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 1994 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, 1980-94 International Health Spending References NATIONAL HEALTH EXPENDITURES In 1994, the Nation's health care bill totaled $949.4 billion for the 271 million persons residing in the United States (Levit, Lazenby, & Sivarajan, 1996). In 1965, the year prior to the beginning of the Medicare and Medicaid Programs, national health expenditures were only $41.1 billion (see table C-1). Adjusting for inflation, health care expenditures increased substantially from 1965 to 1994, rising from $193.6 billion in 1965 (in constant 1994 dollars) to $949.4 billion in 1994 (see table 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 5.2 percent between 1991 and 1992, however, health expenditure growth per capita decelerated to 2.9 percent for 1992 to 1993 and 2.7 percent for 1993 to 1994. This is the slowest growth recorded in more than three decades. TABLE C-1.--NATIONAL HEALTH EXPENDITURES, SELECTED CALENDAR YEARS 1960-2005 [Dollar amounts in billions] -------------------------------------------------------------------------------------------------------------------------------------------------------- Spending category 1960 1965 1970 1975 1980 1985 1990 1991 1992 1993 1994 2000 \1\ 2005 \1\ -------------------------------------------------------------------------------------------------------------------------------------------------------- Percent of GDP.................... 5.1 5.7 7.1 8.0 8.9 10.2 12.1 12.9 13.3 13.6 13.7 16.1 18.0 Health services and supplies........ 25.2 37.7 67.9 122.3 235.6 411.8 672.9 736.3 806.0 863.1 919.2 ........ ........ Personal health care.............. 23.6 35.2 63.8 114.5 217.0 376.4 614.7 676.2 739.8 786.5 831.7 1,315.5 1,908.0 Hospital care................... 9.3 14.0 28.0 52.6 102.7 168.3 256.4 282.3 305.3 324.2 338.5 512.4 713.4 Physicians' services............ 5.3 8.2 13.6 23.9 45.2 83.6 146.3 158.6 174.7 181.1 189.4 283.1 417.5 Dentists' services.............. 2.0 2.8 4.7 8.0 13.3 21.7 31.6 33.3 37.0 39.2 42.2 61.2 85.9 Other professional services..... 0.6 0.9 1.4 2.7 6.4 16.6 34.7 38.3 42.1 46.3 49.6 97.4 149.3 Home health care................ 0.1 0.1 0.2 0.6 2.4 5.6 13.1 16.1 19.6 23.0 26.2 61.3 105.1 Drugs and other medical nondurables.................... 4.2 5.9 8.8 13.0 21.6 37.1 59.9 65.6 71.3 75.2 78.6 126.8 182.3 Vision products and other medical durables............... 0.6 1.0 1.6 2.5 3.8 6.7 10.5 11.2 11.9 12.6 13.1 20.5 28.7 Nursing home care............... 0.8 1.5 4.2 8.7 17.6 30.7 50.9 57.2 62.3 67.0 72.3 122.8 182.2 Other personal health care...... 0.7 0.8 1.3 2.5 4.0 6.1 11.2 13.6 15.6 17.8 21.8 30.1 43.6 Program administration and net cost of private health insurance. 1.2 1.9 2.7 4.9 11.8 23.8 38.6 38.7 42.8 51.0 58.7 78.0 108.7 Government public health activities..................... 0.4 0.6 1.3 2.9 6.7 11.6 19.6 21.4 23.4 25.7 28.8 35.5 46.0 Research and construction of medical facilities......................... 1.7 3.4 5.3 8.4 11.6 16.4 24.5 24.9 27.6 29.2 30.2 42.7 55.8 ------------------------------------------------------------------------------------------------------------------- Total......................... $26.9 $41.1 $73.2 $130.7 $247.2 $428.2 $687.5 $761.3 $833.6 $892.3 $949.4 $1,471.7 $2,118.5 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Estimates prepared by the Congressional Budget Office, February 1995. Note.--Numbers may not add to totals due to rounding. Source: Health Care Financing Administration, Office of the Actuary. TABLE C-2.--NATIONAL HEALTH EXPENDITURES IN CONSTANT 1994 DOLLARS, SELECTED CALENDAR YEARS 1960-94 [Dollar amounts in billions] -------------------------------------------------------------------------------------------------------------------------------------------------------- Spending category 1960 1965 1970 1975 1980 1985 1990 1991 1992 1993 1994 -------------------------------------------------------------------------------------------------------------------------------------------------------- Health services and supplies......................... 126.1 177.4 259.3 337.0 423.8 567.2 763.0 801.2 851.4 885.2 919.2 Personal health care............................. 118.4 165.4 243.8 315.4 390.4 518.5 697.0 735.8 781.4 806.6 831.7 Hospital care................................ 46.5 66.1 107.0 144.8 184.7 231.8 290.8 307.2 322.4 332.5 338.5 Physicians' service.......................... 26.5 38.5 51.9 65.9 81.4 115.2 165.9 172.6 184.5 185.8 189.4 Dentists' services........................... 9.8 13.1 17.8 21.9 24.0 29.8 35.8 36.3 39.1 40.2 42.2 Other professional services.................. 3.0 4.1 5.4 7.5 11.4 22.9 39.3 41.6 44.5 47.5 49.6 Home health care............................. 0.3 0.4 0.8 1.7 4.3 7.6 14.9 17.5 20.7 23.6 26.2 Drugs and other medical nondurables.......... 21.3 27.7 33.7 35.9 38.9 51.0 67.9 71.4 75.3 77.1 78.6 Visions products and other medical durables.. 3.2 4.7 6.2 7.0 6.8 9.3 11.9 12.2 12.6 12.9 13.1 Nursing home care............................ 4.3 6.9 16.1 23.9 31.7 42.3 57.7 62.2 65.8 68.7 72.3 Other personal health care................... 3.5 3.9 5.0 6.8 7.2 8.4 12.7 14.8 16.5 18.3 21.8 Program administration and net cost of private health insurance................................ 5.8 9.1 10.4 13.5 21.3 32.7 43.8 42.1 45.2 52.3 58.7 Government public health activities.............. 1.8 2.9 5.1 8.1 12.1 16.0 22.2 23.3 24.7 26.3 28.8 Research and construction of medical facilities...... 8.5 16.2 20.4 23.1 20.9 22.5 27.8 27.1 29.1 29.9 30.2 -------------------------------------------------------------------------------------------------- Total.......................................... $134.6 $193.6 $279.8 $360.1 $444.7 $589.8 $790.8 $828.3 $880.5 $915.1 $949.4 -------------------------------------------------------------------------------------------------------------------------------------------------------- Note.--Constant dollar expenditures are calculated using the consumer price index for all urban consumers (CPI-U). Source: Health Care Financing Administration, Office of the Actuary. TABLE C-3.--NATIONAL HEALTH EXPENDITURES: PER CAPITA AMOUNTS IN CONSTANT 1994 DOLLARS, SELECTED CALENDAR YEARS 1960-94 -------------------------------------------------------------------------------------------------------------------------------------------------------- Spending category 1960 1965 1970 1975 1980 1985 1990 1991 1992 1993 1994 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total.......................................... ----$706-----$949---$1,303---$1,604---$1,891---$2,389---$3,047---$3,158---$3,321---$3,416---$3,510 Health services and supplies..................... 663 869 1,207 1,501 1,802 2,296 2,940 3,054 3,211 3,304 3,396 Personal health care............................. 623 811 1,135 1,405 1,660 2,100 2,688 2,806 2,947 3,011 3,074 Hospital care................................ 245 324 496 645 786 939 1,120 1,171 1,216 1,241 1,251 Physicians' services......................... 139 189 241 293 346 487 639 658 696 693 700 Dentists' services........................... 52 64 83 96 102 121 138 138 147 150 156 Other professional services.................. 16 20 25 33 49 93 152 159 168 166 183 Home health care............................. 1 2 4 8 18 31 57 67 78 88 97 Drugs and other medical nondurables.......... 112 136 157 160 165 207 262 272 284 288 290 Vision products and other medical durables... 17 23 29 31 29 38 46 46 48 48 49 Nursing home care............................ 22 34 75 106 135 171 223 237 248 257 267 Other personal health care................... 18 19 23 30 31 34 49 58 62 68 81 Program administration and net cost of private health insurance................................ 31 44 48 60 91 133 169 161 170 195 217 Government public health activities.............. 10 14 24 36 51 65 56 89 93 98 107 Research and construction of medical facilities...... 45 79 95 103 89 91 107 103 110 112 112 -------------------------------------------------------------------------------------------------- Average annual percentage increase................... 60-65 65-70 70-75 75-80 80-85 85-90 92-93 93-94 ....... ....... ....... Total.......................................... 6.0 6.5 4.2 3.4 4.8 5.0 2.9 2.7 ....... ....... ....... Health services and supplies..................... 5.6 6.8 4.4 3.7 5.0 5.1 2.9 2.8 ....... ....... ....... Personal health care............................. 5.4 7.0 4.4 3.4 4.8 5.0 2.2 2.1 ....... ....... ....... Hospital care................................ 5.8 9.0 5.3 4.0 3.6 5.2 2.1 0.8 ....... ....... ....... Physicians' services......................... 6.3 5.0 4.0 3.4 6.2 5.2 -0.4 1.0 ....... ....... ....... -------------------------------------------------------------------------------------------------------------------------------------------------------- Note.--Constant dollar expenditures are calculated using the consumer price indices for all urban consumers (CPI-U). Average annual amounts are calculated on unrounded numbers. Source: Health Care Financing Administration, Office of the Actuary. Hospital care expenditures were the largest component of national health expenditures at $338.5 billion or 36 percent in 1994. In terms of per capita spending, $1,251 was spent for hospital care in 1994 (see table C-3). Hospital expenditures increased only 4.4 percent in 1994, the third consecutive year of decelerated growth. Spending for physician services in 1994 grew to $189.4 billion, almost 20 percent of national health expenditures. The share of personal health expenditures funded by the public sector increased from 39.5 percent in 1990 to 43.5 percent in 1994, the highest level ever (see table C-4). \1\ The Federal Government accounted for 33.7 percent ($280 billion) of personal health spending (including payments for both Medicare and Medicaid), and 9.8 percent ($81.8 billion) was paid by State and local government. --------------------------------------------------------------------------- \1\ Personal health expenditures accounted for 88 percent of national health expenditures in 1994. The remaining 12 percent was expended on program administration; administrative costs of private health insurance and profits earned by private health insurance: noncommercial health research; new construction; and government public health activities. --------------------------------------------------------------------------- In 1994, private health insurance payments (including premiums paid for both employers and employees) were 32.1 percent ($266.8 billion) of personal health expenditures. Twenty-one percent ($174.9 billion) was paid by direct (out-of- pocket) payments by individuals. Philanthropy and in-plant health services accounted for 3.4 percent. EXPENDITURES FOR HOSPITAL CARE In 1994, the 36 percent of total national health expenditures spent on hospitals was 6 percentage points less than 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 post-acute care, as well as nonpatient care activities) reached $308.4 billion in 1995. This was up 5.3 percent from the previous year. Combined with the 5.0-percent increase in 1994, this produced the smallest 2-year rise in hospital costs in at least 30 years. That inpatient expenses increased more slowly than total expenses reflects the growing share of activity in the hospital outpatient setting. The average cost of a day of hospital care (adjusted to reflect outpatient services) rose by 6.3 percent to $1,127 in 1995. 