Department of Health and Human Servces 

OFFICE OF 

INSPECTOR GENERAL 

INTERSTATE FLOW OF 

MEDICARE FUNDS 

.. SERV1(' 

." .2 

1t.,,,:W 

Richard P. Kusserow 

INSPECfOR GENERAL 

OEI-12-89-89220 
EXECUTIV SU" MMAR 

Introduction 

This inspection details on a state-by-state basis, how the Medicare program (1) obtains 

revenue "contributions" through various forms of taxation and insurance premiums 

and (2) makes "disbursements" to purchase health care servces. This inspection 

collects publicly available 1985 data on each state s contributions to the Medicare trust 

funds and concurrent disbursement for servces to Medicare beneficiaries, calculates the net flow of Medicare funds into or out of each state, and tests possible reasons for this flow. 

Results 

On average, Part A and B withdrew 1.89 percent of gross state product in Medicare 

taxes and premiums, while returning 1.76 percent in provider and practitioner 

reimbursement. However, this ratio varied from state to state. For example, Florida and Pennsylvania each enjoyed an annual "net grain" of over $1 bilion. Conversely, New York and Texas each suffered a "net loss" of over $1 bilion. Overall, 16 states 

(or other jurisdictions) received $4.2 bilion more in Medicare disbursements than they paid in revenues. Thirty-six states contributed $9.4 bilion more into Medicare 

revenues that they received in disbursements. The difference accumulated in the 

Medicare trust funds. 

When initiating this inspection, the Office of Inspector General hypothesized that 

Medicare s fied deductibles and co-payments would transfer money from states with 

low average incomes and health care costs to those with high average incomes and 

health care costs. Contrary to this expectation, multivariate analysis establishes that a 

state s contributions to Medicare correlate with its economic strength. Disbursements 

relate to the state s proportion of elderly residents, availability of health care 

resources, and general health status. 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .......................... . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . .. . . . . . . . . . . .. . . . . . . . . . . .. .. . . . . . . . . . . .. . . . . . . . . .. . . . . . . . . . . . . . . .. . . . . . . . . . . .. :.... . . .. . . . . .. . . . .. . . .. 

TABLE OF CON1"' ENTS 

EXECUTIVE SUMMARY 

TABLE OF CONTENTS........................................... 

INRODUCTION. . . 

Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Medicare. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Part A contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Part B contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Medicare administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Medicare finances 

Methodology 

Data sources


FINDINGS 

Interstate flow of Medicare funds. . . . . . . . . . . . . 

Univariate analysis of possible causes 

Beneficiaries 

Population. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Employment


Gross State Product. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
 Multivariate analysis of possible causes. . . . . . . . . . . . . . . . . . . . . . . . . .. 

Part A contributions: Payroll tax 

Part A contributions: General revenue. . . . 

Part A disbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Part B contributions: Beneficiary premiums 

Part B contributions: General revenue 

Part B disbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

REFERENCES 

Appendix 1: Old age, survivors, disabilty health insurance contributions by 

state, 1985 .. . . . . . . . . 

Appendix 2: General revenue contributions by state, 1985 . . . . . . . . . . 

Appendix 3: Part B premium contributions by state, 1985 ............. 

Appendix 4: Total Part A contributions and disbursements by state, 1985 

Appendix 5: Total Part B contributions and disbursements by state, 1985 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

. . . .

Appendix 6: Net Part A and Part B contributions and disbursements by state 

1985 .................................................... 

Appendix 7: Ratio of Part A and Part B contributions to disbursements by 

state, 1985 .. . . . . 

Appendix 8: Part A and Part B contributions and disbursements per beneficiary 

by state, 1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Appendix 9: Part A and Part B contributions and disbursements per population 

by state, 1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Appendix 10: Part A and Part B contributions and disbursements per employee 

by state, 1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Appendix 11: Part A and Part B contributions and disbursements per gross state product ($ milion) by state, 1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . -

Appendix 12: Population, employees, and gross state product per beneficiary by 

state, 1985 .. . . . . . . . 

Appendix 13: Payroll tax and Part A general revenue contribution per 

beneficiary, population, employees, and gross state product by state 

1985 ....................................................


Appendix 14: Premiums and Part B general revenue contribution per 

beneficiary, population, employees, and gross state product by state 

1985 .................................................... 

VII 
INTRODUCI' ION


Purose 

This inspection originated with the July 1, 1988 enactment of the Medicare 

Catastrophic Coverage Act of 1988, P.L. 100-360. Among other provisions, this 

legislation restricted the inpatient deductible to the first hospitalization of the year 

removed day limits on hospitalization, eliminated co-insurance on inpatient servces 

and limited Part B out-of-pocket expenses. It financed these servces with an income 

related premium on Medicare beneficiaries. 

The Office of Inspector General hypothesized that certain states have higher than 

average (1) resident incomes and (2) health care costs (e. , due to higher local costs 

broader array of health services available, and higher intensity of servce). Other 

states, without major medical centers, have lower than average incomes and health 

care costs. If a health insurance program (like Medicare) has fixed dollar deductibles 

co-payments, and limits; residents of higher cost states would reach them more often 

and more quickly than residents of lower cost states. High cost states would therefore 

receive a greater proportion of the insurance program s benefits. 

