 presents the real annual growth in expenses per adjusted admission. This chart provides a clearer picture of the actual rate of increase in costs per case by removing the effects of general inflation. Even after taking inflation into account, the recent trend in hospital costs differs sharply from previous years. In 1994, hospital costs per case rose more slowly than inflation for the first time since 1979. In 1995 and 1996, costs per case grew even more slowly relative to inflation. CHART C-1. REAL ANNUAL CHANGES IN HOSPITAL EXPENSES PER ADJUSTED ADMISSION (IN PERCENT), 1965-96 Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association National Hospital Panel Survey. A variety of factors other than general inflation contribute to aggregate changes in hospital costs, and the roles of these factors may vary widely over time. Chart C-2 displays the contributions of five factors: general inflation, hospital input prices, population growth, utilization, and intensity. Between 1985 and 1992, total hospital expenses rose at an annual rate of 10 percent. The largest contributor to this increase was the intensity of hospital care; that is, the resources used per patient. During this period, general inflation also accounted for a large share of the increase in hospital expenses. Hospital input prices rose faster than the general price level, and hospital utilization per person actually fell (as the number of adjusted admissions grew more slowly than the population). CHART C-2. FACTORS CONTRIBUTING TO GROWTH OF TOTAL HOSPITAL EXPENSES, 1985-92 AND 1992-96 Note._Hospital expenses grew at an annual rate of 10.0 percent between 1985 and 1992 and 5.3 percent between 1992 and 1996. Source: Prospective Payment Assessment Commission. Between 1992 and 1996, the increase in total hospital expenses was only 5.3 percent per year. Because of this, although it slowed from 3.9 percent between 1985 and 1992 to 2.8 percent between 1992 and 1996, general inflation accounted for more than half of the hospital cost increase in the latter period. Hospital utilization per person, which had fallen in the earlier period, rose substantially between 1992 and 1996, accounting for a large share of the growth in hospital expenses. Finally, intensity, which had been the major contributor to cost growth in the earlier period, was almost level between 1992 and 1996. Expenditures for hospital care are financed primarily by third parties, as shown in table C-6. In 1995, private health insurers paid 32.3 percent of the total, Medicare 32.2 percent, and Medicaid (including both the Federal and State shares) 14.8 percent. The share financed by out-of-pocket payments from individuals was only 3.3 percent in 1995, down from 5.2 percent in 1980. TABLE C-6.--NATIONAL EXPENDITURES FOR HOSPITAL CARE BY SOURCE OF FUNDS, SELECTED YEARS 1980-95 [Amounts in billions] ---------------------------------------------------------------------------------------------------------------- 1980 1985 1990 1995 Source of payment ----------------------------------------------------------------------- Amount Percent Amount Percent Amount Percent Amount Percent ---------------------------------------------------------------------------------------------------------------- Out of pocket........................... $5.3 5.2 $8.8 5.2 $9.8 3.8 $11.4 3.3 Third-party payments.................... 97.4 94.8 159.4 94.8 246.8 96.2 338.7 96.7 Private health insurance.............. 38.7 37.7 61.0 36.3 95.7 37.3 113.1 32.3 Other private funds................... 5.0 4.9 8.3 4.9 13.8 5.4 11.3 3.2 Government............................ 53.7 52.3 90.1 53.6 137.3 53.5 214.3 61.2 Federal............................. 40.9 39.8 71.1 42.3 103.4 40.3 175.4 50.1 Medicare.......................... 26.3 25.6 48.9 29.1 68.5 26.7 112.6 32.2 Medicaid\1\....................... 4.6 4.4 7.4 4.4 14.9 5.8 37.2 10.6 Other Federal..................... 9.9 9.7 14.8 8.8 20.0 7.8 25.5 7.3 State and local..................... 12.8 12.5 19.0 11.3 33.9 13.2 39.0 11.1 Medicaid\2\....................... 3.9 3.8 6.3 3.7 11.6 4.5 14.8 4.2 Other State and local............. 8.9 8.7 12.8 7.6 22.3 8.7 24.2 6.9 ----------------------------------------------------------------------- Total........................... $102.7 100.0 $168.2 100.0 $256.5 100.0 $350.1 100.0 ---------------------------------------------------------------------------------------------------------------- \1\ Federal share only. \2\ State and local share only. Source: Prospective Payment Assessment Commission analysis of data from the Health Care Financing Administration, Office of the Actuary. TRENDS IN HOSPITAL UTILIZATION Admissions From 1978 through 1983, total inpatient admissions increased at an annual rate of 1.0 percent, and admissions for persons 65 and over increased an average of 4.8 percent per year, as shown in table C-7. TABLE C-7.--ANNUAL CHANGE IN HOSPITAL ADMISSIONS BY AGE GROUP, 1978-96 ------------------------------------------------------------------------ Percent change in admissions -------------------------------- Year 65 and All Under 65 over ------------------------------------------------------------------------ 1978................................... 0.4 -1.0 4.9 1979................................... 2.7 1.7 5.3 1980................................... 2.9 1.5 6.7 1981................................... 0.9 0.0 3.0 1982................................... 0.0 -1.6 4.1 1983................................... -0.5 -2.8 4.7 1984................................... -3.7 -4.2 -2.6 1985................................... -4.9 -4.7 -5.2 1986................................... -2.1 -2.5 -1.0 1987................................... -0.6 -1.0 0.4 1988................................... -0.4 -1.6 2.0 1989................................... -1.0 -2.0 1.2 1990................................... -0.5 -1.6 1.7 1991................................... -1.1 -2.9 2.5 1992................................... -0.8 -2.2 1.7 1993................................... 0.7 -0.5 2.9 1994................................... 0.9 0.2 2.0 1995................................... 1.4 0.4 2.9 1996................................... -0.4 -0.8 0.4 -------------------------------- Average annual percent change -------------------------------- 1978-83................................ 1.0 -0.4 4.8 1984-86................................ -3.5 -3.8 -3.0 1987-92................................ -0.7 -1.9 1.6 1993-96................................ 0.7 -0.2 2.1 ------------------------------------------------------------------------ Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association National Hospital Panel Survey. With the introduction of Medicare's prospective payment system (PPS) in 1983, the number of elderly patients declined sharply, contrary to most expectations. Admissions of patients under 65, however, fell even more during the first few years of PPS and had been decreasing for several years before that. From 1987 through 1992, total admissions continued to decrease, but at a slower rate, due to an increase among the older population. In 1993, overall admissions increased for the first time in 12 years, due to a slower rate of decline in younger patients and a continuing increase in those 65 and over. This trend continued until 1995 when total admissions increased 1.4 percent over the previous year, the largest increase in 15 years. In 1996, however, total admissions decreased 0.4 percent from the previous year due to fewer admissions in the under 65 population and only a small increase in the number of admissions among the elderly. Average Length of Stay Before the implementation of PPS, the average length of stay for all patients was relatively constant between 7.0 and 7.2 days, as shown in table C-8. With the introduction of PPS, however, there was a significant drop in length of stay. From 1982 to 1984, the average stay fell from 7.2 days to 6.7 days for all patients and from 10.1 days to 8.9 days for patients 65 and over. Average length of stay stabilized at these levels throughout the rest of the 1980s, but has declined again in the 1990s. Hospital stays for elderly patients were 2.0 days shorter, on average, in 1996 than in 1990, and for patients under 65 the average stay was 0.6 days shorter. This decline was even steeper than in the first years of PPS. TABLE C-8.--AVERAGE LENGTH OF STAY AND ANNUAL CHANGE BY AGE GROUP, 1978-96 ---------------------------------------------------------------------------------------------------------------- All Under 65 65 and over ----------------------------------------------------------------- Average Average Average Year length of Percent length of Percent length of Percent stay (in change stay (in change stay (in change days) days) days) ---------------------------------------------------------------------------------------------------------------- 1978.......................................... 7.2 -0.3 6.0 -0.9 10.6 -1.2 1979.......................................... 7.1 -1.0 5.9 -1.2 10.4 -1.9 1980.......................................... 7.2 0.5 5.9 -0.2 10.4 -0.1 1981.......................................... 7.2 0.4 5.9 0.1 10.4 -0.1 1982.......................................... 7.2 -0.6 5.9 -0.6 10.1 -2.3 1983.......................................... 7.0 -2.0 5.8 -1.7 9.7 -4.4 1984.......................................... 6.7 -5.1 5.6 -3.5 8.9 -7.5 1985.......................................... 6.5 -1.7 5.5 -1.3 8.8 -2.1 1986.......................................... 6.6 0.6 5.6 0.5 8.8 0.4 1987.......................................... 6.6 0.8 5.6 0.4 8.9 1.0 1988.......................................... 6.6 -0.1 5.6 -0.3 8.8 -0.7 1989.......................................... 6.6 0.1 5.5 -0.7 8.8 0.2 1990.......................................... 6.6 -1.1 5.4 -1.5 8.7 -1.5 1991.......................................... 6.5 -1.4 5.3 -2.1 8.5 -2.0 1992.......................................... 6.4 -1.6 5.2 -1.9 8.3 -2.2 1993.......................................... 6.2 -2.8 5.1 -1.8 7.9 -4.7 1994.......................................... 6.0 -3.8 4.9 -3.8 7.6 -4.2 1995.......................................... 5.7 -4.2 4.8 -2.4 7.1 -6.6 1996.......................................... 5.5 -3.3 4.8 -1.3 6.7 -5.6 ----------------------------------------------------------------- Average annual percent change ----------------------------------------------------------------- 1978-83....................................... ........... -0.5 ........... -0.8 ........... -1.7 1984-86....................................... ........... -2.1 ........... -1.4 ........... -3.1 1987-92....................................... ........... -0.6 ........... -1.0 ........... -0.9 1993-96....................................... ........... -3.5 ........... -2.3 ........... -5.3 ---------------------------------------------------------------------------------------------------------------- Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association National Hospital Panel Survey. Hospital Occupancy Table C-9 shows that, with slight increases in admissions and stable average length of stay, occupancy rates were over 70 percent in the early 1980s. The number of hospital beds was increasing, exceeding 1 million by 1983. During the early years of PPS, however, occupancy rates decreased dramatically. From 1983 to 1986, the aggregate occupancy rate fell from 72.2 percent to 63.4 percent. There was a slight increase in occupancy rates in the late 1980s, but the sharp reduction in average length of stay lowered the occupancy rate below 60 percent by 1995, despite almost 130,000 fewer beds than in 1983. In 1996, occupancy rates decreased 1.3 percent from the previous year, to 58.9 percent. TABLE C-9.--INPATIENT HOSPITAL OCCUPANCY RATE AND NUMBER OF BEDS, 1978-96 ---------------------------------------------------------------------------------------------------------------- Occupancy Year Inpatient days rate (in Percent Number of Percent percent) change beds change ---------------------------------------------------------------------------------------------------------------- 1978................................................ 256,708,259 73.7 -0.8 954,001 0.9 1979................................................ 260,791,942 74.5 1.0 959,269 0.6 1980................................................ 269,615,111 76.1 2.2 970,456 1.2 1981................................................ 272,956,933 75.8 -0.4 986,917 1.7 1982................................................ 271,422,385 74.5 -1.6 997,720 1.1 1983................................................ 264,504,444 72.2 -3.1 1,003,658 0.6 1984................................................ 