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, this also produced the lowest 2-year increase in three decades. In fact, hospital costs per day grew more slowly in 1994 and 1995 than in any two single years since data on this measure have been available. The average cost per case (also adjusted to reflect outpatient care) rose to $6,427 in 1995, an increase of only 1.8 percent. This represents the fifth consecutive decline in this growth rate. In 1994 and 1995, 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. TABLE C-4.--PERSONAL HEALTH CARE EXPENDITURES: AGGREGATE AMOUNTS AND PERCENTAGE DISTRIBUTION, SELECTED CALENDAR YEARS 1960-2005 -------------------------------------------------------------------------------------------------------------------------------------------------------- Spending category 1960 1965 1970 1975 1980 1985 1990 1991 1992 1993 1994 2000 \1\ 2005 \1\ -------------------------------------------------------------------------------------------------------------------------------------------------------- (12) Amount in billions of dollars ---------------------------------------------------------------------------------------------------------------------- Private.......................... $18.5 $27.9 $41.3 $69.2 $130.0 $228.4 $371.7 $399.6 $431.5 $452.3 $469.9 $691.4 $943.7 Private health insurance..... 5.0 8.7 14.8 28.4 62.0 113.8 201.8 221.2 242.7 256.4 266.8 411.0 571.2 Out-of-pocket payments....... 13.1 18.5 24.9 38.1 60.3 100.6 148.4 155.1 164.4 169.4 174.9 227.4 294.7 Other private sources of funds....................... 0.4 0.7 1.6 2.7 7.8 14.1 21.5 23.3 24.3 26.6 28.2 53.0 77.8 Public........................... 5.1 7.3 22.5 45.3 87.3 148.0 243.0 276.6 308.3 334.1 361.8 624.1 964.3 Federal...................... 2.1 3.0 14.7 30.9 63.4 111.3 178.1 205.7 234.4 256.8 280.0 493.6 775.5 State and local.............. 3.0 4.3 7.8 14.4 23.6 36.7 64.9 70.8 73.9 77.3 81.8 130.5 188.8 ---------------------------------------------------------------------------------------------------------------------- Total...................... 23.6 35.2 63.8 114.5 217.0 376.4 614.7 676.2 739.8 786.5 831.7 1,315.5 1,908.0 ---------------------------------------------------------------------------------------------------------------------- (12) Percentage distribution ---------------------------------------------------------------------------------------------------------------------- Private.......................... 78.3 79.4 64.7 60.4 59.9 60.7 60.5 59.1 58.3 57.5 56.5 52.6 49.5 Private health insurance..... 21.2 24.7 23.2 24.8 28.6 30.2 32.8 32.7 32.8 32.6 32.1 31.2 29.9 Out-of-pocket payments....... 55.3 52.7 39.0 33.3 27.8 26.7 24.1 22.9 22.2 21.5 21.0 17.3 15.4 Other private sources of funds....................... 1.8 2.0 2.6 2.4 3.6 3.7 3.5 3.4 3.3 3.4 3.4 4.0 4.1 Public........................... 21.7 20.6 35.3 39.6 40.1 39.3 39.5 40.9 41.7 42.5 43.5 47.4 50.5 Federal...................... 9.0 8.4 23.0 27.0 29.2 29.6 29.0 30.4 31.7 32.7 33.7 37.5 40.6 State and local.............. 12.6 12.2 12.2 12.5 10.9 9.7 10.6 10.5 10.0 9.8 9.8 9.9 9.9 ---------------------------------------------------------------------------------------------------------------------- Total...................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Estimates prepared by the Congressional Budget Office, February 1995. Note.--Numbers may not add to totals due to rounding. Percentage amounts are calculated on unrounded numbers. Source: Health Care Financing Administration, Office of the Actuary. TABLE C-5.--SELECTED DATA ON COMMUNITY HOSPITAL EXPENSES, 1965-95 ---------------------------------------------------------------------------------------------------------------- Total expenses Expenses per Expenses per Inpatient expenses ---------------------- adjusted inpatient adjusted admission \1\ day ----------------------------------------- Year Amount (in Percent -------------------- billions) change Percent Amount Percent Amount (in Percent Amount change 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 ---------------------------------------------------------------------------------------------------------------- \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. 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. In 1995, costs per case grew even more slowly relative to inflation. CHART C-1. REAL ANNUAL CHANGES IN HOSPITAL EXPENSES PER ADJUSTED ADMISSION (IN PERCENT), 1965-95 <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT> 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 only slightly 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). Between 1992 and 1995, the increase in total hospital expenses was only 5.7 percent per year. Because of this, although it slowed from 3.8 percent between 1985 and 1992 to 2.8 percent between 1992 and 1995, general inflation accounted for almost 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 1995, 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 1995. Expenditures for hospital care are financed primarily by third parties, as shown in table C-6. In 1993, private health insurers paid 36.1 percent of the total, Medicare 28.4 percent, and Medicaid (including both the Federal and State shares) 13.0 percent. The share financed by out-of-pocket payments from individuals was only 2.8 percent in 1993, down from 5.2 percent in 1985. CHART C-2. FACTORS CONTRIBUTING TO GROWTH OF TOTAL HOSPITAL EXPENSES, 1985-92 AND 1992-95 <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT> Note._Hospital expenses grew at an annual rate of 10.0 percent between 1985 and 1992 and 5.7 percent between 1992 and 1995. Source: Prospective Payment Assessment Commission. TABLE C-6.--NATIONAL EXPENDITURES FOR HOSPITAL CARE BY SOURCE OF FUNDS, 1980, 1985, AND 1990-93 [Amounts in billions] -------------------------------------------------------------------------------------------------------------------------------------------------------- 1980 1985 1990 1991 1992 1993 Source of payment ----------------------------------------------------------------------------------------------------------- Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent -------------------------------------------------------------------------------------------------------------------------------------------------------- Total....................................... $102.7 100.0 $168.2 100.0 $256.5 100.0 $282.3 100.0 $306.0 100.0 $326.6 100.0 Out of pocket............................... 5.3 5.2 8.8 5.2 9.8 3.8 9.6 3.4 9.0 2.9 9.1 2.8 Third-party payments........................ 97.4 94.8 159.4 94.8 246.8 96.2 272.7 96.6 297.0 97.1 317.4 97.2 Private health insurance.................. 38.7 37.7 61.0 36.3 95.7 37.3 102.8 36.4 109.1 35.7 117.8 36.1 Other private funds....................... 5.0 4.9 8.3 4.9 13.8 5.4 15.1 5.3 15.9 5.2 16.8 5.2 Government................................ 53.7 52.3 90.1 53.6 137.3 53.5 154.8 54.8 172.0 56.2 182.9 56.0 Federal................................. 40.9 39.8 71.1 42.3 103.4 40.3 120.3 42.6 137.3 44.9 149.2 45.7 Medicare.................................... 26.3 25.6 48.9 29.1 68.5 26.7 74.9 26.5 84.2 27.5 92.7 28.4 Medicaid\1\................................. 4.6 4.4 7.4 4.4 14.9 5.8 23.4 8.3 30.1 9.8 32.1 9.8 Other Federal............................... 9.9 9.7 14.8 8.8 20.0 7.8 22.0 7.8 23.0 7.5 24.4 7.5 State and local........................... 12.8 12.5 19.0 11.3 33.9 13.2 34.5 12.2 34.7 11.3 33.7 10.3 Medicare\2\............................. 3.9 3.8 6.3 3.7 11.6 4.5 11.1 3.9 10.9 3.6 10.3 3.2 Other State and local................... 8.9 8.7 12.8 7.6 22.3 8.7 23.4 8.3 23.7 7.8 23.4 7.2 -------------------------------------------------------------------------------------------------------------------------------------------------------- \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. 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 has continued, and the increase in total admissions of 1.4 percent in 1995 was the largest in 15 years. TABLE C-7.--ANNUAL CHANGE IN HOSPITAL ADMISSIONS BY AGE GROUP, 1978-95 ------------------------------------------------------------------------ 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 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 1993-95............................ 1.0 0.0 2.6 ------------------------------------------------------------------------ Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association National Hospital Panel Survey. 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 10.4 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 1.6 days shorter, on average, in 1995 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, 1978-95 ---------------------------------------------------------------------------------------------------------------- All Under 65 65 and over ----------------------------------------------------- Average Average Average Year length length length of stay Percent of stay Percent of stay Percent (in change (in change (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 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 1993-95............................................... ....... -3.6 ....... -2.7 ....... -5.2 ---------------------------------------------------------------------------------------------------------------- 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. TABLE C-9.