At the same time, financing such a program with equal sized premiums from all 

beneficiaries exacts a disproportionate share of revenues from those beneficiaries with 

lower average incomes. A flat tax on payroll also regressively burdens residents of 

states with lower average incomes. Only the portion financed from general revenue 

(mainly the income tax) progressively spares these states. Medicare could therefore 

have the net effect of transferring funds from lower income states (which pay a larger 

share of the taxes and premiums) to higher income states (which generate large health 

care expenses). The Office of Inspector .General (OIG) originally initiated this 

inspection to test this hypothesis and to determine how the catastrophic coverage 

legislation s addition of a income based premium on the elderly would affect this flow 

of Medicare funds between states. Although P.L. 101-234, the Medicare Catastrophic 

Coverage Repeal Act of 1989, voided P.L. 100-360' s coverage on December 13, 1989 the OIG elected to complete its evaluation of the first question. 

This inspection makes no value judgment as to the desirabilty or undesirability of 

transferring funds between states. Most federal programs necessarily (and 

appropriately) draw revenue from the nation as a whole and principally disburse it in 

a limited number of localities. For programs like flood control or disaster relief, the 

flow of funds intentionally spreads a specific event s costs over the economic capacity 

of the rest of the country. For programs like defense and agriculture, all states pay taxes but procurement historically concentrates in certain regions. In social welfare 

programs such as Social Security and Medicare, all states both draw revenue and 

receive benefits, but in largely unrelated amounts. 
Medicare 

On July 1, 1966, Medicare commenced its health insurance of the elderly. On July 1 1973, it expanded coverage to the long-term disabled. Congress intended this program as alternative coverage for people who usually lacked access to health insurance, which is usually available through an employer. T-b-srois programs is nationwide: eligibilty for basic benefits is the same, regardless of the state in which the beneficiary resides. 

Medicare is the common name for title XVIII of the Social Security Act, Health Insurance for the Aged and Disabled. It primarily consists of two major programs. 

Part A€ Hospital Insurance pays for inpatient hospital care and other related 

care. 

Part B Supplementary Medical Insurance pays for physicians' servces 

outpatient hospital services, durable medical equipment, home health 

care, and other medical expenss. 

Medicare collects its revenue at the national level, aggregating its "contributions" from 

all states. It then "disburses" this money throughout the country from centrally 

administered trust funds. Accordingly, its only actuarial concern is that total program income matches total program outlays. Medicare s financial structure does not 

distinguish between the specific sources of funds or their ultimate geographic 

destination. 

Par A contributions 

Payroll taxes financed 91.3 percent of 

the Part A program in 1985. The taxes 

levied on 115 milion current workers 

paid for servces to 31.1 milion 

beneficiaries. The Part A program also 

maintained a trust fund of about onehalf year s disbursements to provide a 

small reserve against fluctuations in 

program experience. In 1985, about 

28. 2 milion people age 65 and over 

and about 2.9 milion disabled people 

under age 65 were eligible for benefits 

under Part A. 

In addition, a small proportion of Part 

A financing comes from the Railroad 

Retirement Account for railroad 

Table 1: Operations of the hospital insurance 

fund, FY 1985 

Source $ millon 

Payroll tax


Railroad retirement transfers


Uninsured persons reimbursement


Voluntary enrollee premiums


Miltary wage credits


Investment interest 

Total revenue 

Total disbursements 

Net change in HI fund 

46490 

371 

766 

3182 

50933 

48654 

2279 

Source: Board of trustees of the federal hospital 

insurance trust fund. The 1988 annual report of 

the board of trustees of the federal hospital 

insurance trust fund. Washington, DC: U. 

Government Printing Office, 1988: 35. 

workers, general revenue for deemed military service wage credits and certain 
uninsured persons, and premiums paid by voluntary enrollees. Interest from the trust 

fund provides the balance of Part A revenue. Because states basically contribute to 

these sources in proportion to unrestricted federal revenue, the balance of this 

inspection treats them as general revenue. 

On a long-range actuarial basis, adequate financing of the Part A program depends 

upon comparison of the actual tax rates specified by law with the corresponding 

program costs. The Part A trustees (the Secretaries of the Treasury, Labor, and Health & Human Servces; and two public members) estimate the percentage of 

taxable payroll needed depending upon forecasts of the status of the economy, labor force participation, and other factors that take into account different assumptions about their performance, ranging from optimistic to pessimistic. 

Congress has adjusted the tax rate several times since the program s inception in order 

to keep pace with increased outlays. The rate in 1984 was 1.3 percent each, for 

employers and employees; and 2.6 percent for self-employed individuals. The 

comparable rates in 1985 were 1.35 percent and 2.7 percent. In 1986, they became 1.45 percent and 2.9 percent. 

In addition, the m mum amount of wages subject to taxation has been increased at 

various times in order to broaden the tax base. In the 1980s, this increase was 

scheduled to occur automatically on a yearly basis. In 1984, taxes were paid on up to $37 800 of earnings; in 1985, it was $39 600; and in 1986, $42 000. 