241,779,724 66.7 -7.6 992,616 -1.1 1985................................................ 226,128,547 63.6 -4.7 974,559 -1.8 1986................................................ 222,903,834 63.4 -0.3 963,133 -1.2 1987................................................ 223,441,342 64.1 1.2 954,458 -0.9 1988................................................ 222,312,614 64.6 0.8 942,306 -1.3 1989................................................ 220,360,991 64.8 0.3 930,994 -1.2 1990................................................ 216,836,360 64.5 -0.6 921,447 -1.0 1991................................................ 211,474,700 63.5 -1.4 911,781 -1.0 1992................................................ 206,440,330 62.3 -1.9 907,661 -0.5 1993................................................ 202,077,589 61.4 -1.5 901,669 -0.7 1994................................................ 196,116,784 60.3 -1.7 890,575 -1.2 1995................................................ 190,377,347 59.7 -1.1 874,250 -1.8 1996................................................ 183,495,155 58.9 -1.3 853,561 -2.4 ----------------------------------------------------------- Average annual percent change ----------------------------------------------------------- 1978-83............................................. ................ ......... -0.5 ........... 1.0 1984-86............................................. ................ ......... -4.2 ........... -1.4 1987-92............................................. ................ ......... -0.3 ........... -1.0 1993-96............................................. ................ ......... -1.4 ........... -1.5 ---------------------------------------------------------------------------------------------------------------- Source: Prospective Payment Assessment Commission analysis of data from American Hospital Association National Hospital Panel Survey. Hospital Employment Hospitals experienced a significant downturn in total employment levels at the time PPS was introduced, as shown in table C-10. During 1984 and 1985, full-time equivalent employees declined by 2.3 percent. From 1986 through 1993, however, hospital employment increased. During the late 1970s and through the 1980s, growth in the number of part-time personnel exceeded growth in the number of full-time personnel in every year. In 1992, however, the number of full-time personnel grew faster than the number of part-time personnel for the first time in more than 20 years. This trend continued in 1993, but the increase in both types of personnel slowed dramatically. In 1994 hospital employment declined for the first time since the early years of PPS. This was only the second such period in the past three decades. The number of hospital employees has continued to decrease; part-time employees decreased 1.1 percent in 1996 compared to the previous year, while full-time employees held constant. TABLE C-10.--ANNUAL PERCENT CHANGE IN HOSPITAL EMPLOYMENT, 1978-96 ------------------------------------------------------------------------ Personnel Year Total -------------------------------- FTEs Total Full time Part time ------------------------------------------------------------------------ 1978........................ 3.7 4.1 3.3 6.8 1979........................ 3.5 3.9 2.9 6.7 1980........................ 4.7 5.2 4.0 9.1 1981........................ 5.4 6.0 4.8 9.4 1982........................ 3.7 3.7 3.6 4.1 1983........................ 1.4 1.5 1.2 2.3 1984........................ -2.3 -2.1 -2.6 -0.8 1985........................ -2.3 -2.0 -2.7 -0.1 1986........................ 0.3 0.4 0.2 0.9 1987........................ 0.7 0.9 0.4 2.3 1988........................ 1.1 1.4 0.7 3.3 1989........................ 1.6 1.9 1.2 3.6 1990........................ 2.1 2.3 1.8 3.6 1991........................ 0.6 0.7 0.6 1.0 1992........................ 1.6 1.5 1.7 0.9 1993........................ 0.7 0.6 0.8 0.2 1994........................ -0.8 -0.8 -0.7 -0.9 1995........................ -1.4 -1.4 -1.5 -0.9 1996........................ -0.2 -0.3 0.0 -1.1 ------------------------------------------- Average annual percent change ------------------------------------------- 1978-83..................... 3.7 4.1 3.3 6.4 1984-86..................... -1.4 -1.2 -1.7 0.0 1987-92..................... 1.3 1.5 1.1 2.4 1993-96..................... -0.4 -0.5 -0.4 -0.7 ------------------------------------------------------------------------ Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association National Hospital Panel Survey. EXPENDITURES FOR PHYSICIANS' SERVICES Health care expenditures for physicians' services were $201.6 billion in 1995, an increase of 5.8 percent from 1994. This amounted to 20.4 percent of national health expenditures. Third-party (public expenditures and private insurance) payments financed over 80 percent of physicians' services. In 1995 private health insurance, the single largest payer, was responsible for 48.1 percent of these expenditures ($97 billion). In 1980, this portion was only 37.9 percent. Public expenditures in this area have grown much more slowly, rising from 28.9 percent in 1980 to 31.7 percent ($64 billion) in 1995. Of this last figure, $40 billion was for Federal Medicare payments. In contrast, out-of-pocket payments by individuals for physicians' services have decreased from 32.4 percent in 1980 to 18.3 percent ($6.9 billion) in 1995 (see table C-11). Inflation in physicians' fees has outpaced that of the U.S. economy as a whole since 1981 as measured by the Consumer Price Index (CPI). The inflation rate of 3.6 for 1996, however, is the lowest since 1973 (see table C-12). The American Medical Association reports that, over the 10 years from 1984 to 1994, physician income rose an average 5 percent a year. In 1994, however, the average physician net income experienced the first decrease ever recorded by the AMA. After expenses but before taxes, average physician income was $182,400, a 3.6 percent decrease from $189,300 in 1993. In 1995, average physician net income rebounded 7.2 percent to $195,500. The 2-year change in income, however, amounts to an average annual increase of only 1.6 percent from 1993 to 1995. When adjusted for inflation, this represents an average annual loss of 1.04 percent, with real incomes remaining below those for 1993. Changes in the health care market appear to be affecting the conditions of employment for many physicians (Physician Payment Review Commission). In 1995, the percentage of physicians who were self-employed declined from 58 to 55 percent. These doctors, who were more likely to have additional years of experience and be board certified, earned an average income of $230,800. This was over 50 percent higher than employee-doctors whose average net income was only $152,500, but the difference would be less if noncash benefits received by employee physicians were included. The share of physicians who were employees increased from 36 to 39 percent in the same time period. Growth in average net income for physicians in the Middle Atlantic and Pacific areas was well above average in 1995. The West North Central, Mountain, and New England census regions saw the least increase in income from 1994 to 1995. Physicians in the New England States continue to report the lowest average net income of $161,000; the East South Central region remained the highest at $216,000 (see table C-13). TABLE C-11.--EXPENDITURES FOR PHYSICIAN SERVICES \1\ BY SOURCE OF FUNDS, SELECTED YEARS 1980-95 [Amounts in billions] -------------------------------------------------------------------------------------------------------------------------------------------------------- 1980 1985 1990 1993 1994 1995 Source of payment ----------------------------------------------------------------------------------------------------------- Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent -------------------------------------------------------------------------------------------------------------------------------------------------------- Out-of-pocket payments...................... $14.8 32.4 $24.3 29.1 $35.4 24.2 $37.5 20.6 $37.3 19.6 $36.9 18.3 Third-party payments........................ 30.6 67.6 59.3 70.9 110.9 75.8 145.1 79.4 153.3 80.4 164.8 81.7 Private health insurance.................... 17.1 37.9 23.4 36.9 63.3 43.2 86.5 47.3 91.1 47.8 97.0 48.1 Other private funds......................... 0.4 0.8 1.4 1.6 2.7 1.8 3.1 1.7 3.1 1.6 3.7 1.9 Government.................................. 13.1 28.9 24.5 29.3 45.0 30.7 55.6 30.4 59.1 31.0 64.0 31.7 Federal................................. 10.0 22.1 19.5 23.4 35.9 24.5 43.5 23.8 46.7 24.5 50.9 25.3 Medicare.............................. 8.0 17.6 16.5 19.7 29.5 20.2 33.4 18.3 36.2 19.0 40.0 19.8 Medicaid.............................. 1.4 3.1 2.0 2.4 4.2 2.8 7.6 4.2 8.0 4.2 8.4 4.2 Other Federal programs................ 0.6 1.4 1.1 1.3 2.2 1.5 2.6 1.4 2.5 1.3 2.6 1.3 State and local......................... 3.1 6.9 4.9 5.9 9.1 6.2 12.0 6.6 12.5 6.5 13.1 6.5 Medicaid.............................. 1.1 2.5 1.5 1.9 2.9 2.0 5.0 2.7 5.5 2.9 5.9 2.9 Other State and local programs........ 2.0 4.3 3.4 4.0 6.2 4.2 7.0 3.8 7.0 3.7 7.1 3.5 ----------------------------------------------------------------------------------------------------------- Total............................... 45.2 100.0 83.6 100.0 146.3 100.0 182.7 100.0 190.6 100.0 201.6 100.0 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Encompasses the cost of all services and supplies provided in physicians' offices, the cost for services of privately billing physicians in hospitals and other institutions, and the cost of diagnostic work performed in independent clinical laboratories. The salaries of staff physicians are counted with expenditures for the services of the employing institution. Note.--Totals may not equal sum of rounded components. Source: Health Care Financing Administration, Office of the Actuary. Data from the Office of National Health Statistics. TABLE C-12.--ANNUAL PERCENTAGE CHANGE IN SELECTED COMPONENTS OF THE CONSUMER PRICE INDEX (CPI-U), \1\ 1965-96 ---------------------------------------------------------------------------------------------------------------- All items less Medical Physicians' Year All items medical care total services care ---------------------------------------------------------------------------------------------------------------- 1965........................................................... 1.6 1.6 2.4 3.6 1966........................................................... 2.9 3.1 4.4 5.6 1967........................................................... 3.1 2.1 7.2 7.2 1968........................................................... 4.2 4.2 6.0 5.6 1969........................................................... 5.5 5.4 6.7 7.0 1970........................................................... 5.7 5.9 6.6 7.5 1971........................................................... 4.4 4.1 6.2 7.0 1972........................................................... 3.2 3.2 3.3 3.0 1973........................................................... 6.2 6.4 4.0 3.4 1974........................................................... 11.0 11.2 9.3 9.2 1975........................................................... 9.1 9.0 12.0 12.1 1976........................................................... 5.8 5.3 9.5 11.4 1977........................................................... 6.5 6.3 9.6 9.1 1978........................................................... 7.6 7.6 8.4 8.4 1979........................................................... 11.3 11.5 9.2 9.1 1980........................................................... 13.5 13.6 11.0 10.5 1981........................................................... 10.3 10.4 10.7 11.0 1982........................................................... 6.2 5.9 11.6 9.4 1983........................................................... 3.2 2.9 8.8 7.8 1984........................................................... 4.3 4.1 6.2 6.9 1985........................................................... 3.6 3.4 6.3 5.9 1986........................................................... 1.9 1.5 7.5 7.2 1987........................................................... 3.6 3.5 6.6 7.3 1988........................................................... 4.1 3.9 6.5 7.2 1989........................................................... 4.8 4.6 7.7 7.4 1990........................................................... 5.4 5.2 9.0 7.1 1991........................................................... 4.2 3.9 8.7 6.0 1992........................................................... 3.0 2.8 7.4 6.3 1993........................................................... 