--INPATIENT HOSPITAL OCCUPANCY RATE AND NUMBER OF BEDS, 1978- 96 ------------------------------------------------------------------------ Occupancy Year rate (in Percent Number of Percent percent) change beds change ------------------------------------------------------------------------ 1978.......................... 73.7 -0.8 954,001 0.9 1979.......................... 74.5 1.0 959,269 0.6 1980.......................... 76.1 2.2 970,456 1.2 1981.......................... 75.8 -0.4 986,917 1.7 1982.......................... 74.5 -1.6 997,720 1.1 1983.......................... 72.2 -3.1 1,003,658 0.6 1984.......................... 66.7 -7.6 992,616 -1.1 1985.......................... 63.6 -4.7 974,559 -1.8 1986.......................... 63.4 -0.3 963,133 -1.2 1987.......................... 64.1 1.2 954,458 -0.9 1988.......................... 64.6 0.8 942,306 -1.3 1989.......................... 64.8 0.3 930,994 -1.2 1990.......................... 64.5 -0.6 921,447 -1.0 1991.......................... 63.5 -1.4 911,781 -1.0 1992.......................... 62.3 -1.9 907,661 -0.5 1993.......................... 61.4 -1.5 901,669 -0.7 1994.......................... 60.3 -1.7 890,575 -1.2 1995.......................... 59.7 -1.1 874,250 -1.8 Average annual percent change: 1978-83................... ......... -0.5 ........... 1.0 1984-86................... ......... -4.2 ........... -1.4 1987-92................... ......... -0.3 ........... -1.0 1993-95................... ......... -1.4 ........... -1.2 ------------------------------------------------------------------------ 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 and 1995, 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. TABLE C-10.--ANNUAL CHANGE IN HOSPITAL EMPLOYMENT, 1978-95 ------------------------------------------------------------------------ Percent change in: ------------------------------------------- Year Personnel-- 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 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 1993-95................. -0.5 -0.5 -0.5 -0.5 ------------------------------------------------------------------------ Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association National Hospital Panel Survey. EXPENDITURES FOR PHYSICIANS' SERVICES Personal health care expenditures for physicians' services were $189.4 billion in 1994, an increase of 4.6 percent from the previous year (see table C-11). In 1994, 20 percent of national health expenditures and 23 percent of personal health expenditures were for physicians' services (see table C-1). Third-party (public expenditures and private insurance) payments financed over fourth fifths of physicians' services. In 1994, private health insurance paid $89.5 billion (47 percent) for such services. Public programs paid $60.9 billion (32.1 percent) for such services, of which $36.1 billion was Federal Medicare payments. Patients or their families paid $35.8 billion (18.9 percent) for physicians' services (see table C-11). TABLE C-11.--EXPENDITURES FOR PHYSICIAN SERVICES \1\ BY SOURCE OF FUNDS, SELECTED YEARS 1980-94 [Amounts in billions] ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 1980 1985 1990 1991 1992 1993 1994 Source of payment ----------------------------------------------------------------------------------------------------------------------------- Amount Percent 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 $35.6 22.4 $37.0 21.7 $37.0 20.4 $35.8 18.9 Third-party payments.............................................. 30.6 67.6 59.3 70.9 110.9 75.8 123.1 77.8 136.7 78.3 144.1 79.6 153.5 81.1 Private health insurance.......................................... 17.1 37.9 23.4 36.9 63.3 43.2 71.4 45.0 81.5 46.6 85.3 47.1 89.5 47.3 Other private funds............................................... 0.4 0.8 1.4 1.6 2.7 1.8 2.5 1.6 2.5 1.5 2.7 1.5 3.0 1.6 Government........................................................ 13.1 28.9 24.5 29.3 45.0 30.7 49.2 31.0 52.7 30.2 56.0 30.9 60.9 32.1 Federal....................................................... 10.0 22.1 19.5 23.4 35.9 24.5 38.6 24.3 40.9 23.4 44.0 24.3 48.6 25.7 Medicare.................................................... 8.0 17.6 16.5 19.7 29.5 20.2 30.8 19.4 31.7 18.2 33.9 18.7 36.1 20.1 Medicaid.................................................... 1.4 3.1 2.0 2.4 4.2 2.8 5.3 3.4 6.6 3.8 7.6 4.2 8.0 4.2 Other Federal programs...................................... 0.6 1.4 1.1 1.3 2.2 1.5 2.5 1.6 2.5 1.4 2.6 1.4 2.5 1.3 State and local............................................... 3.1 6.9 4.9 5.9 9.1 6.2 10.6 6.7 11.8 6.8 12.0 6.6 12.3 6.5 Medicaid.................................................... 1.1 2.5 1.5 1.9 2.9 2.0 3.8 2.4 4.5 2.6 5.0 2.8 5.4 2.9 Other State and local programs.............................. 2.0 4.3 3.4 4.0 6.2 4.2 6.7 4.3 7.3 4.2 7.0 3.9 6.9 3.6 ----------------------------------------------------------------------------------------------------------------------------- Total....................................................... 45.2 100.0 83.6 100.0 146.3 100.0 158.6 100.0 174.7 100.0 181.1 100.0 189.4 100.0 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ \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.--Numbers may not add to totals because of rounding. Source: Health Care Financing Administration, Office of the Actuary. Inflation continues to affect the growth in spending for physicians' services. Physicians' fees rose more rapidly (4.5 percent in 1995) than prices in the economy as a whole (2.8 percent) as measured by the consumer price index (CPI) (see table C-12). TABLE C-12.--ANNUAL PERCENTAGE CHANGES IN SELECTED COMPONENTS OF THE CONSUMER PRICE INDEX (CPI-U), \1\ 1965-95 ---------------------------------------------------------------------------------------------------------------- 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 ---------------------------------------------------------------------------------------------------------------- \1\ Consumer price index (CPI) for all urban (U) consumers. Source: U.S. Department of Labor, Bureau of Labor Statistics. The American Medical Association reports that, over the 10 years from 1984 to 1994, physician income rose an average 5 percent a year. The average physician net income in 1994, however, experienced the first decrease ever recorded by the AMA. After expenses but before taxes, physician income was $182,400, a 3.6 percent decrease from $189,300 in 1993 (see table C-13). TABLE C-13.--PHYSICIANS' AVERAGE NET INCOME AFTER EXPENSES BUT BEFORE TAXES, 1983-94 [Average net Income \1\ in thousands of dollars] -------------------------------------------------------------------------------------------------------------------------------------------------------- Percent Category 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Change 1993-94 -------------------------------------------------------------------------------------------------------------------------------------------------------- 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 -3.6 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 3.9 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 -3.3 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 -2.9 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 -6.8 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 -9.6 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 -8.6 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 -2.1 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 -2.7 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 -9.0 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 -4.0 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 -3.7 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 -7.3 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 -1.7 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 2.2 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 3.4 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 -9.2 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 -10.7 Location: Nonmetropolitan..................... 87.2 90.9 94.2 107.7 117.9 120.9 129.4 130.5 150.4 159.2 160.0 NA NA 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 NA NA 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 NA NA 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 -3.6 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 -1.7 -------------------------------------------------------------------------------------------------------------------------------------------------------- \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. NA--Not available. Source: American Medical Association (1995a and b). Self-employed physicians, who are more likely to have additional years of experience and be board certified, earned an average of $210,200 in 1994 in contrast to employee-doctors whose net income was $148,200. Both of these practice arrangements reported declines in income from 1993. Declines in income were reported throughout the United States, except for the East South Central and West South Central census regions, which increased by 2.2 and 3.4 percent. Physicians in the East South Central and West South Central regions also had the highest average net incomes ($199,200 and $195,500 respectively). The lowest average net incomes ($156,100) were for physicians in the New England area. Surgeons continued to have the highest average net incomes in 1994 ($255,200) and general and family practitioners the lowest ($121,400). Generalists' incomes appear to be improving relative to those of specialists. Average incomes for general and family practitioners saw a gain of 3.9 percent from 1993 to 1994. Also, while median real incomes for all physicians declined from the previous year, real incomes for those in family practice and internal medicine fell less than those for most specialists (Physician Payment Review Commission, 1996). Table C-14 shows physicians' median net incomes by specialty. In the decade from 1984 to 1994, the real net income for general and family practitioners increased at an average annual rate of 2 percent. The only other specialty to show an average annual increase over 2 percent in real net income was radiology at 2.4 percent. Table C-15 shows average physician net incomes in nominal and real (or constant) dollars. Physicians average net income increased 202 percent between 1977 and 1994, but real income, expressed in 1994 dollars, increased only 23 percent (from $148,000 to $182,000) during this same time period. Table C-16 shows the distribution of physicians' net incomes in 1994 for all physicians and selected specialties. While the average net income of all physicians was $182,400, half of all physicians earned $150,000 or less. One-fourth of all physicians earned $105,000 or less, while one-fourth earned $220,000 or more. Anesthesiologists, radiologists, and surgeons had the highest median incomes, with half earning $200,000 or more. TABLE C-14.