Currently, over four covered workers support each Part A beneficiary, but this ratio will decline rapidly early in the next century. By the middle of that century, only about two covered workers will support each enrollee. The anticipated reserves and 

financing of the Part A program cannot offset this demographic change, except by using the most optimistic assumptions. The trustees project that the trust fund' 

exhaustion even before the .major demographic shift. Efforts to improve the efficiency 

and reduce the costs of the health care delivery system may moderate this projection. 

The Prospective Payment System for hospitals comprises one such cost containment 

efforts. 

Part B contnoutions 

The Part B program is financed on the actuarial principle that its trust fund should 

always be somewhat greater than the claims that have been incurred by beneficiaries 

but not yet paid. Part B financing comes from three principal sources: Premiums paid 

by or on behalf of Part B enrollees, general revenue, and interest from investment of 

the trust fund. 

Until 1973 , the premium covered half the benefit and administration costs of the Part 

B plus a contingency reserve. General revenue financed the other half of Part B costs. 

Beginning in July 1973, Congress limited premium increases to the percentage increase 

in monthly social security cash benefits and changed the premium adjustment period. 
As a result, premiums steadily 

contributed less to Part B, with 72. 

percent coming from general revenue in 

1985. 

The Social Security Trust Funds hold all 

of the income not currently needed to 

pay benefits and related expenses. The 

assets of the funds may not be used for 

any other purposes. They are invested 

in interest-bearing obligations of the 

S. government. 

Medicare admistration


The federal government principally 

administers the Medicare program 

Table 2: Operations of supplemental medical 

insurance trust fund, CY 1985 

Source $ millon 

Enrollee premiums 5613 

General revenue 18250 

Investment interest 1243 

Total revenue 25106 

Disbursements 23880 

Change 1226 

Source: Board of trustees of the federal 

supplementary medical insurance trust fund. The 

1988 annual report of the board of trustees of the 

federal supplementary medical insurance trust 

fund. Washington, DC: U.S. Government Printing 

Office, 1988: 26. 

through three agencies: the Social Security Administration (SSA) and the Health Care 

Financing Administration (HCF A) in the Department of Health and Human Services 

(HHS), and the Internal Revenue Service (IRS) in the Department of the Treasury. Within HHS, administrative costs for the Part A program are less than 2 percent of 

total disbursements. For Part B, they are about 3 percent. 

The SSA is responsible for enrollng people into the Medicare program. This usually 

occurs at the same time they apply for retirement benefits, or two years after receipt 

of disability benefits. Nationwide, SSA is the primary public contact point for 

information on the program, biling problems, and provider participation. 

The HCF A determines the nature and extent of reimbursement for all covered 

servces. Through contractors, it processes all provider claims for reimbursement. 

has established mechanisms to monitor the quality of care provided. 

The IRS collects the Medicare taxes from employers and personal income tax filings 

and deposits this money in the Trust Funds. The Secretary of the Treasury is the 

managing trustee of the Part A and Part B trust funds, and is responsible for actually 

executing all Medicare disbursements to states in the form of payments to carriers (for 

Part A claims) and fiscal intermediaries (for Part B claims). 

Medicare fiances


Both Part A and Part B are intended to be actuarially sound. To accomplish this 

objective, the accrual of funds in each trust fund should "in the long run" balance its 

disbursements of funds. This calculation of the necessary levels of accruals and 

disbursements derives from actuarial calculations of national economic, demographic 

and health care trends. 
For Part A, fiscal soundness is based upon the ratio of the amount of payroll tax 

dollars coming in as contributions from covered workers to the amount of Medicare 

dollars being paid out to beneficiaries through fiscal intermediaries and carriers. This 

ratio changes constantly based on changes in the national and statewide economy, 

population age, health status, and health care utilzation factors. 

Part B depends less upon the ratio of contributors to beneficiaries. Subscribers' fees 

comprise about 25 percent of Part B funding during the study period. The remaining 

75 percent from of general revenue remains subject to the fluctuations discussed 

above. 

Methodology 

The first phase of this inspection collects publicly available data sources. These 

sources include federal government statistics and private data for the year 1985. This 

phase includes a state-by-state calculation of contributions and disbursements to and 

from the Part A and Part B trust funds. This information demonstrates the basic flow 

patterns between states due to Medicare, identifying jurisdictions with net losses and 

net gains. 

The second phase of this inspection adjusts these "crude" amounts by controllng for 

state size. A particular state s large flow of Medicare funds may derive from its being 

a large state, rather than from unique features of the Medicare program. Accordingly, 

this phase divides Part A and Part B contributions, disbursements, and nets by 

beneficiaries, population, employment, and gross state product to obtain ratios for 

comparison. In addition to reducing the impact of large states, this two dimensional 

analysis use the coefficient of variation to identify individual causes that influence the 

flow of Medicare funds. This methodology emphasizes the effect of outlier states that 

most deviate from mean relationships even upon controllng for state size. 

The third phase of this inspection performs multivariate analyses to control for the 

interaction between the single causes identified in phase two as influencing the flow of 

Medicare funds. For example, if state wealth and state health facilities each 

individually affect flow, what effect to they exert together? Wealthier states have 

greater health care resources and facilties, causing intercorrelation of any variables 

selected for their measurement. This pqase s analyses test individual causes for 

significance, eliminates outlying cases, performs a stepwise regression, eliminates postregression outliers, and compares the model's predicted values with actual values to 

analyze the residuals. 