3.0 2.7 5.9 5.6 1994........................................................... 2.6 2.5 4.8 4.4 1995........................................................... 2.8 2.7 4.5 4.5 1996........................................................... 3.0 2.8 3.5 3.6 ---------------------------------------------------------------------------------------------------------------- \1\ Consumer Price Index for all Urban Consumers (CPI-U), changes in annual averages. Source: U.S. Department of Labor, Bureau of Labor Statistics. Physician net income varies more by specialty than across geographic areas. Surgeons had the highest average net incomes in 1995 ($269,400) and general and family practitioners the lowest ($131,200). Incomes for general and family practitioners, however, continue to increase at a healthy rate, with gains from 1993 to 1994 of 3.9 percent and from 1994 to 1995 of 8.1 percent. The largest gain from 1994 to 1995 was by obstetricians and gynecologists with an increase of 21.9 percent to $244,300. This followed a 9.7 percent decrease in average net income for this specialty in 1994. Growth in income for surgeons was below the all-physician average, declining 2.9 percent from 1993 to 1994 and increasing only 5.6 percent from 1994 to 1995 (see table C-13). TABLE C-13.--PHYSICIANS' AVERAGE NET INCOME AFTER EXPENSES BUT BEFORE TAXES, 1983-95 [Average net income \1\ in thousands of dollars] -------------------------------------------------------------------------------------------------------------------------------------------------------- Percent Category 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 change 1994-95 -------------------------------------------------------------------------------------------------------------------------------------------------------- Specialty: General/family practice........... 68.5 71.1 77.9 80.3 91.5 94.6 95.9 102.7 111.5 114.4 116.8 121.4 131.2 8.1 Internal medicine................. 93.3 103.2 101.0 109.4 121.8 130.9 146.5 152.5 149.6 162.1 180.8 174.9 185.7 6.2 Surgery........................... 145.5 151.8 155.4 162.4 187.9 207.5 220.5 236.4 233.8 250.5 262.7 255.2 269.4 5.6 Pediatrics........................ 70.7 74.5 77.1 81.8 85.3 94.9 104.7 106.5 119.3 123.9 135.4 126.2 140.5 11.3 Obstetrics/gynecology............. 119.9 116.2 122.7 135.9 163.2 180.7 194.3 207.3 221.8 220.7 221.9 200.4 244.3 21.9 Radiology......................... 148.0 139.8 150.8 168.8 180.7 188.5 210.5 219.4 229.8 257.3 259.8 237.4 244.4 2.9 Psychiatry........................ 80.0 85.5 88.6 91.5 102.7 111.4 111.7 116.5 127.6 132.1 131.3 128.5 137.2 6.8 Anesthesiology.................... 144.7 145.4 140.2 150.2 163.1 194.5 185.8 207.4 221.1 231.1 224.1 218.1 215.1 -1.4 Census division: New England....................... 84.5 87.3 108.3 107.1 110.6 132.9 128.3 142.5 143.8 171.2 171.5 156.1 161.0 3.1 Middle Atlantic................... 98.6 98.4 107.9 114.6 126.1 135.0 152.5 156.1 171.0 172.4 185.3 177.8 207.0 16.4 East North Central................ 114.3 109.4 118.9 126.6 137.6 147.0 155.6 172.4 174.1 187.1 199.2 191.9 198.8 3.6 West North Central................ 110.5 110.7 113.7 120.7 133.9 138.0 159.2 151.4 164.2 187.5 198.2 183.8 184.6 0.4 South Atlantic.................... 106.7 114.5 112.6 119.6 133.8 156.0 165.6 169.0 168.8 186.4 192.5 189.3 198.8 5.0 East South Central................ 114.9 122.2 115.0 122.6 141.2 164.8 173.0 169.0 179.4 180.0 195.0 199.2 216.0 8.4 West South Central................ 124.4 119.1 123.3 129.0 140.4 160.7 170.5 178.8 193.3 193.8 189.1 195.5 205.9 5.3 Mountain.......................... 91.4 102.3 97.5 108.5 125.5 132.1 142.6 170.9 155.0 175.7 193.2 175.4 178.8 1.9 Pacific........................... 103.1 109.4 113.6 119.0 135.4 136.0 148.1 162.5 172.4 178.1 181.2 171.8 189.9 10.5 Location: Nonmetropolitan................... 87.2 90.9 94.2 107.7 117.9 120.9 129.4 130.5 150.4 159.2 160.0 171.4 157.5 -8.1 Metropolitan: Less than 1,000,000........... 111.0 115.1 118.1 124.5 140.4 154.1 164.1 172.7 174.8 185.6 195.2 193.0 204.1 5.8 1,000,000 and over............ 106.3 106.4 112.8 117.5 127.9 140.7 153.4 163.3 170.4 181.5 188.5 175.1 193.5 10.5 Employment status: Self-employed..................... 115.9 118.6 124.5 131.1 146.2 160.0 175.3 185.6 191.0 202.3 218.0 210.2 230.8 9.8 Employee.......................... 77.6 80.4 83.8 91.7 99.6 113.0 119.2 119.8 134.0 136.1 150.7 148.2 152.5 2.9 ----------------------------------------------------------------------------------------------------------------- All physicians \2\............ 104.1 108.4 112.2 119.5 132.3 144.7 155.8 164.3 170.6 181.7 189.3 182.4 195.5 7.2 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Average net income after expenses but before taxes. These figures include contributions made into pension, profit-sharing, and deferred compensation plans. \2\ Includes physicians in specialties not reported separately. Source: American Medical Association (1997a and b). Table C-14 shows median net income for physicians, the level below and above which lie half of all earnings. In the decade from 1985 to 1995, the median income for all physicians increased each year by an average 5.5 percent. After adjusting for inflation, this represents a real growth of 1.9 percent yearly. Pediatrics had the largest yearly increase of 6.3 percent (nominal) or 2.7 percent (real or constant dollars). Anesthesiology grew only 4.3 percent (nominal) or 0.8 percent (real or constant dollars) over this same time. TABLE C-14.--MEDIAN PHYSICIAN NET INCOME AFTER EXPENSES BUT BEFORE TAXES, 1985 AND 1995 [In thousands of dollars] ---------------------------------------------------------------------------------------------------------------- Median net income Average annual ------------------------------ percent change Category 1995 1995 ------------------- 1985 nominal real \1\ Nominal Real \1\ ---------------------------------------------------------------------------------------------------------------- Specialty: General/family practice................................... $70 $124 $88 5.9 2.3 Internal medicine......................................... 90 150 106 5.2 1.6 Surgery................................................... 129 225 159 5.7 2.1 Pediatrics................................................ 70 129 91 6.3 2.7 Obstetrics/gynecology..................................... 120 200 141 5.2 1.6 Radiology................................................. 135 230 162 5.5 1.9 Psychiatry................................................ 80 124 88 4.5 0.9 Anesthesiology............................................ 133 203 143 4.3 0.8 Pathology................................................. 115 185 131 4.9 1.3 Census division: New England............................................... 94 140 99 4.1 0.5 Middle Atlantic........................................... 90 173 122 6.8 3.1 East North Central........................................ 100 164 116 5.1 1.5 West North Central........................................ 85 160 113 6.5 2.9 South Atlantic............................................ 94 164 116 5.7 2.1 East South Central........................................ 92 175 124 6.6 3.0 West South Central........................................ 100 173 122 5.6 2.0 Mountain.................................................. 85 151 107 5.9 2.3 Pacific................................................... 97 165 116 5.5 1.8 ------------------------------------------------- All physicians \2\.................................... 94 160 113 5.5 1.9 ---------------------------------------------------------------------------------------------------------------- \1\ In 1985 dollars. \2\ Includes physicians in specialties not listed separately. Source: American Medical Association (1997b). Table C-15 shows average physician net income in nominal and real (or constant) dollars. Physicians' average net income increased 74 percent between 1985 and 1995, but real income, expressed in 1995 dollars, increased only 23 percent (from $158,900 to $195,500) over the 10 year period. TABLE C-15.--AVERAGE PHYSICIAN NET INCOME AFTER EXPENSES BUT BEFORE TAXES, 1977-95 [Dollars in thousands] ------------------------------------------------------------------------ Year Nominal Real ------------------------------------------------------------------------ 1977.............................................. $60.4 $151.9 1978.............................................. 64.6 151.0 1979.............................................. 77.4 162.5 1980.............................................. NA NA 1981.............................................. 89.9 150.7 1982.............................................. 97.7 154.3 1983.............................................. 104.1 159.3 1984.............................................. 108.4 159.0 1985.............................................. 112.2 158.9 1986.............................................. 119.5 166.2 1987.............................................. 132.3 177.5 1988.............................................. 144.7 186.4 1989.............................................. 155.8 191.5 1990.............................................. 164.3 191.6 1991.............................................. 170.6 190.9 1992.............................................. 181.7 197.4 1993.............................................. 189.3 199.6 1994.............................................. 182.4 187.6 1995.............................................. 195.5 195.5 ------------------------------------------------------------------------ NA--Not available. Note.--Real (1995 dollars) incomes are calculated using the Consumer Price Index for all Urban Consumers. Source: CRS analysis of data from American Medical Association (1997a and b). Table C-16 shows the distribution of physicians' net incomes in 1995 for all physicians and selected specialties. While the average net income of all physicians was $195,500, the median income may be more representative of the typical physician's earnings. Half of all physicians earned $160,000 or less. One-fourth of all physicians earned $115,000 or less, while one-fourth earned $238,000 or more. Median incomes across all physician specialties remain far apart, with the median income for gastroenterology at $244,000 in 1995, followed by surgery at $225,000. On the lower side, general and family practice and psychiatry reported median incomes of $124,000. TABLE C-16.--DISTRIBUTION OF PHYSICIAN NET INCOME AFTER EXPENSES BUT BEFORE TAXES BY SPECIALTY AND CENSUS DIVISION, 1995 [In thousands of dollars] ------------------------------------------------------------------------ 25th 75th Category Mean percentile Median percentile ------------------------------------------------------------------------ Specialty: General/family practice. $131.2 $90.0 $124.0 $159.0 Internal medicine....... 185.7 110.0 150.0 214.0 General internal medicine........... 159.5 101.0 138.0 190.0 Cardiovascular diseases........... 292.3 150.0 210.0 388.0 Gastroenterology.... 256.5 145.0 244.0 315.0 Surgery................. 269.4 160.0 225.0 316.0 General surgery..... 244.4 150.0 203.0 302.0 Otolaryngology...... 232.3 148.0 206.0 282.0 Orthopedic surgery.. 323.2 200.0 250.0 350.0 Ophthalmology....... 240.8 125.0 194.0 260.0 Urological surgery.. 243.4 175.0 220.0 293.0 Pediatrics.............. 140.5 95.0 129.0 175.0 Obstetrics/gynecology... 244.3 150.0 200.0 296.0 Radiology............... 244.4 160.0 230.0 310.0 Psychiatry.............. 137.2 95.0 124.0 160.0 Anesthesiology.......... 215.1 150.0 203.0 262.0 Pathology............... 209.4 130.0 185.0 230.0 Other specialty......... 188.5 127.0 170.0 222.0 Emergency medicine.. 184.4 145.0 170.0 225.0 Neurology........... 197.8 130.0 160.0 225.0 Dermatology......... 214.9 125.0 190.0 238.0 Geographic area: New England............. 161.0 100.0 140.0 200.0 Middle Atlantic......... 207.0 119.0 173.0 250.0 East North Central...... 198.8 119.0 164.0 250.0 West North Central...... 184.6 108.0 160.0 221.0 South Atlantic.......... 198.8 113.0 164.0 240.0 East South Central...... 216.0 120.0 175.0 282.0 West South Central...... 205.9 124.0 173.0 240.0 Mountain................ 178.8 108.0 151.0 220.0 Pacific................. 189.9 120.0 165.0 220.0 ------------------------------------------- All physicians \1\.. 