--MEDIAN PHYSICIAN NET INCOME AFTER EXPENSES BUT BEFORE TAXES, 1984 AND 1994 [In thousands of dollars] ---------------------------------------------------------------------------------------------------------------- Median net income Average annual ------------------------------ percent change 1994 1994 ------------------- 1984 nominal real \1\ Nominal Real \1\ ---------------------------------------------------------------------------------------------------------------- All physicians \2\............................................ $92 $150 $105 5.0 1.3 Specialty: General/family practice................................... 63 110 77 5.7 2.0 Internal medicine......................................... 90 150 105 5.2 1.6 Surgery................................................... 130 219 154 5.4 1.7 Pediatrics................................................ 68 110 77 4.9 1.3 Obstetrics/gynecology..................................... 106 182 128 5.6 1.9 Radiology................................................. 122 220 154 6.1 2.4 Psychiatry................................................ 80 120 84 4.1 0.5 Anesthesiology............................................ 150 200 140 2.9 -0.7 Pathology................................................. 106 152 107 3.7 0.1 Census division: New England............................................... 80 135 95 5.4 1.7 Middle Atlantic........................................... 85 140 98 5.1 1.4 East North Central........................................ 97 164 115 5.4 1.7 West North Central........................................ 90 150 105 5.2 1.6 South Atlantic............................................ 93 160 112 5.6 1.9 East South Central........................................ 100 163 114 5.0 1.3 West South Central........................................ 100 164 115 5.1 1.4 Mountain.................................................. 92 146 102 4.7 1.1 Pacific................................................... 95 150 105 4.7 1.0 ---------------------------------------------------------------------------------------------------------------- \1\ In 1984 dollars. \2\ Includes physicians in specialties not listed separately. Source: American Medical Association (1986, 1995a). The continuing survey of physicians' incomes conducted by the magazine Medical Economics (Terry, 1993) showed that, on average, physicians received 83 percent of their 1992 gross practice incomes from third parties (see table C-17). On average, 17 percent came from commercial insurers, 14 percent from Blue Shield, 26 percent from Medicare, 10 percent from Medicaid, 10 percent from health maintenance organizations (HMOs) and independent practice associations (IPAs), and 6 percent from preferred provider organizations (PPOs). As table C-17 indicates, the importance of each source of payment varied by specialty. Cardiothoracic surgeons received the highest percentage of gross pay from Medicare (50 percent). Pediatricians, on average, received only 1 percent of their gross income from Medicare, but received the highest percentage of gross pay from Medicaid (24 percent). TABLE C-15.--AVERAGE PHYSICIAN NET INCOME AFTER EXPENSES BUT BEFORE TAXES, 1977-94 [Dollars in thousands] ------------------------------------------------------------------------ Nominal Real ------------------------------------------------------------------------ 1977.............................................. $60.4 $147.7 1978.............................................. 64.6 146.8 1979.............................................. 77.4 158.0 1980.............................................. NA NA 1981.............................................. 89.9 146.6 1982.............................................. 97.7 150.0 1983.............................................. 104.1 154.9 1984.............................................. 108.4 154.6 1985.............................................. 112.2 154.5 1986.............................................. 119.5 161.6 1987.............................................. 132.3 172.6 1988.............................................. 144.7 181.3 1989.............................................. 155.8 186.2 1990.............................................. 164.3 186.3 1991.............................................. 170.6 185.6 1992.............................................. 181.7 191.9 1993.............................................. 189.3 194.1 1994.............................................. 182.4 182.4 ------------------------------------------------------------------------ NA--Not available. Note.--No data for 1980. Real (1994 dollars) incomes are calculated using the consumer price index for all urban consumers. Source: CRS analysis of data from American Medical Association (1995a and b). A subsequent analysis by Medical Economics (Walker, 1995) addressed physician income from HMOs and PPOs and the amount in the form of capitation payments (see table C-18). In 1994, almost four-fifths of physicians belonged to at least one managed care plan. HMOs accounted for 22 percent of gross income, preferred provider organizations (PPOs) for 15 percent of gross income, and capitation for 15 percent of gross income. TABLE C-16.--DISTRIBUTION OF PHYSICIAN NET INCOME AFTER EXPENSES BUT BEFORE TAXES BY SPECIALTY AND CENSUS DIVISION, 1994 [In thousands of dollars] ---------------------------------------------------------------------------------------------------------------- 25th 50th 75th percentile percentile percentile Mean ---------------------------------------------------------------------------------------------------------------- All physicians \1\................................................ 105 150 220 182.4 Specialty: General/family practice....................................... 85 110 144 121.2 Internal medicine............................................. 100 150 199 174.9 Surgery....................................................... 150 219 300 255.2 Pediatrics.................................................... 85 110 150 126.2 Obstetrics/gynecology......................................... 130 182 248 200.4 Radiology..................................................... 165 220 302 237.4 Psychiatry.................................................... 90 120 150 128.5 Anesthesiology................................................ 168 200 262 218.1 Pathology..................................................... 120 152 210 182.5 Census division: New England................................................... 98 135 180 156.1 Middle Atlantic............................................... 100 140 220 177.8 East North Central............................................ 117 164 237 191.9 West North Central............................................ 110 150 225 183.8 South Atlantic................................................ 106 160 248 189.3 East South Central............................................ 120 163 230 199.2 West South Central............................................ 110 164 234 195.5 Mountain...................................................... 100 146 209 175.4 Pacific....................................................... 105 150 210 171.8 ---------------------------------------------------------------------------------------------------------------- \1\ Includes physicians in specialties not listed separately. Source: American Medical Association (1995a). TABLE C-17.--THIRD PARTY SOURCES OF PHYSICIAN PAYMENT FOR SELECTED SPECIALTIES, 1992 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Commercial plans Blue Shield Medicare Medicaid HMOs/IPAs PPOs ----------------------------------------------------------------------------------------------------------------------------- As As As As As As Specialty Average percent Average percent Average percent Average percent Average percent Average percent annual of gross annual of gross annual of gross annual of gross annual of gross annual of gross payment practice payment practice payment practice payment practice payment practice payment practice income income income income income income ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Cardiologists..................................................... $61,400 15 $56,100 14 $177,490 46 $18,220 5 $27,530 6 $16,730 4 Cardio/thoracic surgeons.......................................... 61,200 12 70,670 14 241,890 50 31,410 6 44,000 10 17,980 4 Family practice................................................... 33,420 14 30,290 12 54,170 22 25,320 11 27,720 12 18,140 7 Gastroenterologists............................................... 58,600 14 57,500 15 151,640 40 21,620 6 32,140 10 19,810 5 General practice.................................................. 30,870 14 23,940 12 45,230 24 20,210 12 23,300 10 15,250 5 General surgeons.................................................. 62,430 19 53,810 17 103,590 33 26,100 9 31,890 10 20,510 6 Pediatricians..................................................... 36,860 15 33,350 14 810 1 53,800 24 31,890 15 22,830 9 Plastic surgeons.................................................. 84,410 20 61,030 14 54,450 13 13,910 4 25,960 6 30,810 7 Psychiatrists..................................................... 38,910 20 23,610 13 22,780 11 10,870 6 10,000 5 13,190 6 Internists........................................................ 31,060 12 33,700 12 101,320 39 12,380 5 22,230 10 16,290 6 Neurosurgeons..................................................... 154,920 26 77,130 14 118,990 22 35,290 7 55,620 10 39,880 7 OBG specialists................................................... 96,590 24 80,930 20 24,290 7 47,860 11 58,280 15 48,860 11 Orthopedists...................................................... 122,860 24 78,430 17 95,950 21 28,810 6 43,510 9 38,570 7 All surgical specialists.......................................... 83,980 20 66,010 16 105,590 26 32,030 8 41,800 10 30,930 7 All nonsurgical specialists....................................... 