Data sources


The SSA publishes annual statistics about payroll tax collections, both employee and 

self-employed. In 1985, the Part A program received 2. 7 percent of the 14. 1 percent tax for "old age, survivors, and disability health insurance" (OASDHI) contributions. 
The Part A and Part B trustees report essentially the same dollar amount of payroll€

tax revenue. (Appendix 1.) 

Different statistical series vary in their definitions of "outlying" areas. Appropriate comparison therefore requires careful attention to data sources. For OASDHI 

outlying areas include revenue from Puerto Rico, Virgin Islands, Guam, American 

Samoa, sailors, and expatriates. It does not include miltary personnel, who fall into 

the "other" category. The armed forces apparently transfer their $4.7 bilion in payroll 

taxes to Medicare without attributing it to particular states. Indeed, assigning military personnel to states presents a variety of problems for any statistical series. 

Additionally, military personnel receive essentially no Medicare benefits prior to 

leaving the servce. 

The Part A and Part B trustees annually report the amount of general revenue each 

trust fund receives, but do not break the totals down by state. The Tax Foundation 

estimates each state s overall federal tax burden which consists principally of general revenue. Accordingly, this inspection divides total Part A and Part B general revenue by the state s proportion of the overall federal tax burden to estimate its contribution. 

The Tax Foundation does not estimate the federal tax burden on outlying areas or 

other." The Internal Revenue Service reports 1.48 percent of federal revenues derive from outlying areas, international operations, and unallocated receipts. 

Unfortunately, it does not separate these components. Accordingly, this analysis takes this proportion as a reasonable approximation of their federal tax burden. (Appendix 

Every two years, the HCF A tabulates the number of Part B beneficiaries in each state. 

For 1985, this inspection multiplies this number by $186, the premium that year. This total dollar amount closely approximates the actual collections reported by the trustees 

of the Part B fund. (Appendix 3. 

The HCF A's Part B enumeration includes outlying areas, but not "other." The SSA 

annually reports the number of Part A enrollees with a separate category for overseas 

beneficiaries. This inspection therefore uses the SSA data for "other.€

The HCFA also annually aggregates Part A and Part B disbursements by state. €

combines billng information from the different Medicare carriers and fiscal€

intermediaries by state of beneficiary residence. This data contains some preliminary and interim bils that remain subject to slight adjustments at final settlement. These€

marginal changes (closely on the order of 0.001 percent) should not significantly affect 

the state by state totals. (Appendices 4 and 5. 
;\ 

FINDINGS


Interstate flow of Medicae fuds 

This inspection divided the United States into 53 jurisdictions: 50 states, District of 

Columbia, outlying areas, and "other." In 1985 they contributed $75.7 billon to 

Medicare revenues and received $70.5 billon in disbursements. The $5.2 bilion 

difference accumulated in the Medicare trust funds or went to inter-fund borrowing. 

Theoretically, negative transfers out of the trust funds would eventually offset the 

current increases in reserve balances. (Appendix 6. 

Figure 1: States with Medicare net gains 

Sixeen states receive a "net gain" of $4 237 milion more in total Medicare 

disbursements than they made in total Medicare contributions. Florida and 

Pennsylvania each gain over a billon dollars more from Medicare than they pay in 

revenues. Missouri, Mississippi, West Virginia, Alabama, and Arkansas (in descending order) each net over $100 milion from Medicare. Arizona, California, Rhode Island 

Maine, Louisiana, Kentucky, North Dakota, South Dakota, and Iowa gain over $10 millon. 

Thirt-seven jurisdictions suffer a "net loss" of $9,438 millon to Medicare. New York 

and Texas each contribute over a billon dollars more into revenues than they receive 

in disbursements. "Other " New Jersey, Virginia, outlying areas, Connecticut, North

Carolina, Colorado, Minnesota, Georgia, Maryland, Alaska, Utah, Washington, Ohio Indiana, Wisconsin, District of Columbia, Oklahoma, Delaware, and Massachusetts (in order) each lose in excess of $100 millon. Except for Nevada and Kansas, the 
, 

Figure 2: States with Medicare net losses 

remaining states each give over $10 millon net to Medicare. For all 53 jurisdictions the average total net transfer totals $99.0 millon (s 459. , V 464.5). 

Figure : States with Part A net gains As noted in the preceding section 

other" and outlying areas include some 

statistical anomalies. For revenue 

purposes other" encompasses OASDHI 

contribution from active duty miltary 

personnel and revenues not otherwse 

accounted for. However, these sources 

do not receive any Medicare 

disbursements, skewing the apparent net 

loss. Similarly, outlying areas receive 

credit for tax contributions due to 

international transactions and 

unallocated receipts. The accompanying graphics show amounts for outlying areas 

combined together at Puerto Rico s location, southeast of Florida. Amounts for 

other" also appear offshore, but east of Georgia. 

Separate calculation of Part A contributions and disbursements produces a pattern

similar to that of Medicare as a whole. On average, Part A causes a $66.6 millon net 

transfer (s 379. , V 571.3). 