195.5 115.0 160.0 238.0 ------------------------------------------------------------------------ \1\ Includes physicians in specialties not listed separately. Source: American Medical Association (1997a). The AMA's Physician Marketplace Statistics 1996 reported that, on average, nonfederal patient care physicians received 42.9 percent of their incomes from private insurers. Medicare payments were 27.4 percent; Medicaid was a source of another 11.8 percent of doctor revenue. Patient out-of-pocket payments accounted for 17.9 percent (see table C-17). The importance of each source varied by specialty, with physicians specializing in internal medicine receiving the highest percentage of revenue from Medicare. Pediatricians, on average, received only 1.3 percent of their income from Medicare, but received the highest percentage of income from Medicaid (23.6 percent). TABLE C-17.--PERCENT OF NONFEDERAL PHYSICIAN REVENUE BY SOURCE OF PAYMENT, 1996 ---------------------------------------------------------------------------------------------------------------- Private Patient out Category Medicare Medicaid insurance of pocket ---------------------------------------------------------------------------------------------------------------- Specialty: General/family practice................................. 23.6 12.9 40.8 22.7 Internal medicine....................................... 40.2 8.8 37.9 13.2 Surgery................................................. 34.9 8.1 43.2 13.8 Pediatrics.............................................. 1.3 23.6 48.8 26.3 Obstetrics/gynecology................................... 8.7 17.9 58.2 15.1 Radiology............................................... 34.9 10.5 39.9 14.8 Psychiatry.............................................. 13.7 11.8 35.9 38.6 Anesthesiology.......................................... 27.4 13.0 46.4 13.3 Pathology............................................... 30.4 10.7 42.2 16.6 Census: New England............................................. 26.6 11.7 44.6 17.1 Middle Atlantic......................................... 30.2 8.8 43.9 17.1 East North Central...................................... 28.1 11.9 42.3 17.7 West North Central...................................... 28.5 10.2 43.8 17.4 South Atlantic.......................................... 27.9 11.8 42.1 18.2 East South Central...................................... 29.0 15.2 38.5 17.3 West South Central...................................... 27.8 12.0 40.8 19.4 Mountain................................................ 23.9 11.8 46.2 18.1 Pacific................................................. 23.9 13.8 43.8 18.5 --------------------------------------------------- All physicians \1\.................................. 27.4 11.8 42.9 17.9 ---------------------------------------------------------------------------------------------------------------- Source: American Medical Association (1997a). A Medical Economics Continuing Survey addressed physician gross income from HMOs, PPOs, and the amount in the form of capitation payments (see table C-18). According to the survey, there was a small increase between 1994 and 1995 in the portion of physicians participating in capitated plans from 36 to 38 percent. Physicians with prepaid contracts earned a median $40,000 in capitation payments in 1995, only 5 percent more than in 1994. The rise in the number of doctors who take HMO patients, however, jumped from a median 69 percent of survey respondents in 1994 to 77 percent in 1995. The median gross income in 1995 for these physicians was $63,770, an increase of 17 percent from 1994. PPO participation by physicians also rose from 69 to 75 percent, with earnings increasing 13 percent to $48,660 (Terry, 1996). TABLE C-18.--PHYSICIAN GROSS INCOME FROM MANAGED CARE AND CAPITATION BY SPECIALTY, 1995 ---------------------------------------------------------------------------------------------------------------- Median 1995 gross income \1\ Percent of 1995 gross from: income \1\ from: Physician specialty ----------------------------------------------------------- HMOs PPOs Capitation HMOs PPOs Capitation ---------------------------------------------------------------------------------------------------------------- Anesthesiologists................................... $58,680 $39,720 $32,500 20 15 10 Cardiologists....................................... 50,880 44,600 47,500 12 10 10 Cardio/thoracic surgeons............................ 87,670 50,000 50,000 20 10 10 Emergency physicians................................ 49,750 46,790 45,000 20 20 20 Family practitioners................................ 69,080 63,600 27,500 20 15 10 Gastroenterologists................................. 52,210 23,730 32,000 25 10 15 General practitioners............................... 62,660 54,410 53,200 20 15 15 General surgeons.................................... 57,610 33,200 45,000 25 15 20 Internist........................................... 115,860 64,640 60,000 20 10 10 Neurosurgeons....................................... 114,230 79,060 40,000 30 20 15 OBG specialists..................................... 51,710 42,320 22,500 10 9 10 Orthopedic surgeons................................. 74,790 70,000 50,000 15 15 10 Pediatricians....................................... 68,820 63,870 42,500 30 25 17 Plastic surgeons.................................... 73,980 55,580 42,500 15 15 10 Psychiatrists....................................... 46,120 37,880 24,000 20 20 10 Radiologists........................................ (\2\) (\2\) 36,000 20 (\2\) 10 ----------------------------------------------------------- All surgical specialists........................ 78,200 58,960 40,000 20 15 10 All nonsurgeons \2\............................. 56,780 43,630 40,000 20 15 15 All fields...................................... 63,770 48,660 40,000 20 15 15 ---------------------------------------------------------------------------------------------------------------- \1\ Gross is the individual physician's share of 1994 practice receipts before professional expenses and income taxes. \2\ Insufficient sample. Figures exclude physicians with no HMO, preferred provider organizations, or capitation contracts. Source: Terry (1996). SUPPLY OF HOSPITAL BEDS The national supply of community hospital beds per 1,000 population steadily increased from the 1940s, reaching a peak of 4.6 beds per 1,000 population in 1975. By 1994, the number of beds dropped to 3.5 per 1,000 population. Among the 9 Census regions, the East South Central experienced the largest increase from 1.7 per 1,000 population in 1940 to 4.7 in 1980. By 1994, this number had declined to 4.3, but was still more than twice that of the 1940 figure. In contrast, the New England, Mountain, and Pacific regions had fewer beds per 1,000 in 1994 than in 1940 (see table C-19). TABLE C-19.--COMMUNITY HOSPITAL BEDS PER 1,000 POPULATION AND AVERAGE ANNUAL PERCENT CHANGE BY REGION AND STATE, SELECTED YEARS 1940-1994 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Beds per 1,000 civilian population Average annual percent change Region and State ----------------------------------------------------------------------------------------------------------------------------------- 1940 \1\ 1950 \1\ 1960 \2\ 1970 1980 1990 \3\ 1994 \3\ 1940-60 \1\ \2\ 1960-70 \2\ 1970-80 1980-90 \3\ 1990-94 \3\ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ New England................................................. 4.4 4.2 3.9 4.1 4.1 3.4 3.1 -0.6 0.5 0.0 -1.9 -2.3 Maine..................................................... 3.0 3.2 3.4 4.7 4.7 3.7 3.4 0.6 3.3 0.0 -2.1 -2.1 New Hampshire............................................. 4.2 4.2 4.4 4.0 3.9 3.1 2.9 0.2 -0.9 -0.3 -2.3 -1.7 Vermont................................................... 3.3 4.0 4.5 4.5 4.4 3.0 3.3 1.6 0.0 -0.2 -3.4 2.4 Massachusetts............................................. 5.1 4.8 4.2 4.4 4.4 3.6 3.3 -1.0 0.5 0.0 -2.0 -2.2 Rhode Island.............................................. 3.9 3.8 3.7 4.0 3.8 3.2 2.8 -0.3 0.8 -0.5 -1.7 -3.3 Connecticut............................................... 3.7 3.6 3.4 3.4 3.5 2.9 2.8 -0.4 0.0 0.3 -1.9 -0.9 Middle Atlantic............................................. 3.9 3.8 4.0 4.4 4.6 4.1 4.1 0.1 1.0 0.4 -0.9 0.0 New York.................................................. 4.3 4.1 4.3 4.6 4.5 4.1 4.2 0.0 0.7 -0.2 -0.7 0.6 New Jersey................................................ 3.5 3.2 3.1 3.6 4.2 3.7 3.9 -0.6 1.5 1.6 -1.3 1.3 Pennsylvania.............................................. 3.5 3.8 4.1 4.7 4.8 4.4 4.2 0.8 1.4 0.2 -0.9 -1.2 East North Central.......................................... 3.2 3.2 3.6 4.4 4.7 3.9 3.5 0.6 2.0 0.7 -1.8 -2.7 Ohio...................................................... 2.7 2.9 3.4 4.2 4.7 4.0 3.6 1.2 2.1 1.1 -1.8 -2.6 Indiana................................................... 2.3 2.6 3.1 4.0 4.5 3.9 3.5 1.5 2.6 1.2 -1.4 -2.7 Illinois.................................................. 3.4 3.6 4.0 4.7 6.1 4.0 3.7 0.8 1.6 0.8 -2.4 -1.9 Michigan.................................................. 4.0 3.3 3.3 4.3 4.4 3.7 3.3 -1.0 2.7 0.2 -1.7 -2.8 Wisconsin................................................. 3.4 3.7 4.3 5.2 4.9 3.8 3.4 1.2 1.9 -0.8 -2.5 -2.7 West North Central.......................................... 3.1 3.7 4.3 6.7 6.8 4.9 4.5 1.6 2.9 0.2 -1.7 -2.1 Minnesota................................................. 3.9 4.4 4.8 6.1 5.7 4.4 4.0 1.0 2.4 -0.7 -2.6 -2.4 Iowa...................................................... 2.7 3.2 3.9 5.6 5.7 5.1 4.6 1.9 3.7 0.2 -1.1 -2.5 Missouri.................................................. 2.9 3.3 3.9 5.1 5.7 4.8 4.4 1.5 2.7 1.1 -1.7 -2.2 North Dakota.............................................. 3.5 4.3 5.2 6.8 7.4 7.0 7.0 2.0 2.7 0.8 -0.6 0.0 South Dakota.............................................. 2.8 4.4 4.5 5.6 5.5 6.1 6.1 2.4 2.2 -0.2 1.0 0.0 Nebraska.................................................. 3.4 4.2 4.4 6.2 6.0 5.5 5.2 1.3 3.5 -0.3 -1.0 -1.4 Kansas.................................................... 2.8 3.4 4.2 5.4 5.8 4.8 4.4 2.0 2.5 0.7 -1.9 -2.2 South Atlantic.............................................. 2.5 2.8 3.3 4.0 4.5 3.7 3.5 1.4 1.9 1.2 -1.9 -1.4 Delaware.................................................. 4.4 3.9 3.7 3.7 3.6 3.0 2.6 -0.9 0.0 -0.3 -1.8 -3.5 Maryland.................................................. 3.9 3.6 3.3 3.1 3.6 2.8 2.6 -0.8 -0.6 1.5 -2.1 -1.8 District of Columbia...................................... 5.5 5.5 5.9 7.4 7.3 7.6 7.2 0.4 2.3 -0.1 0.3 -1.3 Virginia.................................................. 2.2 2.5 3.0 3.7 4.1 3.3 3.0 1.6 2.1 1.0 -2.1 -2.4 West Virginia............................................. 2.7 3.1 4.1 5.4 5.5 4.7 4.5 2.1 2.8 0.2 -1.6 -1.1 North Carolina............................................ 2.2 2.6 3.4 3.8 4.2 3.3 3.3 2.2 1.1 1.0 -2.1 0.0 South Carolina............................................ 1.8 2.4 2.9 3.7 3.9 3.3 3.2 2.4 2.5 0.5 -1.7 -0.8 Georgia................................................... 1.7 2.0 2.8 3.8 4.6 4.0 3.8 2.5 3.1 1.9 -1.4 -1.3 Florida................................................... 2.8 2.9 3.1 4.4 5.1 3.9 3.7 0.5 3.6 1.5 -2.4 -1.3 East South Central.......................................... 1.7 2.1 3.0 4.4 4.7 4.3 4.3 3.9 1.5 -0.6 -2.2 -2.4 Kentucky.................................................. 1.8 2.2 3.0 4.0 4.5 4.3 4.1 2.6 2.9 1.2 -0.2 -1.2 Tennessee................................................. 1.9 2.3 3.4 4.7 5.5 4.8 4.3 3.0 3.3 1.6 -1.1 -2.7 Alabama................................................... 1.5 2.0 2.8 4.3 5.1 4.6 4.3 3.2 4.4 1.7 -1.0 -1.7 Mississippi............................................... 1.4 1.7 2.9 4.4 5.3 5.0 4.7 3.7 4.3 1.9 0.0 -1.5 West South Central.......................................... 2.1 2.7 3.3 4.3 4.7 3.8 3.5 2.3 2.7 0.9 -1.8 -2.0 Arkansas.................................................. 1.4 1.6 2.9 4.2 5.0 4.6 4.2 3.7 3.6 1.8 -0.6 -2.2 Louisiana................................................. 3.1 3.8 3.9 4.2 4.8 4.6 4.4 1.2 0.7 1.3 -0.4 -1.1 Oklahoma.................................................. 1.9 2.5 3.2 4.5 4.6 4.0 3.6 2.6 3.5 0.2 -1.4 -2.6 Texas..................................................... 2.0 2.7 3.3 4.3 4.7 3.5 3.2 2.5 2.7 0.9 -2.9 -2.2 Mountain.................................................... 3.6 3.8 3.5 4.3 3.8 3.1 2.7 -0.1 2.1 -1.2 -2.0 -3.4 Montana................................................... 4.9 5.3 5.1 5.8 5.9 5.8 5.0 0.2 1.3 0.2 -0.2 -3.6 Idaho..................................................... 2.6 3.4 3.2 4.0 3.7 3.2 3.0 1.0 2.3 -0.8 -1.4 -1.6 Wyoming................................................... 3.5 3.9 4.6 5.5 3.6 4.8 4.6 1.4 1.8 -4.1 3.1 -1.1 Colorado.................................................. 3.9 4.2 3.8 4.6 4.2 3.2 2.7 -0.1 1.9 -0.9 -2.7 -4.2 New Mexico................................................ 2.7 2.2 2.9 3.5 3.1 2.8 2.5 0.4 1.9 -1.2 -0.7 -2.8 Arizona................................................... 