46,460 15 39,730 14 87,000 28 24,080 10 28,480 10 18,370 6 All M.D.s......................................................... 55,600 17 45,710 14 86,070 26 26,390 10 32,150 10 22,030 6 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Source: Terry (1993). TABLE C-18.--PERCENTAGE OF PHYSICIAN GROSS INCOME FROM MANAGED CARE AND CAPITATION BY SPECIALTY, 1994 ------------------------------------------------------------------------ Percent of 1994 income from: ----------------------------------- Physician specialty Preferred HMOs provider Capitation organizations ------------------------------------------------------------------------ Anesthesiologists................... 26 20 22 Cardiologists....................... 13 10 9 Cardio/thoracic surgeons............ 21 10 15 Emergency physicians................ (\1\) (\1\) 16 Family practitioners................ 21 10 18 Gastroenterologists................. 17 12 14 General practitioners............... 28 15 24 General surgeons.................... 19 10 18 Internist........................... 20 10 15 Neurosurgeons....................... 19 15 22 OBG specialists..................... 32 20 14 Orthopedic surgeons................. 19 15 14 Pediatricians....................... 32 20 22 Plastic surgeons.................... 17 12 12 Psychiatrists....................... 18 20 23 Radiologists........................ 17 10 17 All surgical specialists............ 22 15 15 All nonsurgeons \2\................. 21 15 15 All fields.......................... 22 15 15 ------------------------------------------------------------------------ \1\ Insufficient sample. \2\ Includes family practitioners and general practitioners. Gross is the individual physician's share of 1994 practice receipts before professional expenses and income taxes. Figures exclude physicians with no HMO, preferred provider organizations, or capitation contracts. Source: Walker (1995). 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 1991, the number of beds had dropped to 3.6 per 1,000 population and remained at that level in 1992 and 1993. Among the 9 census regions, the area experiencing the largest increase has been the East South Central, where beds increased from 1.7 per 1,000 population in 1940 to 5.1 in 1980, falling back to 4.5 in 1993 (see table C- 19). TABLE C-19.--COMMUNITY HOSPITAL BEDS PER 1,000 POPULATION AND AVERAGE ANNUAL PERCENT CHANGE BY GEOGRAPHIC DIVISION AND STATE, SELECTED YEARS 1940-1993 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Beds per 1,000 civilian population Average annual percent change Geographic division and State --------------------------------------------------------------------------------------------------------------------------------------- 1940 \1\ 1950 \1\ 1960 \2\ 1970 1980 1990 1992 1993 1940-60 \1\ \2\ 1960-70 \2\ 1970-80 1980-90 1990-93 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ United States........................................... 3.2 3.3 3.6 4.3 4.5 3.8 3.6 3.6 0.6 1.8 0.5 -1.7 -1.8 New England............................................. 4.4 4.2 3.9 4.1 4.1 3.4 3.3 3.3 -0.6 0.5 0.0 -1.9 -1.0 Maine................................................. 3.0 3.2 3.4 4.7 4.7 3.8 3.7 3.6 0.6 3.3 0.0 -2.1 -1.8 New Hampshire......................................... 4.2 4.2 4.4 4.0 3.9 3.1 3.1 3.0 0.2 -0.9 -0.3 -2.3 -1.1 Vermont............................................... 3.3 4.0 4.5 4.5 4.4 3.1 2.9 3.4 1.6 0.0 -0.2 -3.4 3.1 Massachusetts......................................... 5.1 4.8 4.2 4.4 4.4 3.6 3.6 3.5 -1.0 0.5 0.0 -2.0 -0.9 Rhode Island.......................................... 3.9 3.8 3.7 4.0 3.8 3.2 3.1 3.0 -0.3 0.8 -0.5 -1.7 -2.1 Connecticut........................................... 3.7 3.6 3.4 3.4 3.5 2.9 2.8 2.8 -0.4 0.0 0.3 -1.9 -1.2 Middle Atlantic......................................... 3.9 3.8 4.0 4.4 4.6 4.2 4.2 4.3 0.1 1.0 0.4 -0.9 0.8 New York.............................................. 4.3 4.1 4.3 4.6 4.5 4.2 4.2 4.3 0.0 0.7 -0.2 -0.7 0.8 New Jersey............................................ 3.5 3.2 3.1 3.6 4.2 3.7 4.0 3.9 -0.6 1.5 1.6 -1.3 1.8 Pennsylvania.......................................... 3.5 3.8 4.1 4.7 4.8 4.4 4.3 4.4 0.8 1.4 0.2 -0.9 0.0 East North Central...................................... 3.2 3.2 3.6 4.4 4.7 3.9 3.7 3.6 0.6 2.0 0.7 -1.8 -2.6 Ohio.................................................. 2.7 2.9 3.4 4.2 4.7 4.0 3.8 3.7 1.2 2.1 1.1 -1.8 -2.6 Indiana............................................... 2.3 2.6 3.1 4.0 4.5 3.9 3.8 3.7 1.5 2.6 1.2 -1.4 -1.7 Illinois.............................................. 3.4 3.6 4.0 4.7 6.1 4.0 3.9 3.8 0.8 1.6 0.8 -2.4 -1.7 Michigan.............................................. 4.0 3.3 3.3 4.3 4.4 3.7 3.4 3.3 -1.0 2.7 0.2 -1.7 -3.7 Wisconsin............................................. 3.4 3.7 4.3 5.2 4.9 3.8 3.7 3.5 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 4.8 4.7 1.6 2.9 0.2 -1.7 -1.4 Minnesota............................................. 3.9 4.4 4.8 6.1 5.7 4.4 4.2 4.1 1.0 2.4 -0.7 -2.6 -2.3 Iowa.................................................. 2.7 3.2 3.9 5.6 5.7 5.1 5.0 4.8 1.9 3.7 0.2 -1.1 -2.0 Missouri.............................................. 2.9 3.3 3.9 5.1 5.7 4.8 4.7 4.6 1.5 2.7 1.1 -1.7 -1.4 North Dakota.......................................... 3.5 4.3 5.2 6.8 7.4 7.0 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 6.0 2.4 2.2 -0.2 1.0 -0.5 Nebraska.............................................. 3.4 4.2 4.4 6.2 6.0 5.4 5.3 5.2 1.3 3.5 -0.3 -1.0 -1.3 Kansas................................................ 2.8 3.4 4.2 5.4 5.8 4.8 4.7 4.6 2.0 2.5 0.7 -1.9 -1.4 South Atlantic.......................................... 2.5 2.8 3.3 4.0 4.5 3.7 3.6 3.5 1.4 1.9 1.2 -1.9 -1.8 Delaware.............................................. 4.4 3.9 3.7 3.7 3.6 3.0 3.1 3.1 -0.9 0.0 -0.3 -1.8 1.1 Maryland.............................................. 3.9 3.6 3.3 3.1 3.6 2.9 2.7 2.6 -0.8 -0.6 1.5 -2.1 -3.6 District of Columbia.................................. 5.5 5.5 5.9 7.4 7.3 7.5 7.6 7.3 0.4 2.3 -0.1 0.3 -0.9 Virginia.............................................. 2.2 2.5 3.0 3.7 4.1 3.3 3.2 3.1 1.6 2.1 1.0 -2.1 -2.1 West Virginia......................................... 2.7 3.1 4.1 5.4 5.5 4.7 4.6 4.7 2.1 2.8 0.2 -1.6 0.0 North Carolina........................................ 2.2 2.6 3.4 3.8 4.2 3.4 3.4 3.3 2.2 1.1 1.0 -2.1 -1.0 South Carolina........................................ 1.8 2.4 2.9 3.7 3.9 3.3 3.2 3.2 2.4 2.5 0.5 -1.7 -1.0 Georgia............................................... 1.7 2.0 2.8 3.8 4.6 4.0 3.9 3.9 2.5 3.1 1.9 -1.4 -0.8 Florida............................................... 2.8 2.9 3.1 4.4 5.1 4.0 3.8 3.8 0.5 3.6 1.5 -2.4 -1.7 East South Central...................................... 1.7 2.1 3.0 4.4 5.1 4.8 4.6 4.5 2.9 3.9 1.5 -0.6 -2.1 Kentucky.............................................. 1.8 2.2 3.0 4.0 4.5 4.4 4.3 4.2 2.6 2.9 1.2 -0.2 -1.5 Tennessee............................................. 1.9 2.3 3.4 4.7 5.5 4.9 4.7 4.5 3.0 3.3 1.6 -1.1 -2.8 Alabama............................................... 1.5 2.0 2.8 4.3 5.1 4.6 4.5 4.5 3.2 4.4 1.7 -1.0 -0.7 Mississippi........................................... 1.4 1.7 2.9 4.4 5.3 5.3 4.9 4.9 3.7 4.3 1.9 0.0 -2.8 West South Central...................................... 2.1 2.7 3.3 4.3 4.7 3.9 3.7 3.8 2.3 2.7 0.9 -1.8 -2.6 Arkansas.............................................. 1.4 1.6 2.9 4.2 5.0 4.7 4.7 4.5 3.7 3.6 1.8 -0.6 -1.4 Louisiana............................................. 3.1 3.8 3.9 4.2 4.8 4.6 4.5 4.5 1.2 0.7 1.3 -0.4 -0.7 Oklahoma.............................................. 1.9 2.5 3.2 4.5 4.6 4.0 3.8 3.7 2.6 3.5 0.2 -1.4 -2.6 Texas................................................. 2.0 2.7 3.3 4.3 4.7 3.5 3.4 3.3 2.5 2.7 0.9 -2.9 -1.9 Mountain................................................ 3.6 3.8 3.5 4.3 3.8 3.1 2.9 2.9 -0.1 2.1 -1.2 -2.0 -2.2 Montana............................................... 4.9 5.3 5.1 5.8 5.9 5.8 5.3 5.1 0.2 1.3 0.2 -0.2 -4.2 Idaho................................................. 2.6 3.4 3.2 4.0 3.7 3.2 3.2 3.1 1.0 2.3 -0.8 -1.4 -1.1 Wyoming............................................... 3.5 3.9 4.6 5.5 3.6 4.9 4.8 4.8 1.4 1.8 -4.1 3.1 0.7 Colorado.............................................. 3.9 4.2 3.8 4.6 4.2 3.2 2.9 2.9 -0.1 1.9 -0.9 -2.7 -3.2 New Mexico............................................ 2.7 2.2 2.9 3.5 3.1 2.9 2.7 2.6 0.4 1.9 -1.2 -0.7 -3.6 Arizona............................................... 3.4 4.0 3.0 4.1 3.6 2.7 2.5 2.5 -0.6 3.2 1.3 -2.8 -2.5 Utah.................................................. 3.2 2.9 2.8 3.6 3.1 2.6 2.4 2.4 -0.7 2.5 -1.5 -1.7 -2.6 Nevada................................................ 5.0 4.4 3.9 4.2 4.2 2.9 2.7 2.7 -1.2 0.7 0.0 -3.6 -2.4 Pacific................................................. 4.1 3.2 3.1 3.7 3.5 2.7 2.6 2.5 -1.4 1.8 -0.6 -2.6 -2.5 Washington............................................ 3.4 3.6 3.3 3.5 3.1 2.5 2.4 2.3 -0.1 0.6 -1.2 -2.1 -2.7 Oregon................................................ 3.5 3.1 3.5 4.0 3.5 2.9 2.6 2.5 0.0 1.3 -1.3 -1.9 -4.8 California............................................ 4.4 3.3 3.0 3.8 3.6 2.7 2.6 2.5 -1.9 2.4 -0.5 -2.8 -2.5 Alaska................................................ ........ ........ 2.4 2.3 2.7 2.3 2.3 2.2 ............... -0.4 1.6 -1.6 -1.5 Hawaii................................................ ........ ........ 3.7 3.4 3.1 2.8 2.7 2.7 ............... -0.8 -0.9 -1.0 -1.2 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ \1\ 1940 and 1950 data are estimated based on published figures. \2\ 1960 includes hospital units of institutions. Source: U.S. Public Health Service (1996). SUPPLY OF PHYSICIANS National concern about physician shortages in the 1950s and 1960s led to Federal and State initiatives to increase the supply of physicians. Since that time, the number of physicians in the United States has grown rapidly from 334,028 in 1970 to 684,414 in 1994. According to an Institute of Medicine report, this rate has been 1\1/2\ times faster than the growth rate of the Nation's population (Lohr, Vanselow, & Detmer, 1996). Table C-20 indicates that between 1970 and 1994, the number of all physicians per 100,000 civilians grew from 161 to 263, a 63-percent increase. Table C-21 shows variations in the supply of non-Federal physicians relative to population by State. In 1994, the District of Columbia had the highest ratio (693 physicians per 100,000 population) while Mississippi had the lowest ratio (145 physicians per 100,000 population). The number of physicians in the United States is expected to continue to increase until the year 2020 when the Bureau of Health Professions estimates there will be 269 physicians per 100,000 population. In 1994, about 34 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 National Resident Matching Program announced in March, 1996, that more than half of U.S. medical school seniors plan to spend at least their first year of residency training in general practice. In 1994, there were 97,832 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 over the past decade (see table C-23). Increasing numbers of residency positions are occupied, however, by international medical graduates (IMGs). 