Most states with net gains from Part A also enjoy similar gains for all of Medicare. Part A transfers over $1 bilion to Florida. Pennsylvania, Missouri, Mississippi, West 
Virginia, Alabama, Louisiana, Ilinois 

and Kentucky (in order) each gain over 

$100 milion from Part A. Ilinois 

South Carolina, Tennessee, and Nevada 

each have Part A net gains, despite 

suffering an overall net loss to 

Medicare. 

Conversely, Part A withdraws over $1 

bilion annually from New York and 

Figure 4: States with Part A net losses 

other." Texas, New Jersey, Virginia ff. " 

California, Connecticut, Minnesota 

North Carolina, Colorado, Georgia, Maryland, Alaska, District of Columbia, Utah 

Delaware, Massachusetts, and Michigan (in order) each lose over $100 milion. Only 

California s $433 milion net gain from Part B more than offsets its $358 millon loss to 

Part A for an overall gain from Medicare. 

Figure 5: States with Part B net gains


larger than their Part B net gains.


Texas, outlying areas, New Jersey, 

Ilinois, Virginia, Indiana, Ohio, North 

Carolina, Colorado, Oklahoma 

Connecticut, and Louisiana (in order) 

each suffer a net loss of over $100 

milion to Part B. Missouri, Mississippi 

Alaska, Maine, Louisiana, Kentucky, 

North Dakota, South Dakota, Iowa, and 

Kansas (in order) net more from Part A 

than they relinquish to Part B in net 

losses. 

The smaller Part B program differs even 

more from the overall Medicare net 

distribution that does Part A. It also 

shows higher variance with an average 

net transfer of $33 millon (s 153. , V 

571.3). 

Florida, California, Pennsylvania, and 

New York each enjoy Part B net gains 

of over $100 milion. However, New 

= York, District of Columbia, Oregon, and 

Michigan stil suffer Part A net losses 

Figure 6: States with Part B net losses


The ratio of a state s contributions to disbursements quantifies its net gain or loss 

while controllng for the size of both contributions and disbursements. The average 

state contributes 111.5 percent of its disbursements (s 0. 282, V 31.5). Florida, West 
Figure 7: Ratio of Medicare contributions over Virginia, and Pennsylvania have ratios of disbursements less then 0. , demonstrating their net 

gains to be systematic and not merely a 

function of their large size. Conversely, 

Alaska, outlying areas, and "other 

contribute more than three times as 

much into Medicare revenue than they 

receive in disbursements. For Alaska 

this ratio represents a real transfer of 

finds to outside the state. The latter JJ two jurisdictions reflect data collection 

anomalies. Since "other" receives no 

disbursements, it has an infinite ratio (truncated to six in the figure). (Appendix 7. 

Uniarate analysis of possible causes Table 3: Coefficient of variation (V per 

beneficiary, population, employee, and gross 

Superfcial inspection of the interstate state product 

flow of Medicare funds suggests the Per: Benefi- Popul- Empl- Gross need to control for state size. For ciary ation oyee state 

example, New York, New Jersey, and product


Pennsylvania should possess similar Par A


inventories of health care servces, but Contribution 74. 33.4 30.


have quite different flows of Medicare 27. 

Disbursements 24. 31. 31.0 

funds. In addition, contributions do not 34. 

necessarily relate to disbursements. For Net 364. 1 356.3 367. 

contributions deriving from payrolls 470. 

employment related variables might best 

dependent on general revenue 

population or gross state product may 

Contributions 

34. 

Disbursements 

55. 

28. 

18. 

35. 

21. 

34. 

best measure size. For disbursements 36. 

size may mean the number of Net 234. 146. 162. 

beneficiaries. 188. 

Controllng for beneficiaries, population Total Medicae 

Contributions 66. 26. 24. 

quantify state size. For contributions Par B 

employment, and gross state product 24.4


tests possible causes for the state by Disbursements 24. 31. 30.


state distribution of net gains and losses. 33.


It has the secondary advantage of Net 310. 239.4 248.€

limiting the interstate variance. 299.


HDwever, units of measurement affect


the variance, obscuring comparison of possible causes that have different scales.


The coeffcient of variation (V) better quantifies the relative variation by eliminating 

the units of measurement. It identifies the following relationships having low variation and therefore being likely causes of the interstate flow of Medicare funds. 
BENEFICIAIES€ Part B contributions and total disbursements.€

POPULATION€ Part B contributions. 

EMPLOYMENT€ Part A, Part B, and total contributions. 

GROSS STATE PRODUCT Part A and total contributions. 

These relationships conform to intuitive expectations that disbursements follow 

beneficiaries, while contributions derive from a state s ability to pay. Dividing by these 

measures of size also highlights the outlier states that most diverge from measures 

central tendency. 

Benciri€

Figure 8: Part B contributions per beneficiary The number of beneficiaries in a state€

directly affects both its premium 

contributions to Part B (Pearson r 0. 

P -c 0.0001) and the total disbursements 

to the state (Pearson r 0. , P -c 

0001). Dividing Part B contributions 

by beneficiaries controls for states whose 

populations consist disproportionately of 

the elderly (e. , Florida, Arzona). 