3.4 4.0 3.0 4.1 3.6 2.7 2.4 -0.6 3.2 1.3 -2.8 -2.9 Utah...................................................... 3.2 2.9 2.8 3.6 3.1 2.6 2.3 -0.7 2.5 -1.5 -1.7 -3.0 Nevada.................................................... 5.0 4.4 3.9 4.2 4.2 2.8 2.5 -1.2 0.7 0.0 -3.6 -2.8 Pacific..................................................... 4.1 3.2 3.1 3.7 3.5 2.7 2.4 -1.4 1.8 -0.6 -2.6 -2.9 Washington................................................ 3.4 3.6 3.3 3.5 3.1 2.5 2.2 -0.1 0.6 -1.2 -2.1 -3.1 Oregon.................................................... 3.5 3.1 3.5 4.0 3.5 2.8 2.3 0.0 1.3 -1.3 -1.9 -4.8 California................................................ 4.4 3.3 3.0 3.8 3.6 2.7 2.5 -1.9 2.4 -0.5 -2.8 -1.9 Alaska.................................................... ........ ........ 2.4 2.3 2.7 2.3 2.2 ............... -0.4 1.6 -1.6 -1.1 Hawaii.................................................... ........ ........ 3.7 3.4 3.1 2.7 2.6 ............... -0.8 -0.9 -1.0 -0.9 ----------------------------------------------------------------------------------------------------------------------------------- United States......................................... 3.2 3.3 3.6 4.3 4.5 3.7 3.5 0.6 1.8 0.5 -1.7 -1.4 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ \1\ 1940 and 1950 data are estimated based on published figures. \2\ 1960 includes hospital units of institutions. \3\ Starting with 1990, excludes hospital units of institutions. Note.--Data for 1990 has been revised. Source: U.S. Public Health Service (1997). SUPPLY OF PHYSICIANS Physician shortages in the 1950s and 1960s led to Federal and State initiatives to increase the supply of physicians. Since that time, however, the number of physicians in the United States has grown rapidly from 334,028 in 1970 to 720,325 in 1995, a rate over four times faster than that of the total population. Today, the concern is now focused on a possible oversupply of physicians and its effect on efforts to control health care spending. Table C-20 indicates that between 1970 and 1995, the number of all physicians per 100,000 civilians grew from 161 to 274, a 70 percent increase. Table C-21 shows variations in the supply of non-Federal physicians relative to population by State. In 1996, the District of Columbia had the highest ratio (714 physicians per 100,000 population) while Mississippi had the lowest ratio (155 physicians per 100,000 population). There are also questions as to whether there are too many specialists and too few primary care physicians to meet the Nation's future health care needs and whether a competitive health care market alone will be able to resolve the imbalance. In 1995, about 39 percent of physicians were in primary care specialties, defined as general and family practice, internal medicine, obstetrics/gynecology, and pediatrics (see table C-22 for number of physicians by specialty). The Physician Payment Review Commission's 1997 Annual Report to Congress indicates a moderate trend toward generalism. The National Resident Matching Program also announced in March 1997 that 56 percent of U.S. medical school seniors plan to spend at least their first year of residency training in general practice. This rate has been on the rise since 1991, when only 44.3 percent of graduates pursued generalist training (Association of American Medical Colleges). TABLE C-20.--PHYSICIAN SUPPLY BY MAJOR CATEGORIES, SELECTED YEARS 1970-95 ---------------------------------------------------------------------------------------------------------------- 1970 1980 1990 1995 Category ------------------------------------------------------------------------------- Number Percent Number Percent Number Percent Number Percent ---------------------------------------------------------------------------------------------------------------- Federal......................... 29,501 9 17,787 4 20,475 3 21,079 3 Non-Federal..................... 301,323 91 443,502 96 592,166 97 697,269 97 Metropolitan (non-Federal only)...................... 258,265 86 385,365 87 521,668 88 616,436 86 Nonmetropolitan (non-Federal only)...................... 43,058 14 58,137 13 70,498 12 80,833 11 Patient care.................... 278,535 83 376,512 80 503,870 82 582,131 81 Nonpatient care................. 32,310 10 38,404 9 43,440 8 43,312 6 Male............................ 308,627 92 413,395 88 511,227 83 570,921 79 Female.......................... 25,401 8 54,284 12 104,194 17 149,404 21 International medical graduates. 57,217 17 97,726 21 131,764 21 165,498 23 ------------------------------------------------------------------------------- Total physicians \1\.... 334,028 100 467,679 100 615,421 100 720,325 100 =============================================================================== Total physician- population ratio (per 100,000 persons)....... 161 202 240 274 ---------------------------------------------------------------------------------------------------------------- \1\ Address unknown excluded from all Federal/non-Federal categories, not-classified, inactive, and address unknown are excluded from patient care/nonpatient care categories. Note.--Totals may not equal sum of rounded components. Source: American Medical Association (1997c). TABLE C-21.--NON-FEDERAL PHYSICIAN/POPULATION RATIOS \1\ AND RANK BY STATE, SELECTED YEARS 1970-95 ------------------------------------------------------------------------ 1995 State 1970 1975 1985 1990 1995 rank ------------------------------------------------------------------------ Alabama....................... 90 103 152 170 202 41 Alaska........................ 74 95 137 155 164 49 Arizona....................... 144 185 220 233 239 25 Arkansas...................... 92 103 150 165 192 43 California.................... 194 219 266 272 275 11 Colorado...................... 178 186 216 232 257 16 Connecticut................... 192 224 302 332 372 5 Delaware...................... 134 155 203 217 246 21 District of Columbia.......... 390 467 607 658 714 1 Florida....................... 155 185 236 251 269 12 Georgia....................... 108 126 172 187 214 36 Hawaii........................ 160 185 239 266 283 10 Idaho......................... 94 104 133 142 162 50 Illinois...................... 138 164 217 229 265 14 Indiana....................... 102 116 156 171 200 42 Iowa.......................... 103 113 149 167 189 44 Kansas........................ 118 137 179 195 223 32 Kentucky...................... 102 122 162 181 211 39 Louisiana..................... 120 131 187 200 241 23 Maine......................... 111 133 193 208 235 28 Maryland...................... 183 217 334 360 384 4 Massachusetts................. 207 237 331 364 420 2 Michigan...................... 125 145 190 201 232 29 Minnesota..................... 151 172 223 240 267 13 Mississippi................... 84 94 126 144 155 51 Missouri...................... 129 148 195 209 236 27 Montana....................... 104 116 155 181 214 37 Nebraska...................... 116 134 170 185 220 33 Nevada........................ 114 129 173 175 178 46 New Hampshire................. 140 162 207 227 248 19 New Jersey.................... 146 174 243 267 302 8 New Mexico.................... 113 130 184 206 229 30 New York...................... 236 258 318 339 391 3 North Carolina................ 111 132 185 209 239 24 North Dakota.................. 96 106 168 184 224 31 Ohio.......................... 133 147 199 213 242 22 Oklahoma...................... 103 113 149 160 177 47 Oregon........................ 144 171 215 233 250 18 Pennsylvania.................. 152 169 234 256 301 9 Rhode Island.................. 160 194 248 277 328 6 South Carolina................ 93 114 161 177 212 38 South Dakota.................. 81 90 143 154 187 45 Tennessee..................... 119 139 189 210 247 20 Texas......................... 117 135 174 188 206 40 Utah.......................... 138 155 185 200 216 35 Vermont....................... 187 207 268 288 316 7 Virginia...................... 125 149 214 233 253 17 Washington.................... 149 168 223 241 259 15 West Virginia................. 104 124 171 183 216 34 Wisconsin..................... 120 137 188 207 239 26 Wyoming....................... 101 108 140 156 176 48 ----------------------------------------- United States \1\......... 148 169 220 237 264 ..... ------------------------------------------------------------------------ \1\ The ratios are for nonfederal physicians per 100,000 civilian population. \2\ Excludes counts of physicians in U.S. possessions and with unknown addresses. Source: American Medical Association (1997c). TABLE C-22.--FEDERAL AND NON-FEDERAL PHYSICIANS: TOTAL AND OFFICE-BASED ACTIVITY BY SPECIALTY, 1980, 1990, AND 1995 ---------------------------------------------------------------------------------------------------------------- Federal and non-Federal physicians ----------------------------------------------------------- 1980 1990 1995 Specialty ----------------------------------------------------------- Office Office Office Total based Total based Total based ---------------------------------------------------------------------------------------------------------------- Allergy immunology.................................. 1,518 1,371 3,388 2,453 3,775 2,843 Anesthesiology...................................... 15,958 11,338 25,981 17,803 32,853 23,770 Cardiovascular diseases............................. 9,823 6,729 15,862 10,680 18,998 13,739 Child psychiatry.................................... 3,217 1,961 4,343 2,615 5,542 3,673 Dermatology......................................... 5,660 4,378 7,557 6,006 8,563 6,959 Diagnostic radiology................................ 7,048 4,191 15,412 9,815 19,808 12,751 Emergency medicine.................................. 5,699 3,362 14,243 8,420 19,112 11,700 Family practice..................................... 27,530 18,378 47,639 37,476 59,345 45,272 Gastroenterology.................................... 4,046 2,737 7,493 5,200 9,551 7,300 General practice.................................... 32,519 29,642 22,841 20,517 16,867 14,660 General surgery..................................... 34,034 22,426 38,376 24,520 37,569 24,086 Internal medicine................................... 71,531 40,617 98,349 57,950 115,168 72,612 Neurology........................................... 5,685 3,253 9,237 5,595 11,397 7,623 Neurological surgery................................ 3,341 2,468 4,358 3,092 4,888 3,567 Obstetrics/gynecology............................... 26,305 19,513 33,697 25,485 37,652 29,111 Ophthalmology....................................... 12,974 10,603 16,073 13,068 17,464 14,596 Orthopedic surgery.................................. 13,996 10,728 19,138 14,199 22,037 17,136 Otolaryngology...................................... 6,553 5,266 8,138 6,367 9,086 7,139 Pathology \1\....................................... 13,642 6,081 16,584 7,494 18,320 9,306 Pediatrics \2\...................................... 29,462 18,210 41,899 27,073 51,956 34,656 Physical medicine/rehabilitation.................... 2,146 1,014 4,105 2,183 5,565 3,400 Plastic surgery..................................... 2,980 2,438 4,590 3,835 5,493 4,612 Psychiatry.......................................... 27,481 16,004 35,163 20,146 38,098 23,334 Pulmonary diseases.................................. 3,715 2,048 6,080 3,662 7,453 4,964 Radiology........................................... 11,653 7,802 8,492 6,060 8,038 5,994 Radiation oncology.................................. 1,581 1,027 2,821 1,968 3,630 2,633 Urological surgery.................................. 7,743 6,228 9,372 7,398 9,886 7,991 Other specialty..................................... 5,810 2,418 7,254 2,656 7,307 3,014 Other surgical specialties \3\...................... 2,852 2,261 2,945 2,389 3,300 2,529 Other remaining specialties \4\..................... 6,071 2,549 7,822 3,316 8,249 3,693 Unspecified......................................... 12,289 4,959 8,058 1,554 8,473 2,612 Not classified...................................... 20,629 ........ 12,678 ........ 20,579 ........ Other categories \5\................................ 32,134 ........ 55,433 ........ 74,303 ........ ----------------------------------------------------------- Total physicians................................ 467,679 272,000 615,421 360,995 720,325 427,275 ---------------------------------------------------------------------------------------------------------------- \1\ Includes pathology and forensic pathology. \2\ Includes pediatrics, pediatric cardiology, and pediatric allergy. \3\ Includes colon and rectal surgery and thoracic surgery. \4\ Includes aerospace medicine, general preventive medicine, nuclear medicine, occupational medicine, medical genetics, and public health. \5\ Includes inactive and address unknown; these categories are included in total physicians only, not in office- based practice. Note.