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 increased 88 percent, from 12,509 in 1985 to 23,499 in 1994 and is now at 24 percent of all residents in training (table C-24). HEALTH INSURANCE STATUS IN 1994 Most people have some form of health insurance. In 1994, an estimated 84.9 percent of the total noninstitutionalized population had public or private coverage during at least part of the year. However, an estimated 39.6 million Americans, or 15.1 percent of the population, were without coverage in 1994. Almost all of the uninsured were under age 65; consequently, 17.0 percent of the nonelderly population were uninsured. This section examines characteristics of both the insured and the uninsured populations in 1994, and reviews trends in health insurance coverage over the 1979-94 period (see Smith & Nuschler, 1996). TABLE C-20.--PHYSICIAN SUPPLY BY MAJOR CATEGORIES, 1970, 1980, 1990, AND 1994 ---------------------------------------------------------------------------------------------------------------- 1970 1980 1990 1994 Category ------------------------------------------------------------------------------- Number Percent Number Percent Number Percent Number Percent ---------------------------------------------------------------------------------------------------------------- Total physicians \1\............ 334,028 ........ 467,679 ........ 615,421 ........ 684,414 ........ ------------------------------------------------------------------------------- Federal..................... 29,501 9 17,787 4 20,475 3 22,454 3 Non-Federal................. 301,323 91 443,502 96 592,166 97 660,582 97 Metropolitan (non- Federal only).......... 258,265 (86) 385,365 (87) 521,668 88 584,727 (89) Nonmetropolitan (non- Federal only).......... 43,058 (14) 58,137 (13) 70,498 12 75,855 (12) Patient care................ 278,535 83 376,512 80 503,870 82 562,456 82 Nonpatient care............. 32,310 10 38,404 9 43,440 8 43,012 6 Male........................ 308,627 92 413,395 88 511,227 83 551,151 81 Female...................... 25,401 8 54,284 12 104,194 17 133,263 20 International medical graduates.................. 57,217 17 97,726 21 131,764 21 154,576 23 Total physician-population ratio (per 100,000 persons) 161 ........ 202 ........ 244 ........ 263 ........ ---------------------------------------------------------------------------------------------------------------- \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.--Numbers may not add due to rounding. Source: American Medical Association (1996). TABLE C-21.--NON-FEDERAL PHYSICIAN/POPULATION RATIOS AND RANK BY STATE, SELECTED YEARS 1970-94 [Ratios: Non-Federal physicians (M.D.s) per 100,000 civilian population] ------------------------------------------------------------------------ 1994 State 1970 1975 1985 1990 1994 rank ------------------------------------------------------------------------ Alabama....................... 90 103 152 170 190 41 Alaska........................ 74 95 137 155 151 50 Arizona....................... 144 185 220 233 230 23 Arkansas...................... 92 103 150 165 183 43 California.................... 194 219 266 272 270 11 Colorado...................... 178 186 216 232 246 16 Connecticut................... 192 224 302 332 360 5 Delaware...................... 134 155 203 217 235 20 District of Columbia.......... 390 467 607 658 693 1 Florida....................... 155 185 236 251 258 13 Georgia....................... 108 126 172 187 199 37 Hawaii........................ 160 185 239 266 273 10 Idaho......................... 94 104 133 142 154 49 Illinois...................... 138 164 217 229 252 14 Indiana....................... 102 116 156 171 189 42 Iowa.......................... 103 113 149 167 181 44 Kansas........................ 118 137 179 195 212 31 Kentucky...................... 102 122 162 181 199 36 Louisiana..................... 120 131 187 200 225 28 Maine......................... 111 133 193 208 228 24 Maryland...................... 183 217 334 360 367 4 Massachusetts................. 207 237 331 364 400 2 Michigan...................... 125 145 190 201 218 29 Minnesota..................... 151 172 223 240 259 12 Mississippi................... 84 94 126 144 145 51 Missouri...................... 129 148 195 209 227 25 Montana....................... 104 116 155 181 196 40 Nebraska...................... 116 134 170 185 209 33 Nevada........................ 114 129 173 175 168 47 New Hampshire................. 140 162 207 227 240 19 New Jersey.................... 146 174 243 267 291 8 New Mexico.................... 113 130 184 206 218 30 New York...................... 236 258 318 339 369 3 North Carolina................ 111 132 185 209 225 27 North Dakota.................. 96 106 168 184 211 32 Ohio.......................... 133 147 199 213 233 21 Oklahoma...................... 103 113 149 160 168 46 Oregon........................ 144 171 215 233 242 17 Pennsylvania.................. 152 169 234 256 287 9 Rhode Island.................. 160 194 248 277 305 7 South Carolina................ 93 114 161 177 196 38 South Dakota.................. 81 90 143 154 178 45 Tennesssee.................... 119 139 189 210 233 22 Texas......................... 117 135 174 188 196 39 Utah.......................... 138 155 185 200 205 35 Vermont....................... 187 207 268 288 306 6 Virginia...................... 125 149 214 233 240 18 Washington.................... 149 168 223 241 251 15 West Virginia................. 104 124 171 183 207 34 Wisconsin..................... 120 137 188 207 226 26 Wyoming....................... 101 108 140 156 160 48 ----------------------------------------- United States \1\....... 148 169 220 237 252 ..... ------------------------------------------------------------------------ \1\ Excludes counts of physicians in U.S. possessions and with unknown addresses. Source: American Medical Association (1996). TABLE C-22.--FEDERAL AND NON-FEDERAL PHYSICIANS FOR TOTAL AND OFFICE-BASED ACTIVITY BY SPECIALTY 1980, 1990, 1994 ---------------------------------------------------------------------------------------------------------------- Federal and non-Federal physicians ----------------------------------------------------------- 1980 1990 1994 Specialty ----------------------------------------------------------- Office Office Office Total based Total based Total based ---------------------------------------------------------------------------------------------------------------- Allergy immunology.................................. 1,518 1,371 3,388 2,453 3,729 2,726 Anesthesiology...................................... 15,958 11,338 25,981 17,803 31,816 21,962 Cardiovascular diseases............................. 9,823 6,729 15,862 10,680 18,437 12,917 Child psychiatry.................................... 3,217 1,961 4,343 2,615 5,212 3,261 Dermatology......................................... 5,660 4,378 7,557 6,006 8,353 6,709 Diagnostic radiology................................ 7,048 4,191 15,412 9,815 19,175 12,079 Emergency medicine.................................. 5,699 3,362 14,243 8,420 17,744 10,604 Family practice..................................... 27,530 18,378 47,639 37,476 54,829 42,162 Gastroenterology.................................... 4,046 2,737 7,493 5,200 9,087 6,707 General practice.................................... 32,519 29,642 22,841 20,517 18,454 16,048 General surgery..................................... 34,034 22,426 38,376 24,520 37,902 24,209 Internal medicine................................... 71,531 40,617 98,349 57,950 111,427 67,897 Neurology........................................... 5,685 3,253 9,237 5,595 10,921 7,131 Neurological surgery................................ 3,341 2,468 4,358 3,092 4,710 3,419 Obstetrics/gynecology............................... 26,305 19,513 33,697 25,485 36,649 28,211 Ophthalmology....................................... 12,974 10,603 16,073 13,068 17,144 14,297 Orthopedic surgery.................................. 13,996 10,728 19,138 14,199 21,533 16,580 Otolaryngology...................................... 6,553 5,266 8,138 6,367 8,785 6,856 Pathology \1\....................................... 13,642 6,081 16,584 7,494 18,253 8,963 Pediatrics \2\...................................... 29,462 18,210 41,899 27,073 49,357 32,152 Physical med./rehab................................. 2,146 1,014 4,105 2,183 5,224 3,025 Plastic surgery..................................... 2,980 2,438 4,590 3,835 5,206 4,313 Psychiatry.......................................... 27,481 16,004 35,163 20,146 37,702 22,551 Pulmonary diseases.................................. 3,715 2,048 6,080 3,662 7,189 4,631 Radiology........................................... 11,653 7,802 8,492 6,060 7,932 5,885 Radiation oncology.................................. 1,581 1,027 2,821 1,968 3,493 2,450 Urological surgery.................................. 7,743 6,228 9,372 7,398 9,727 7,779 Other specialty..................................... 5,810 2,418 7,254 2,656 7,643 3,323 Other surgical specialties \3\...................... 2,852 2,261 2,945 2,389 3,273 2,459 Other remaining specialties \4\..................... 6,071 2,549 7,822 3,316 8,354 3,706 Unspecified......................................... 12,289 4,959 8,058 1,554 6,208 2,032 Not classified...................................... 20,629 ........ 12,678 ........ 14,283 ........ Other categories \5\................................ 32,134 ........ 55,433 ........ 64,663 ........ Total physicians................................ 