A However, the decreasing fraction of Part 

tiB financed by beneficiary premiums€

weakens any causal linkage. Alaska 

Wyoming, outlying areas, Colorado, and the District of Columbia make the largest 

Part B per beneficiary contributions. In the first four jurisdictions the elderly 

constitute unusually small proportions of their total populations. The District of 

Columbia has a higher per capita income than any state and therefore makes an 

unusually large contribution to general revenue. "Other " Arkansas, West Virginia 

Mississippi, and South Dakota have the lowest Part B contributions per beneficiary. 

Other" has essentially no beneficiaries, while the rural states suffer from low average 

incomes. (Appendix 8). 

Similarly, dividing total Medicare disbursements by beneficiaries identifies the District 

of Columbia, California, Michigan, Ilinois, and Nevada as having high costs per beneficiary. The two former locales have disproportionately comprehensive health 

care facilties. However, no causal characteristics particularly distinguish the latter 

three states. "Other " outlying areas, Utah, Montana, and North Carolina have the 

lowest costs per beneficiary. "Other" has no beneficiaries and therefore no 

disbursements. Utah enjoys a reputation for healthy lifestyles and low morbidity. The 

remaining areas could have either lower cost or lower intensity health servces. 

Population€
, 

Figure 10: Part B contributions per population Figure 9: Medicare disbursements per beneficiary€

Population directly measures a state s size. Its correlates (Pearson r 0. , P -c 0.0001) 

significantly with Part B contributions. This relationship also has the lowest coefficient 

of variation. Dividing Part B contributions by population, Connecticut, New Jersey, 

District of Columbia, Alaska, and Massachusetts have the highest quotient. These 

jurisdictions also enjoy relatively high average incomes. "Other " Utah, Mississippi

Idaho, and South Carolina come in lowest. "Other" scores low because it has no 

beneficiaries and therefore no beneficiary premiums. Mississippi, Idaho, and South 

Carolina have relatively low average incomes. Utah has a low proportion of elderly 

residents; however, so does Alaska. (Appendix 9). 

Employent Figure 11: Medicare contributions per employee 

The number of employees in a state 

indirectly quantifies its economic 

activity. In particular, employment 

significantly correlates with contributions 

(Pearson r 0. , P -c 0.0001). Dividing total Medicare contributions by 

employment identifies the District of


Columbia, Delaware, Alaska, outlying 0 -€

areas, and New York as making higher


than average contributions, especially€

OASDHI and general revenue. These jurisdictions have higher average earnings and 

presumably higher rates of taxation. Mississippi other " South Dakota, Maine, and 

Kentucky make the lowest Medicare contributions per employee. The four states have 

lower average incomes, but "other" includes considerable non-wage income attributed 

for accounting purposes. This revenue should artificially inflate the average income of 

the miltary personnel in this group, suggesting unusually low average incomes among 

the miltary. (Appendix 10). 
Gross State Product 

Figure 12: Medicare contributions per gross state Gross state product parallels the product economic definition of the gross national 

product, but for a single state. It 

directly measures the size of a state 

economy and significantly correlates 

with total Medicare contributions 

(Pearson r 0. , P -( 0.0001). Unlike 

number of employees, it accounts for 

differences in their average earnings and 

includes unearned income. Calculating 

total contributions as a percentage of 

gross state product, outlying areas 

devote 4.2 percent of their total economic activity to paying for Medicare. "Other 

(3.0 percent), Delaware (2.7 percent), Rhode Island (2.2 percent), and New York (2. 

percent) follow with successively lower fractions. These areas have high average incomes, suggesting that Medicare uses relatively progressive methods to raise its 

revenues. Wyoming (1.1 percent), Alaska (1.1 percent), Louisiana (1.4 percent), New 

Mexico (1.4 percent), and the District of Columbia (1.5 percent) contribute the 

smallest proportions of their economies to Medicare. However, Alaska and the 

District of Columbia have the highest per capita personal incomes in the nation. 

Their residents must therefore have atyically light Medicare tax burdens. (Appendix 

11). 

Multiarate analysis of possible causes 

Controllng one measure of state size at 

a time emphasizes the effect of the 

other possible causes of Medicare funds 

flows. For example, controllng for 

population highlights the importance of 

states with above average incomes. 

Measuring the interaction between 

possible causes therefore requires a 

multivariate analysis of contributions 

and disbursements. Also, the previous 

phase emphasizes outliers, whereas a 

multivariate analysis eliminates outliers. 

Part A contrbutions: Payroll 

Table 4: Variables measuring possible causes of 

FICA contributions to Part A 

State ecnomic healh 

Failed businesses per capita 

Employed persons per capita 

Persons receiving public aid 

Unemployment rate 

Lar force€

Per capita persons in the civilan labor force


Proportion of population 18-64 years old


Income€

Disposable income per capita€

Annual pay per capita 

Personal income per capita 

Hourly earnings per capita 

Part A contributions derive principally from OASDHI. Three possible causes appear most likely to affect the size of a state s FICA tax: 
Figure 13: FICA predicted by disposable 

income€

230€

220€

210€

200€

.90€

180€

+1+€ .70€

150€

140€

it +
 13D€

120€

110€

100 +


Per cap1ta 1Jecae Ct thousand) 

FIC n = f(state economic health , labor 

force 3 income). 