--Data for 1990 and 1995 are as of January 1. Data for 1980 are as of December 31. Source: American Medical Association (1997c). In 1995, there were 98,035 residents in training. The number of U.S. medical school graduates, which rose rapidly in the late 1960s and early 1970s, has been relatively stable since 1980 (see table C-23). TABLE C-23.--MEDICAL SCHOOL GRADUATES, FIRST-YEAR RESIDENTS AND TOTAL RESIDENTS, 1965-95 ------------------------------------------------------------------------ Medical First- Year school year Total graduates residents residents ------------------------------------------------------------------------ 1965................................... 7,409 9,670 31,898 1966................................... 7,574 10,316 31,898 1967................................... 7,743 10,419 33,743 1968................................... 7,973 10,464 35,047 1969................................... 8,059 10,808 37,139 1970................................... 8,367 11,552 39,463 1971................................... 8,974 12,066 42,512 1972................................... 9,551 11,500 45,081 1973................................... 10,391 11,031 49,082 1974................................... 11,613 11,628 52,685 1975................................... 12,714 13,200 54,500 1976................................... (\1\) 14,258 56,872 1977................................... 13,607 15,900 59,000 1978................................... 14,393 16,800 63,163 1979................................... 14,966 17,600 64,615 1980................................... 15,135 18,702 61,465 1981................................... 15,667 18,389 69,738 1982................................... 15,985 18,976 69,142 1983................................... 15,824 18,794 73,000 1984................................... 16,327 19,539 75,125 1985................................... 16,319 19,168 75,514 1986................................... 16,125 18,183 76,815 1987................................... 15,836 18,067 81,410 1988................................... 15,887 17,941 81,093 1989................................... 15,620 18,131 82,000 1990................................... 15,336 18,322 82,902 1991................................... 15,481 19,497 86,217 1992................................... 15,386 19,794 88,620 1993................................... 15,512 21,616 96,469 1994................................... 15,579 19,293 97,832 1995................................... 15,911 21,372 98,035 ------------------------------------------------------------------------ \1\ Not available. Source: American Medical Association (various years). The number of residency positions occupied by international medical graduates (IMGs) has fluctuated over the period 1971- 95. Due to stricter immigration laws and more rigorous competency requirements, IMGs dropped from over 40 percent of all residents in 1971 to about 17 percent in 1985. Since then, however, the percentage of IMGs in training in the United States has almost doubled, from 12,509 in 1985 to 24,983 in 1995 and is now at 25 percent of all residents in training (see table C-24). TABLE C-24.--INTERNATIONAL MEDICAL GRADUATE RESIDENTS \1\ BY CITIZENSHIP, SELECTED YEARS 1971-95 ------------------------------------------------------------------------ Percent Total of all U.S. Foreign residents citizens nationals ------------------------------------------------------------------------ 1971........................ 17,515 41 1,063 16,452 1976........................ 16,634 29 1,783 14,851 1981........................ 11,596 17 2,908 8,688 1983........................ 14,084 19 4,961 9,123 1985........................ 12,509 17 6,868 5,609 1991........................ 17,017 20 5,107 11,910 1992........................ 19,084 22 5,015 \2\ 14,06 9 1993........................ 22,706 24 5,056 17,650 1994........................ 23,499 24 4,285 19,214 1995........................ 24,982 25 4,030 20,952 ------------------------------------------------------------------------ \1\ IMGs are defined by location of education. \2\ Includes 6,192 permanent resident aliens. Source: American Medical Association (various years). HEALTH INSURANCE STATUS IN 1995 Most people have some form of health insurance. In 1995, an estimated 84.6 percent of the total noninstitutionalized population had public or private coverage during at least part of the year. However, an estimated 40.6 million Americans, or 15.4 percent of the population, were without coverage in 1995. Almost all of the uninsured were under age 65; consequently, 17.3 percent of the nonelderly population were uninsured. This section examines characteristics of both the insured and the uninsured populations in 1995, and reviews trends in health insurance coverage over the 1979-95 period (see Smith 1996). Estimates of health insurance coverage in 1995 are based on analysis of the March 1996 Current Population Survey (CPS), a household survey by the Department of Commerce's Census Bureau. Each year's March CPS asks whether individuals had coverage from selected sources of health insurance at any time during the preceding calendar year. Thus, the March 1996 CPS reflects respondents' recollections of coverage during all of 1995. \1\ --------------------------------------------------------------------------- \1\ Some analysts have suggested that respondents may actually be reporting their coverage status at the time of the survey, rather than for the previous year. --------------------------------------------------------------------------- Health Insurance Coverage and Selected Population Characteristics Age Table C-25 provides a breakdown of health insurance coverage by type of insurance and age. In 1995, young adults ages 18 to 24 were the least likely to have health insurance. While 51 percent of this group were covered under an employment-based plan, over one-fourth (28 percent) had no health insurance. These young adults comprised 9 percent of the U.S. population, but 17 percent of the uninsured population. These individuals are often too old to be covered as dependents on their parents' policies, and as entry-level workers they do not have strong ties to the work force; some may choose to remain uninsured and spend their money on other items. After age 25, the percentage of people with health insurance increases. Of those age 65 and over, 96 percent were covered by Medicare and/or Medicaid, and 1 percent were uninsured. The remainder of this section focuses on the population under age 65. TABLE C-25.--HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND AGE, 1995 ---------------------------------------------------------------------------------------------------------------- Type of insurance \1\ ------------------------------------------------------------- Population Medicare and/ Age (in Employment or Medicaid Private Military \3\ Uninsured millions) based \2\ \3\ nongroup (percent) (percent) (percent) (percent) (percent) ---------------------------------------------------------------------------------------------------------------- Under 5............................... 20.1 57.7 30.2 3.2 1.7 13.5 5-17.................................. 51.1 64.5 20.8 5.0 2.0 13.9 18-24................................. 24.8 51.2 12.3 9.9 2.8 28.2 25-34................................. 40.9 64.7 8.9 4.7 1.2 22.9 35-54................................. 74.7 72.7 7.5 5.6 2.6 15.2 55-59................................. 11.3 70.3 10.5 7.7 4.7 13.2 60-64................................. 9.8 62.9 15.2 11.8 7.1 13.6 65+................................... 31.7 35.2 96.4 33.5 3.6 1.0 ------------------------------------------------------------------------- Total........................... 264.3 61.8 23.5 9.2 2.6 15.4 ---------------------------------------------------------------------------------------------------------------- \1\ People may have more than one source of health insurance; percentages may total to more than 100. \2\ Group health insurance through employer or union. \3\ Military health care or veterans coverage. Source: Congressional Research Service analysis of data from the March 1996 Current Population Survey. Other demographic characteristics Table C-26 shows the rate of health insurance coverage by type of insurance and selected demographic characteristics-- race, family type, region, and poverty level--for people under age 65. In 1995 whites were most likely to have health insurance (87 percent) while Hispanics were least likely (65 percent). Hispanics comprised 12 percent of the under 65 population, but were 23 percent of the uninsured population; comparable numbers for blacks were 13 percent and 17 percent, respectively. The rate of employment-based health coverage was highest among whites (73 percent) and the rate of Medicaid/ Medicare coverage was highest for blacks (29 percent). \2\ --------------------------------------------------------------------------- \2\ Medicaid covered 12 percent of the nonelderly population and Medicare covered less than 2 percent. About 27 percent of blacks had Medicaid coverage. --------------------------------------------------------------------------- People in male-headed or two-parent families with children were most likely to be insured (86 percent), followed by those in female-headed families with children (81 percent) and in families with no children (80 percent). While the rates of coverage were similar for male-present (one- or two-parent) and female-headed (single-parent) families with children, the sources of coverage were quite different: coverage was employment based for 73 percent of male-present families compared to 37 percent of female-headed families, while coverage came from Medicaid/Medicare for 10 percent of male- present families compared to 43 percent of female-headed families. People living in the Midwest were more likely to have insurance (88 percent) than people in the Northeast (86 percent), West (80 percent), and South (80 percent). About 70 percent of those living in the Northeast and Midwest had employment-based health insurance compared to about 60 percent in the South and West. TABLE C-26.--HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND DEMOGRAPHIC CHARACTERISTICS FOR PEOPLE UNDER AGE 65, 1995 ---------------------------------------------------------------------------------------------------------------- Type of insurance (percent) \1\ Population --------------------------------------------- (in Medicaid millions) Employment or Other \3\ Uninsured based \2\ Medicare ---------------------------------------------------------------------------------------------------------------- Race/ethnicity: White............................................. 164.2 72.9 8.8 9.4 13.3 Black............................................. 30.6 48.8 29.2 5.6 22.3 Hispanic.......................................... 27.0 41.3 23.1 3.6 34.9 Other............................................. 10.8 58.5 17.9 9.0 20.3 Family type: Female-headed with children....................... 30.0 36.8 43.0 6.6 19.3 Male- or two-parent-headed with children.......... 114.6 73.4 10.3 6.5 14.4 No children....................................... 88.0 64.7 7.9 10.9 20.4 Region: Northeast......................................... 44.7 69.2 13.1 6.4 14.5 Midwest........................................... 54.4 72.1 12.1 8.0 12.3 South............................................. 81.0 61.7 13.8 9.0 20.5 West.............................................. 52.6 60.8 15.3 8.7 20.1 Poverty level: <1.0 of poverty................................... 33.7 15.3 49.1 7.4 32.9 1.0-1.49 of poverty............................... 20.9 37.2 26.3 10.5 32.4 1.5-1.99 of poverty............................... 22.1 56.0 14.3 9.1 27.2 2.0+ of poverty................................... 156.0 81.3 4.1 7.9 10.5 --------------------------------------------------------- Total........................................... 