467,679 272,000 615,421 360,995 684,414 407,044 ---------------------------------------------------------------------------------------------------------------- \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 1994 are as of January 1. Data for 1980 are as of December 31. Source: American Medical Association. Estimates of health insurance coverage in 1994 are based on analysis of the March 1995 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 1995 CPS reflects respondents' recollections of coverage during all of 1994. \2\ --------------------------------------------------------------------------- \2\ 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. The March 1995 CPS attempted to resolve this controversy by asking about health insurance coverage during the last week, as well as during the last year. Results from these new questions are still being reviewed. --------------------------------------------------------------------------- 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 1994, young adults ages 18 to 24 were the least likely to have health insurance. While 52 percent of this group were covered under an employment-based plan, over one-fourth (27 percent) had no health insurance. These young adults comprised 10 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, 97 percent were covered by Medicare or Medicaid, and 1 percent were uninsured. The remainder of this section focuses on the population under age 65. TABLE C-23.--MEDICAL SCHOOL GRADUATES, FIRST-YEAR RESIDENTS AND TOTAL RESIDENTS, 1965-94 ------------------------------------------------------------------------ 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 ------------------------------------------------------------------------ \1\ Not available. Source: American Medical Association (various years). TABLE C-24.--INTERNATIONAL MEDICAL GRADUATE RESIDENTS BY LOCATION OF EDUCATION AND CITIZENSHIP, SELECTED YEARS 1971-94 ------------------------------------------------------------------------ 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 \1\ 14,06 9 1993........................ 22,706 24 5,056 17,650 1994........................ 23,499 24 4,285 19,214 ------------------------------------------------------------------------ \1\ Includes 6,192 permanent resident aliens. Source: American Medical Association (1986 and various years). TABLE C-25.--HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND AGE, 1994 ---------------------------------------------------------------------------------------------------------------- Type of insurance \1\ Population ------------------------------------------------------------- Age (in Employment Medicare or Private millions) based \2\ Medicaid \3\ nongroup Military \3\ Uninsured (percent) (percent) (percent) (percent) (percent) ---------------------------------------------------------------------------------------------------------------- Under 5............................... 20.3 57.0 30.3 3.8 2.3 14.0 5-17.................................. 50.2 64.2 20.0 5.0 2.2 14.3 18-24................................. 25.2 52.3 12.8 10.5 3.3 26.7 25-34................................. 41.4 65.3 9.5 4.8 1.5 22.0 35-54................................. 73.0 72.8 7.3 6.0 3.0 14.7 55-59................................. 10.8 68.4 9.5 9.2 6.3 13.7 60-64................................. 9.9 61.4 14.8 12.5 7.8 14.1 65+................................... 31.3 35.4 96.6 32.6 5.0 0.9 Total........................... 262.1 61.7 23.4 9.4 3.2 15.2 ---------------------------------------------------------------------------------------------------------------- \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 1995 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 1994 whites were most likely to have health insurance (87 percent) while Hispanics were least likely (65 percent). Hispanics comprised 11 percent of the under 65 population, but were 23 percent of the uninsured population; comparable numbers for blacks were 13 percent and 16 percent, respectively. The rate of employment-based health coverage was highest among whites (72 percent) and the rate of Medicaid/ Medicare coverage was highest for blacks (29 percent). \3\ --------------------------------------------------------------------------- \3\ Medicaid covered 12 percent of the nonelderly population and Medicare covered 2 percent. About 27 percent of blacks had Medicaid coverage. TABLE C-26.--HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND DEMOGRAPHIC CHARACTERISTICS FOR PEOPLE UNDER AGE 65, 1994 ---------------------------------------------------------------------------------------------------------------- Type of insurance \1\ -------------------------------------------- Population Medicaid (in Employment or Uninsured millions) based \2\ Medicare Other \3\ (percent) (percent) (percent) ---------------------------------------------------------------------------------------------------------------- Race/ethnicity: White.............................................. 166.1 72.3 9.0 10.0 13.3 Black.............................................. 30.5 49.9 28.9 6.8 21.0 Hispanic........................................... 26.1 40.6 23.0 4.6 35.3 Other.............................................. 8.2 59.3 16.4 9.2 21.1 Family type: Female-headed with children........................ 29.1 36.3 44.5 6.5 19.0 Male- or two-parent-headed w/children.............. 115.2 72.9 10.0 7.2 14.5 No children........................................ 86.5 64.9 7.7 12.1 19.8 Region: Northeast.......................................... 44.5 67.9 13.1 7.4 15.1 Midwest............................................ 54.1 71.2 12.5 8.8 12.2 South.............................................. 81.0 62.8 13.6 9.7 19.4 West............................................... 51.2 60.6 14.7 9.2 20.3 Poverty level: <1.0 of poverty.................................... 34.9 15.0 49.5 9.1 31.8 1.0-1.49 of poverty................................ 20.9 38.1 24.8 10.8 32.9 1.5-1.99 of poverty................................ 21.6 55.6 13.5 10.3 26.3 2.0+ of poverty.................................... 153.4 81.8 3.8 8.5 10.3 -------------------------------------------------------- Total............................................ 230.8 65.3 13.5 9.0 17.1 ---------------------------------------------------------------------------------------------------------------- \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. Source: Congressional Research Service analysis of data from the March 1995 Current Population Survey. 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 36 percent of female-headed families, while coverage came from Medicaid/Medicare for 10 percent of male- present families compared to 44 percent of female-headed families. People living in the Midwest were more likely to have insurance (88 percent), than people in the Northeast (85 percent), South (81 percent), and West (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. Among individuals with incomes at least two times the poverty level, 90 percent had health insurance compared to 68 percent of the poor (i.e., those with incomes less than one times the poverty level). The poor accounted for 15 percent of the under 65 population, but comprised 28 percent of the uninsured. Only 15 percent of the poor received health coverage through employment, while 50 percent had either Medicaid or Medicare. Over 80 percent of people with incomes at least two times the poverty level were covered through an employer, and 4 percent had Medicaid/Medicare. 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 1994, 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), 92 percent were insured compared to 67 percent in small firms (under 10 employees). People in small firms accounted for 15 percent of the under 65 population but 29 percent of the uninsured. Insurance coverage varied according to industry as well. Agriculture, personal services, and construction 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, 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 employment (78 percent); their dependents had comparable levels of coverage. Workers with part-time, part- year employment had an insured rate of 67 percent. Workers who worked less than full time, full year and their dependents comprised 21 percent of the population, but 33 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 1994--age, race, poverty level, region, firm size, and labor force ties. One-fourth (25 percent) of the uninsured were under age 18, and 56 percent were white. A large proportion (40 percent) had incomes two or more times the poverty level, while 28 percent were poor. Forty percent of the uninsured lived in the South, and 29 percent worked or were dependents of workers in small firms (one to nine employees). Half were full-time, full-year workers or their dependents, 33 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, 1994 ---------------------------------------------------------------------------------------------------------------- Type of insurance \2\ ------------------------------------------- Population From (in From own other's Other \4\ Uninsured millions) job \3\ job \3\ (percent) (percent) (percent) (percent) ---------------------------------------------------------------------------------------------------------------- Firm size: \5\ Under 10.............................................. 34.4 19.3 19.8 30.3 33.2 10-24................................................. 16.3 27.6 26.7 21.1 27.7 25-99................................................. 25.3 35.8 32.7 16.1 19.4 100-499............................................... 29.6 40.0 38.9 12.6 12.7 500-999............................................... 12.0 43.1 40.0 10.6 10.2 1,000+................................................ 84.6 42.7 42.5 11.5 8.2 Industry: \5\ Agriculture........................................... 5.7 16.0 17.2 33.8 34.9 Mining................................................ 1.5 35.6 49.7 8.3 9.9 Construction.......................................... 13.9 25.1 27.7 20.1 30.2 Durable goods......................................... 23.0 40.2 44.5 8.8 10.1 Nondurable goods...................................... 16.4 40.1 40.0 11.5 12.6 Transportation........................................ 15.9 39.7 42.0 10.7 11.9 Wholesale trade....................................... 8.5 37.8 38.3 13.8 13.6 Retail trade.......................................... 27.0 29.1 26.1 22.7 25.7 Finance/insurance..................................... 12.4 42.9 38.4 12.6 9.8 Business services..................................... 