If a state has a vigorous economy with low€

unemployment and relatively high wages€

then more dollars from its wage earners€

should go into the Part A trust fund. If €

state has a high proportion of its residents in€

the labor force, it should contribute more 

money to Medicare. Finally, states with high 

average incomes should yield more payroll 

taxes, at least until large numbers of 

residents reach the cap on FICA taxes. 

Ten publicly available variables measure€

these three causes. Correlation coefficients 

and scattergrams identify per capita disposable income, per capita civilian labor force 

members, and unemployment rate as attaining significance levels of p c: 0.05. 

Figure 14: Accuracy of Part A FICA predictions 

1.40€

1.30€

1.20€

1.1.0€

1.00€

110 130€

Predicted€

Scattergrams also eliminate Alaska and the District of Columbia as outliers. Upon€ rescaling without these two outliers, Florida also becomes an outlier. Alaska 

presumably outlies because it consists disproportionately of young people, while 

Florida outlies because it consists disproportionately of the elderly. The District of 

Columbia has higher per capita income than any state except Alaska and Connecticut. 
After removing these thre;e jurisdictions and rescaling again, New York, New Jersey, Connecticut, and Delaware- become outliers. This status apparently derives from the 

commuting patterns of their respective work forces. Employer location, not employee residence, determines what state receives credit for their FICA taxes. All these states 

have a high proportion of residents who commute either into or out of the state to 

work. 

A stepwise regression identifies the strongest explanatory variables. Upon such analysis of the three significant variables against FICA payroll contributions (p .c 

01), only per capita disposable income significantly explains the variance in

OASDHI. A straight regression analysis at the 0. 15 significance level finds that per capita disposable income accounts for 71 percent of the variance among states for 

FICA payroll taxes, a very strong correlation. 

The final phase of this part of the analysis compares the predicted values for FICA 

contributions to the actual FICA contributions. In a perfect predictive model, we would expect all the values to fall on the 45 degree line. Random errors account for 

each state s divergence from the predicted value. The very strong relationship between the predicted values and the actual values shows the model to be both 

precise and valid.€

Part A contrbutions: General revenue 

A smaller proportion of Part A 

contributions come from general 

revenue. A state s ability to contribute 

to general revenue depends largely 

upon its economic vigor. Six variables 

available from public data sources 

quantify this possible cause. 

As with the FICA analysis, correlation 

with scattergrams identifies significant 

variables. Repeated correlation with 

Table 5: Variables measuring possible causes of€

general revenue contributions to Part A€

Average annual pay 

Personal income per capita 

Hourly earnings per capita€

Civilan labor force€

Total employment€

Failed businesses per capita€

Persons receiving public aid per capita€

Source: Horner ER, ed. Almanac of the fift 

states, 1988. 3rd ed. Palo Alto, CA: Information 

Publications, 1988. 

scattergrams and rescaling, eliminates outlier states. 

Stepwise regression selects per capita personal income and annual pay as being 

statistically significant allowing for their mutual predictive interaction. Together they 

explain 93.3 percent of the variance in general revenue contributions to Part A, a very 

good fit. Both these variables related to a state s capabilty to pay into federal general 

revenue. This finding suggests that general revenue contributions to Part A comprise 

a relatively progressive manner of funding. 
Figure 15: Accuracy of Part A general revenue predictions€

+ -I€

.t +€

Predicted 

Part A disburements 

After controllng for state size, Part A 

disbursements should principally depend upon the 

population s physical health, the health care 

resources available in the state, and the age 

distribution of the Medicare population. 

out = f (population s physical health4, health 

care resources , Medicare age distribution 

This model considers 12 variables that measure 

these three possible causes. For physical health€

the Northwestern National Life Insurance 

Company annually publishes computed indices for€

each state s general health, lifestyle, and disease 

severity from various health measures. Assuming 

that a state has a stable population, unhealthy 

young people will become unhealthy elders. 

Table 6: Variables measuring 

possible causes of disbursements€

from Part A€

Population hea


General health index€

Average life span€

Severity of disease index€

General lifestyle index€

Average work time lost to ilness€

Heah cae resurce€

Physicians per capita€

Hospital beds per capita€

Occupation rate of hospital beds€

Short term hospital stays per capita€

Medicae age distribution€

Percent age 65 to 74€

Percent age 75 to 84€

Percent age 85+ 

The relative danger of working in a states major industries, the strength of its laws on 

factory emissions, and other occupational hazards also affect the overall health status 

of its population. Where significant numbers of workers consistently miss work 

because of ilness but stay in the work force, Medicare receives less contributions from 

the state. At the same time, the persons who suffer il health throughout their 
. :j ....,.. :,.. 

Figure 16: Part A disbursements predicted by working years retain diminished health status genera! health index as elders, thus increasing their utilzation of 300 

I + ++€ 200 *t +€ -1 

+-f +€

100 

-:1 .-_u.. Genenl healtll I11ez 

health care services reimbursed through the 

Medicare trust fund. 