232.7 65.4 13.6 8.2 17.3 ---------------------------------------------------------------------------------------------------------------- \1\ People may have more than one source of health insurance; percentages may total to more than 100. \2\ Group health insurance through employer or union. \3\ Private nongroup health insurance, veterans coverage, or military health care. \4\ In 1995, the weighted average poverty threshold for a family of four was $15,569. Source: Congressional Research Service analysis of data from the March 1996 Current Population Survey. Among individuals with incomes at least two times the poverty level, 90 percent had health insurance compared to 67 percent of the poor (i.e., those with incomes less than the poverty level). The poor accounted for 14 percent of the under 65 population, but were 28 percent of the uninsured. Only 15 percent of the poor received health coverage through employment, while 49 percent had either Medicaid or Medicare coverage. Over 80 percent of people with incomes at least two times the poverty level were covered through an employer, and 4 percent had Medicaid or Medicare coverage. Employment characteristics Table C-27 shows the rate of health insurance coverage by employment characteristics for people under age 65 who were workers or their dependents. In 1995, the rate of employment- based health insurance coverage increased as firm size increased. Among workers and dependents of workers in large firms (1,000 or more employees), 91 percent were insured compared to 69 percent in small firms (under 10 employees). People in small firms accounted for 17 percent of the under 65 population but 30 percent of the uninsured. Insurance coverage varied according to industry as well. Agriculture and personal services had the highest proportion of uninsured workers and dependents--over 30 percent. Employment-based coverage was most likely for workers and dependents in public administration, finance/insurance, mining, and manufacturing of durable goods. Among workers, 86 percent of those employed full time, full year had health insurance and it was most often obtained through their own employment (69 percent); their dependents had comparable levels of coverage. Workers with part-time, part- year employment had an insured rate of 68 percent. Workers who worked less than full time, full year and their dependents represented 20 percent of the population, but 31 percent of the uninsured, while nonworkers were 12 percent of the population and 17 percent of the uninsured. Characteristics of the Uninsured Population Under Age 65 As reported above, people who lack health insurance differ from the population as a whole: they are more likely to be poor, young adults, Hispanic, and work for small firms. Chart C-3 illustrates selected characteristics of the uninsured population under age 65 in 1995--age, race, poverty level, region, firm size, and labor force ties. Almost one-fourth (24 percent) of the uninsured were under age 18, and 54 percent were white. A large proportion (41 percent) had incomes two or more times the poverty level, while 28 percent were poor. Forty-one percent of the uninsured lived in the South, and 30 percent worked or were dependents of workers in small firms (one to nine employees). Over half (52 percent) were full-time, full-year workers or their dependents, 31 percent had less than full time attachment to the labor force, and 17 percent had no labor force ties. TABLE C-27.--HEALTH INSURANCE COVERAGE BY EMPLOYMENT CHARACTERISTICS \1\ FOR PEOPLE UNDER AGE 65, 1995 ---------------------------------------------------------------------------------------------------------------- Type of insurance (percent) \2\ Population ------------------------------------------- (in From millions) From own other's Other \4\ Uninsured job \3\ job \3\ ---------------------------------------------------------------------------------------------------------------- Firm size: \5\ Under 10.............................................. 38.8 16.5 27.5 27.8 30.7 10-24................................................. 18.5 27.4 31.8 18.9 24.7 25-99................................................. 26.3 35.5 34.2 15.3 18.9 100-499............................................... 28.8 41.1 37.6 11.6 13.4 500-999............................................... 12.1 42.8 38.5 11.9 11.0 1,000+................................................ 80.4 44.1 40.0 12.0 8.5 Industry: \5\ Agriculture........................................... 6.0 14.8 23.9 31.6 32.9 Mining................................................ 1.4 34.8 47.9 10.7 10.3 Construction.......................................... 15.3 24.2 32.7 16.9 29.2 Durable goods......................................... 23.7 39.9 44.1 9.9 10.2 Nondurable goods...................................... 15.0 40.3 37.4 12.1 13.8 Transportation........................................ 16.1 39.0 42.7 10.8 11.7 Wholesale trade....................................... 8.7 36.1 40.7 12.6 14.0 Retail trade.......................................... 29.6 27.9 28.2 22.5 25.1 Finance/insurance..................................... 12.1 44.7 37.7 11.7 9.0 Business services..................................... 12.8 27.2 30.5 21.0 24.9 Personal services..................................... 6.0 21.6 21.7 28.6 30.9 Entertainment......................................... 2.9 34.2 29.6 21.0 18.4 Professional services................................. 43.0 42.5 35.1 15.3 10.8 Public administration................................. 12.3 45.6 45.3 11.5 4.3 Labor force attachment of workers: Full time, full year.................................. 87.4 69.4 10.9 8.5 13.7 Part time, full year.................................. 6.9 40.3 10.1 25.6 26.8 Full time, part year.................................. 16.5 47.9 6.3 19.7 29.7 Part time, part year.................................. 7.3 26.4 10.0 35.0 32.0 Labor force attachment of workers' dependents: \1\ Full time, full year.................................. 72.1 0.0 76.9 15.1 12.7 Part time, full year.................................. 3.2 0.0 40.7 38.7 25.6 Full time, part year.................................. 8.8 0.0 43.2 44.4 21.6 Part time, part year.................................. 2.7 0.0 23.9 64.6 19.5 Not in labor force...................................... 27.8 12.2 8.6 59.1 24.7 ------------------------------------------------------- Total............................................. 232.7 33.0 32.5 21.1 17.3 ---------------------------------------------------------------------------------------------------------------- \1\ For dependents, employment characteristics are for the person providing dependent coverage under employment- based or private insurance. If other coverage, characteristics are from the head of household or spouse if head is not employed. \2\ People may have more than one source of health insurance. \3\ Group health insurance through employer or union. \4\ Medicare, Medicaid, private nongroup health insurance, veterans coverage, and military health. \5\ For persons who worked and their dependents. \6\ Person was retired, disabled, or answered questions inconsistently. Source: Congressional Research Service analysis of data from the March 1996 Current Population Survey. CHART C-3. CHARACTERISTICS OF THE UNINSURED POPULATION UNDER AGE 65, 1995 Note._Totals may not equal sum of rounded components. Source: Congressional Research Service analysis of data from the March 1996 Current Population Survey. Trends in Health Insurance Coverage Trends in coverage by type of insurance for the noninstitutionalized U.S. population under age 65 are shown in table C-28. Data for 1980 are not available because the CPS omitted some health insurance questions for that year. Changes in the CPS questionnaire, on which these rates are based, preclude direct comparisons between three time periods: 1979- 86, 1987-93, and 1994-95.\3\ --------------------------------------------------------------------------- \3\ Beginning with the 1987 data, the survey asked about employment-based coverage for all persons over 14, when before only workers were asked about such coverage. Moreover, the newer surveys included additional questions regarding coverage of children. As a result, the number of people with employment-based coverage increased, especially among retirees, and the number of children with coverage also increased. Beginning with the 1994 data, the survey asked additional questions about private health insurance, and changed the order of questions such that questions about private coverage preceded questions about other forms of health insurance. As a result, the number of people estimated to have private coverage increased, and the distribution of coverage between group and nongroup shifted toward more group coverage. Care must be exercised when considering these numbers. Also note that individuals may have had more than one source of coverage. TABLE C-28.--HEALTH INSURANCE COVERAGE FOR THE NONINSTITUTIONALIZED U.S. POPULATION UNDER 65, SELECTED YEARS 1979-95 \1\ [Numbers in thousands] -------------------------------------------------------------------------------------------------------------------------------------------------------- Employment based Government \3\ Other \4\ Uninsured Total \2\ ----------------------------------------------------------------------------------- Year --------------------- Number Percent Number Percent Number Percent Number Percent Number Percent -------------------------------------------------------------------------------------------------------------------------------------------------------- 1979........................................... 133,074 68.6 17,031 8.8 32,631 16.8 28,451 14.7 197,104 100.0 1981........................................... 137,158 67.9 18,520 9.2 32,392 16.0 30,487 15.1 201,926 100.0 1982........................................... 135,991 66.8 18,326 9.0 31,699 15.6 32,496 16.0 203,674 100.0 1983........................................... 134,908 65.7 18,501 9.0 30,505 14.9 34,796 17.0 205,322 100.0 1984........................................... 134,936 65.2 18,701 9.0 30,653 14.8 36,544 17.7 206,998 100.0 1985........................................... 137,461 65.7 18,711 8.9 29,924 14.3 36,741 17.6 209,272 100.0 1986 \1\....................................... 138,919 66.0 19,095 9.1 29,014 13.8 36,818 17.5 210,579 100.0 1987 \1\....................................... 143,497 67.5 19,919 9.4 25,957 12.2 30,673 14.4 212,495 100.0 1988........................................... 144,136 67.2 20,437 9.5 25,009 11.7 32,368 15.1 214,508 100.0 1989........................................... 144,716 66.9 20,762 9.6 25,603 11.8 33,039 15.3 216,426 100.0 1990........................................... 142,520 65.2 23,821 10.9 25,723 11.8 34,352 15.7 218,551 100.0 1991........................................... 142,359 64.5 26,170 11.9 25,034 11.4 35,069 15.9 220,589 100.0 1992 \5\....................................... 141,262 62.5 28,924 12.8 26,017 11.5 38,222 16.9 226,119 100.0 1993........................................... 140,439 61.3 31,398 13.7 27,706 12.1 39,349 17.2 228,973 100.0 1994........................................... 150,663 65.3 31,177 13.5 20,665 8.9 39,428 17.1 230,838 100.0 1995........................................... 152,075 65.4 31,606 13.6 19,051 8.2 40,281 17.3 232,656 100.0 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Questionnaire changes effective in 1987 and 1994 make numbers not strictly comparable over time. Beginning with 1987 data, the survey asked all persons over 14, not just workers, about employment-based health coverage, and included additional questions regarding coverage of children. Beginning with 1994 data, the survey included additional questions about private coverage and the order of questions was altered, such that questions about private coverage preceded questions about other forms of health insurance. \2\ Group health insurance through employer or union. \3\ Medicare or Medicaid. \4\ Private nongroup health insurance, veterans coverage, or military health care. \5\ Based on revised weights from the 1990 Census. Note.