11.4 27.9 25.1 23.6 26.9 Personal services..................................... 5.9 21.5 19.1 30.6 32.9 Entertainment......................................... 2.6 32.3 28.2 21.2 23.2 Professional serv..................................... 44.0 42.1 36.8 14.8 10.6 Public admin.......................................... 13.9 43.3 48.1 12.5 3.8 Labor force attachment workers: Full time, full year.................................. 76.5 78.5 1.1 9.0 14.4 Part time, full year.................................. 6.5 41.2 6.4 25.5 30.4 Full time, part year.................................. 16.5 49.3 3.6 20.9 30.0 Part time, part year.................................. 7.3 25.8 8.2 37.0 32.7 Dependents: \1\ Full time, full year.................................. 76.5 0.6 78.6 13.9 11.5 Part time, full year.................................. 3.9 0.7 52.3 29.9 21.4 Full time, part year.................................. 11.3 0.3 52.7 36.9 18.2 Part time, part year.................................. 3.6 0.4 30.9 54.9 19.3 Not in labor force...................................... 28.7 \6\ 9.8 \6\ 10.4 61.0 23.3 ------------------------------------------------------- Total............................................. 230.8 33.0 32.4 21.7 17.1 ---------------------------------------------------------------------------------------------------------------- \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 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 1995 Current Population Survey. CHART C-3. CHARACTERISTICS OF THE UNINSURED POPULATION UNDER AGE 65, 1994 <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT> Note._Totals may not sum to 100 percent due to rounding. Source: Congressional Research Service analysis of data from the March 1995 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. \4\ --------------------------------------------------------------------------- \4\ 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 towards 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, 1979-94 \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 \5\............................................ 133,074 68.6 17,031 8.8 32,631 16.8 28,451 14.7 197,104 100.0 1981 \5\............................................ 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 \6\............................................ 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 -------------------------------------------------------------------------------------------------------------------------------------------------------- \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, veteran's coverage, or military health care. \5\ Data not available for 1980 because the survey omitted some health insurance questions. \6\ 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 1995 Current Population Surveys. 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. In 1994, the percent covered was about the same as in 1993 (83 percent), while the percent covered under government programs declined slightly. 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 1994. 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). 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 1979-94 period, the percent with Medicaid or Medicare increased by about 5 percentage points, the percent with other types of coverage declined by about 3 percentage points, and the percent uninsured increased by approximately 6 percentage points. UNCOMPENSATED CARE COSTS IN PPS HOSPITALS, 1980-94 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. After 1992, this trend leveled off, with uncompensated care rising at 6.1 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 have grown more rapidly, although they still covered less than 20 percent of uncompensated care in 1994. In that year, uncompensated care losses--that is, costs net of government subsidies--totaled $13.5 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 that 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 about 6 percent of total expenses, while uncompensated care losses have stayed at just under 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 large urban areas (metropolitan areas with populations of 1 million or greater) had uncompensated care costs equal to 6.2 percent of their total expenses in 1994, compared with 5.4 percent for other urban areas and 5.1 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 were about the same as for other hospitals. 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 1994 devoted 17.6 percent of their resources to patients who could not or would not pay, and sustained losses on these patients equal to 8.0 percent of their total costs. Other hospitals sustained much smaller losses, and there were no major differences by teaching status. Hospitals that receive Medicare disproportionate share payments (see the discussion in appendix D) tend to sustain greater losses on uncompensated care, and urban government hospitals also devote a greater proportion of their resources to this care. Proprietary hospitals provide somewhat less uncompensated care than voluntary hospitals. TABLE C-29.--COMMUNITY HOSPITAL UNCOMPENSATED CARE COSTS AND GOVERNMENT OPERATING SUBSIDIES, SELECTED YEARS 1980-92 -------------------------------------------------------------------------------------------------------------------------------------------------------- Amount (billions) Average annual percent change ----------------------------------------------------------------------------------------------- 1980 1986 1992 1993 1994 1980-86 1986-92 1992-94 -------------------------------------------------------------------------------------------------------------------------------------------------------- Uncompensated care costs before government subsidies.... $3.9 $8.9 $14.9 $15.9 $16.8 14.7 8.9 6.1 Government operating subsidies \1\...................... 1.1 2.0 2.8 3.1 3.2 10.5 6.0 7.1 Uncompensated care costs net of government subsidies.... 2.8 6.9 12.1 12.8 13.5 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 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ 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. CHART C-4. UNCOMPENSATED CARE AS A PERCENTAGE OF TOTAL COMMUNITY HOSPITAL EXPENSES, 1980-94 <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT> 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. TABLE C-30.--COMMUNITY HOSPITAL UNCOMPENSATED CARE COSTS AS A PROPORTION OF TOTAL COSTS, BY HOSPITAL GROUP, 1994 [In percent] ------------------------------------------------------------------------ Uncompensated care Uncompensated care costs, before costs, net of Hospital group government government subsidies subsidies ------------------------------------------------------------------------ Large urban..................... 6.2 4.8 Other urban..................... 5.4 4.7 Rural........................... 5.1 4.7 Major teaching, public.......... 17.6 8.0 Major teaching, nonpublic....... 5.1 4.7 Other teaching.................. 4.7 4.6 Nonteaching..................... 4.8 4.5 Disproportionate share large urban.......................... 7.7 5.6 Disproportionate share other urban.......................... 6.1 5.1 Disproportionate share rural.... 6.0 5.7 Nondisproportionate share....... 4.0 3.9 Voluntary....................... 4.6 4.5 Proprietary..................... 4.0 4.0 Urban government................ 14.2 6.7 Rural government................ 5.9 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 1993. 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 1993, the overall mean percent of GDP devoted to health expenditures had increased to 8.3 percent while U.S. health spending as a share of GDP had increased to 14.1 percent, some 70 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 43.9 in the United States to over 90 in Luxembourg and Norway. The OECD average was 75.4 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 INSURANCE SCHEME, FOR SELECTED CALENDAR YEARS 1970-93 -------------------------------------------------------------------------------------------------------------------------------------------------------- Year Per Country ----------------------------------------------------------------------------- capita Percent 1970 1980 1985 1900 1991 1992 1993 1993 public -------------------------------------------------------------------------------------------------------------------------------------------------------- Australia............................................ 5.7 7.3 7.7 8.2 8.5 8.8 8.5 $1,493 67.7 Austria.............................................. 5.4 7.9 8.1 8.4 8.6 8.8 9.3 1,777 66.2 Belgium.............................................. 4.1 6.6 7.4 7.6 8.1 8.2 8.3 1,601 88.9 Canada............................................... 7.1 7.4 8.5 9.4 10.0 10.3 10.2 1,971 71.9 Denmark.............................................. 6.1 6.8 6.3 6.3 6.6 6.5 6.7 1,296 82.6 Finland.............................................. 5.7 6.5 7.3 8.0 9.1 9.4 8.8 1,363 79.3 France............................................... 5.8 7.6 8.5 8.9 9.1 9.4 9.8 1,835 74.4 Germany.............................................. 5.9 8.4 8.7 8.3 8.4 8.7 8.6 1,815 70.2 Greece............................................... 4.0 4.3 4.9 5.3 5.3 5.4 5.7 500 75.8 Iceland.............................................. 5.2 6.4 7.0 8.2 8.4 8.5 8.3 1,564 83.9 Ireland.............................................. 5.6 9.2 8.2 7.0 7.4 7.1 6.7 922 76.7 Italy................................................ 5.2 6.9 7.0 8.1 8.4 8.5 8.5 1,523 73.1 Japan................................................ 4.6 6.6 6.5 6.6 6.7 6.9 7.3 1,495 71.8 Luxembourg........................................... 4.1 6.8 6.8 7.2 7.3 7.4 6.9 1,993 91.0 Netherlands.......................................... 6.0 8.0 8.0 8.2 8.4 8.6 8.7 1,531 77.7 Norway............................................... 5.0 6.6 6.4 7.5 8.0 8.3 8.2 1,592 93.3 New Zealand.......................................... 5.2 7.2 6.5 7.3 7.7 7.7 7.7 1,179 77.2 Portugal............................................. 3.1 5.9 7.0 5.4 5.9 6.0 7.3 866 55.5 Spain................................................ 3.7 5.6 5.7 6.6 6.5 7.0 7.3 972 78.6 Sweden............................................... 7.2 9.4 8.9 8.6 8.5 7.9 7.5 1,266 82.9 Switzerland.......................................... 5.2 7.3 8.1 8.4 9.0 9.3 9.9 2,283 69.0 Turkey............................................... 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