--Persons may have more than one type of coverage; percents may total to more than 100. Data for 1980 not available because some health-related questions were omitted from the Current Population Survey that year. Source: Congressional Research Service analysis of data from the March Current Population Surveys, various years. Between 1979 and 1986, the percent covered by all forms of health insurance decreased, with a decrease of 3 percentage points between 1979 and 1984 and a slight increase between 1984 and 1986, but not to levels shown previously. Between 1979 and 1986, the percent of the population insured by government programs remained roughly stable, and the percents with employment-based and other coverage steadily declined. Between 1987 and 1993, the percent covered also declined by about 3 percentage points, from about 86 percent to 83 percent. During this period, the percent with employment-based coverage continued to decline steadily, the percent with Medicare or Medicaid increased, the percent with other types of coverage declined and then rose to about where it was in 1987, and the percent uninsured continued to steadily increase. Since 1993 the percent covered has been about the same (83 percent). The large changes between 1993 and 1994 in employment-based and other coverage, which includes private nongroup coverage, appear to be a function of changes in the CPS questionnaire. Differences in coverage between 1986 and 1987, and between 1993 and 1994, are a function both of changes in the CPS questionnaire and actual changes in coverage. Assuming that all differences between 1986 and 1987, and between 1993 and 1994, are due to questionnaire changes and no changes in coverage patterns occurred during these transition periods, we can estimate trends from 1979 to 1995. Over this period, the percent with employment-based coverage decreased by about 9 percentage points. From 1979 through 1986, the percent with employment-based coverage declined by 2.6 percent points, from 68.6 to 66.0 percent. From 1987 through 1993, the decline was 6.2 percentage points. If we assume no change in insurance coverages from 1986 to 1987, and from 1993 to 1994, the total decline from 1979 to 1994 was 8.8 percentage points (i.e., 2.6 percentage points plus 6.2 percentage points). The percent with employment-based coverage increased slightly between 1994 and 1995, from 65.3 to 65.4 percent. Note that the decreases in coverage do not equal the increases in uninsured because some individuals had more than one type of coverage. Similarly, over the 1979-95 period, the percent with Medicaid or Medicare increased by about 4 percentage points, the percent with other types of coverage declined by about 4 percentage points, and the percent uninsured increased by approximately 6 percentage points. UNCOMPENSATED CARE COSTS IN PPS HOSPITALS, 1980-95 Uncompensated care is a term used to describe services provided to patients who are unable or unwilling to pay. It includes charity care and bad debts. Charity care is care for which no payment is expected. Bad debts are charges not paid by uninsured individuals, including copayments not paid by insured individuals. For this analysis, hospital charges have been adjusted to reflect the cost of care that was provided but not paid for. Public hospitals and some private institutions receive government operating subsidies that at least partially offset their uncompensated care costs. These subsidies are not always directed specifically toward charity care, but they nonetheless serve to lessen the burden of a high charity care load. This analysis examines uncompensated care both before and net of government subsidies. The financial burden of uncompensated care increased substantially in the first half of the 1980s, as shown in table C-29. Between 1980 and 1986, uncompensated care costs before government subsidies grew at an annual rate of 14.7 percent, rising from $3.9 billion to $8.9 billion. By 1992, uncompensated care costs had grown to $14.9 billion. Since 1992, this trend leveled off, with uncompensated care rising at 5.4 percent per year. While uncompensated care was rising rapidly during the 1980s, government subsidies were increasing at a much slower rate. In 1980, the proportion of uncompensated care costs offset by State and local government operating subsidies was 27.8 percent. By 1986, that proportion had fallen to 22.3 percent, and by 1992, subsidies to all community hospitals equalled only 18.9 percent of uncompensated care costs. In the early 1990s, subsidies grew somewhat more rapidly, but they have fallen sharply since 1993, covering only 18.0 percent of uncompensated care costs in 1995. In that year, uncompensated care losses--that is, costs net of government subsidies--totaled $14.3 billion. These trends are reflected in chart C-4, which compares uncompensated care costs to total hospital expenses in each year. In 1980, 5.5 percent of the resources expended by community hospitals were for patients who could not or would not pay for their care. After accounting for government subsidies, the uncompensated care burden was 3.9 percent. By 1986, uncompensated care costs hit their peak of 6.4 percent of total expenses, and uncompensated care losses rose to 4.9 percent. In the early 1990s, uncompensated care costs have fallen to just over 6 percent of total expenses, while uncompensated care losses have stayed at 5 percent of total expenses. The burden of uncompensated care is borne by hospitals in every group, but some types of hospitals devote a higher percentage of their resources than others to this care (see table C-30). Hospitals in urban areas had uncompensated care costs equal to 6.3 percent of their total expenses in 1995, compared with 5.0 percent for rural hospitals. However, hospitals in the major cities also receive the bulk of subsidies from State and local governments, so their uncompensated care losses are lower than their uncompensated care costs. Among major teaching hospitals (those with at least 0.25 residents per bed), there is a sharp difference between those that are public and those that are privately owned: Public major teaching hospitals in 1995 devoted 18.4 percent of their resources to patients who could not or would not pay, and sustained losses on these patients equal to 9.8 percent of their total costs. Public teaching hospitals with fewer residents per bed sustained even greater losses on uncompensated care, because they receive fewer subsidies than their larger counterparts. TABLE C-29.--COMMUNITY HOSPITAL UNCOMPENSATED CARE COSTS AND GOVERNMENT OPERATING SUBSIDIES, SELECTED YEARS 1980-95 -------------------------------------------------------------------------------------------------------------------------------------------------------- Amount (billions) Average annual percent change -------------------------------------------------------------------------------------- 1980 1986 1992 1993 1994 1995 1980-86 1986-92 1992-95 -------------------------------------------------------------------------------------------------------------------------------------------------------- Uncompensated care costs before government subsidies............. $3.9 $8.9 $14.9 $15.9 $16.8 $17.5 14.7 8.9 5.4 Government operating subsidies \1\............................... 1.1 2.0 2.8 3.1 3.2 3.1 10.5 6.0 3.7 Uncompensated care costs net of government subsidies............. 2.8 6.9 12.1 12.8 13.5 14.3 16.1 9.7 5.8 Proportion of uncompensated care costs covered by government subsidies (in percent).......................................... 27.8 22.3 18.9 19.5 19.3 18.0 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Government operating subsidies include all subsidies from State and local government, up to total uncompensated care costs at each hospital. Note.--Totals may not equal sum of rounded components. Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association Annual Survey of Hospitals. CHART C-4. UNCOMPENSATED CARE AS A PERCENTAGE OF TOTAL COMMUNITY HOSPITAL EXPENSES, 1980-95 Note._Government operating subsidies include all subsidies from State and local government, up to total uncompensated care costs for each hospital. Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association Annual Survey of Hospitals. Uncompensated care costs and losses are highly concentrated among a relatively small group of hospitals, particularly in urban areas: Urban hospitals that devote at least 45 percent of their total resources to poor patients (including uncompensated care, Medicaid, other indigent care patients, and poor Medicare patients) have a very high share of uncompensated care costs, and sustain losses on nonpaying patients equal to 12.7 percent of their total costs. The burden of uncompensated care also falls disproportionately on public and voluntary hospitals. Proprietary hospitals provide the least care to nonpaying patients, only 4.1 percent of their total costs. TABLE C-30.--COMMUNITY HOSPITAL UNCOMPENSATED CARE COSTS AS A PROPORTION OF TOTAL COSTS, BY HOSPITAL GROUP, 1995 [In percent] ------------------------------------------------------------------------ Uncompensated Uncompensated care costs, care costs, net Hospital group before government of government subsidies subsidies ------------------------------------------------------------------------ Urban............................. 6.3 5.3 Rural............................. 5.0 4.6 Major teaching, public............ 18.4 9.8 Major teaching, private........... 5.6 5.4 Other teaching, public............ 12.5 10.4 Other teaching, private........... 4.3 4.3 Nonteaching, public............... 6.3 5.0 Nonteaching, private.............. 4.5 4.4 Low-income patient cost share: Urban Less than 25 percent...... 3.9 3.9 25 percent-45 percent..... 6.5 5.9 45 percent+............... 20.2 12.7 Rural Less than 25 percent...... 4.0 3.8 25 percent-45 percent..... 6.6 5.9 45 percent+............... 8.0 6.6 Voluntary......................... 4.6 4.5 Proprietary....................... 4.1 4.1 Urban government.................. 14.6 8.7 Rural government.................. 5.8 4.6 ------------------------------------------------------------------------ Note.--Government operating subsidies include all subsidies from State and local government, up to total uncompensated care costs at each hospital. Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association Annual Survey of Hospitals. INTERNATIONAL HEALTH SPENDING This section analyzes trends in health expenditures for 24 Organization for Economic Cooperation and Development (OECD) countries from 1970 to 1995. Table C-31 illustrates total health expenditures as a percentage of gross domestic product (GDP). In 1970, the mean percent of GDP spent on health care by OECD countries was 5.1 percent with the United States being 45 percent higher than the average with 7.4 percent. By 1995, the overall mean percent of GDP devoted to health expenditures had increased to 8.1 percent while U.S. health spending as a share of GDP had increased to 14.1 percent, 74 percent greater than the OECD average. The second to the last column in table C-31 presents per capita health expenditures denominated in U.S. dollars. The last column illustrates public health expenditures as a percent of total health spending. This public percentage ranged from 44.8 in the United States to 91.8 in Luxembourg. The OECD average was 75.5 percent. TABLE C-31.--TOTAL HEALTH EXPENDITURES AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT [GDP], PER CAPITA HEALTH SPENDING, AND PERCENTAGE OF MEDICAL EXPENDITURES COVERED BY PUBLIC OECD COUNTRIES FOR SELECTED CALENDAR YEARS 1970-95 -------------------------------------------------------------------------------------------------------------------------------------------------------- Per Country 1970 1980 1985 1990 1991 1992 1993 1994 1995 capita Percent 1995 public -------------------------------------------------------------------------------------------------------------------------------------------------------- Australia...................... 5.7 7.3 7.7 8.2 8.5 8.8 8.5 8.6 8.4 $1,609 68.5 Austria........................ 5.4 7.9 8.1 8.4 8.6 8.8 9.3 7.9 7.8 1,573 76.0 Belgium........................ 4.1 6.6 7.4 7.6 8.1 8.2 8.3 8.0 8.1 1,653 87.9 Canada......................... 7.1 7.4 8.5 9.4 10.0 10.3 10.2 9.7 9.9 2,005 71.8 Denmark........................ 6.1 6.8 6.3 6.3 6.6 6.5 6.7 6.4 6.6 1,344 83.4 Finland........................ 5.7 6.5 7.3 8.0 9.1 9.4 8.8 7.7 7.9 1,289 74.8 France......................... 5.8 7.6 8.5 8.9 9.1 9.4 9.8 9.9 9.7 1,868 78.4 Germany........................ 5.9 8.4 8.7 8.3 8.4 8.7 8.6 10.4 10.3 2,020 78.4 Greece......................... 4.0 4.3 4.9 5.3 5.3 5.4 5.7 5.8 5.5 634 76.2 Iceland........................ 5.2 6.4 7.0 8.2 8.4 8.5 8.3 8.2 8.1 1,571 84.0 Ireland........................ 5.6 9.2 8.2 7.0 7.4 7.1 6.7 6.4 7.6 1,201 80.7 Italy.......................... 5.2 6.9 7.0 8.1 8.4 8.5 8.5 7.7 8.4 1,559 70.6 Japan.......................... 4.6 6.6 6.5 6.6 6.7 6.9 7.3 7.2 6.9 1,454 76.8 Luxembourg..................... 4.1 6.8 6.8 7.2 7.3 7.4 6.9 7.0 6.5 1,962 91.8 Netherlands.................... 6.0 8.0 8.0 8.2 8.4 8.6 8.7 8.8 8.8 1,643 77.7 Norway......................... 5.0 6.6 6.4 7.5 8.0 8.3 8.2 8.0 8.0 1,754 83.0 New Zealand.................... 5.2 7.2 6.5 7.3 7.7 7.7 7.7 7.1 7.1 1,151 76.8 Portugal....................... 3.1 5.9 7.0 5.4 5.9 6.0 7.3 8.2 7.8 939 63.4 Spain.......................... 3.7 5.6 5.7 6.6 6.5 7.0 7.3 7.6 7.3 992 78.6 Sweden......................... 7.2 9.4 8.9 8.6 8.5 7.9 7.5 7.2 7.6 1,339 83.0 Switzerland.................... 5.2 7.3 8.1 8.4 9.0 9.3 9.9 9.8 9.5 2,280 71.9 Turkey......................... 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