According to numerous studies, the 

availability of high intensity health servces 

results in their -increased utilzation.7 This 

trend applies to both necessary servces (e.g. 

a person with a serious ilness might not 

drive fifty miles to have it checked, while a 

person one mile from servce probably will 

seek health care) and to increased requests€

for elective procedures. This variable does 

not change the absolute numerical ratio of 

contributors to beneficiaries, but can affect 

the number and tye of services utilzed by Medicare-eligible persons so as to change

the cost of-ervng beneficiaries in a particular area. 

Additionally, the need for health services 

may initiate the creation of a medical 

center. Once established, the medical 

center then generates further demand for 

its servces. Over time, health care 

resource availabilty can indirectly increase 

the consumption of Medicare servces. 

The age structure of the Medicare 

population may also affect Part A 

disbursements. Persons 85 years of age and 

older tend to be il more often than persons 

aged 65-84. The former group of so-called 

old-old" also tend to have ilnesses that 

require more health care resources than do 

the latter group of "young-old." The use of 

Figure 17: Part A disbursements predicted by 

physicians per capita 

300 

ZIJO 

+T* t+€

100 

210 260 310 

nYS1C1aD. per 1.000 r851denu 

Medicare benefits could therefore vary with the age structure of the elderly 

population. 

Correlation and scattergram of these variables with Part A disbursements, eliminated 

variables with weak associations (p -c 0.05). The general health index, physicians per capita, hospital beds per capita, and percentage of the Medicare population between 

the ages of 65 and 74 years proved to be significant. Regression and rescaling 

eliminate outlier states. 

In a stepwise regression, all four of these variables remain significant at the 0. 

confidence level. An ordinary least squares regression using these variables explains 
j\ 

Figure 18: Part A disbursements predicted by 47 percent of the variance in Part A 

hospital beds per capita benefits. 300 

Figure 19: Part A disbursements predicted by 

Medicare population aged 65-74 years 300€

200 

:t ++ 

:t €

+ 11 + 

200 € 100€

+f + 

100€

BOSpU81 bed€

The final phase of the Part A€

disbursements analysis consists of a . beneUCla(les 65-

multivariate, straight regression using€

ordinary least squares. This procedure compares the amounts predicted jointly by the€

four significant variables to the actual payments in each jurisdiction. Together, they.€ account for 47.2 percent of the variance. An analysis of the residuals shows a strong 

relationship between predicted and actual values, and reflects a good model. 

Figure 20: Accuracy of Part A disbursement predictions 

300€

200€

100€

140 190 240 290€

Predicted€
Part Bcontrbutins: Beneficiary premiu 

As previously noted, beneficiary premiums comprise about one-quarter of contributions to Part B. This component of Medicare funding does not warrant 

multivariate analysis. Beneficiaries each pay a flat rate for their Part B coverage, $186 

in 1985. Accordingly, a state s premiums make up a linear function the number of 

beneficiaries among its residents. Controllng for population, employee, or gross state product predicts premiums less accurately because of these measures' systematic 

differences and inherent variance.€

=GR + SP 

where GR represents the general revenue contribution attributable to each state and 

denotes the total premiums for all subscribers in the state. 

Part B contrbutions: General revenue€

The analysis of general revenue contributions to Part B parallels the procedure and 

results for general revenue contributions to Part It uses the same six variables as 

prospective measures of states' economic health. Correlation tests eliminate 

nonsignificant variabl s. Repeated correlation and rescaling removes outlier states. 

Figure 21: Accuracy of Part B general revenue prediction 

:100 

+-t -+€

:100 Predicted 

Stepwise regression identifies the variables that in the aggregate best explain general revenue contributions to Part B. Again, only per capita personal income and hourly 
. .. 

earnings contribute significant predictive information. Together, they account for 93.4 

percent of interstate differences in general revenue. 

Part B disburements 

Figure 22: Part B disbursements predicted by The modeling of Part B disbursements starts 

physicians per capita with the same three possible causes as 

quantified by the 12 variables used for Part 

130 A disbursements. The same rationales as for 

120 Part A disbursements apply to selection of 

110 these variables for Part B disbursements. 

100 

out = f(population s physical health, health care resources, Medicare age distribution) 

70 + + + + Correlating individual variables with Part B 

60 + ++ disbursements to eliminate weak associations 

the same four variables attained significance 

at p '" 0.05. Correlation and rescaling 110 160 Z1D 260 :no '60 

Pbrs1c18DS per 1. 000 reSlden.ts removes outlier states.

The four variables remain significant through 

a stepwise regression where p '" 0.01. 

However, in an ordinary least squares 

regression at p '" 0. 15 only two variables 

physicians per capita and general health 

rating, continue to be significant. These two 

variables jointly explain 33 percent of the 

variance in Part B benefits to states. 

The final phase of the analysis compares the 

disbursements predicted by this model to the 

actual amounts paid out. An analysis of the 

residuals demonstrates a strong relationship 

between the model's predictions and the 

actual benefits. 

Conclusion 

Figure 23: Part B disbursements predicted by 

state health index 

130 

120 

110 + 

100 

+ t + 

Gen.nl beBlt.l1 U.deJ: 

This data shows that Medicare creates large changes in the flow of funds into and out 

of states. The aggregate, net amounts seem to be random on superficial inspection. 

However, upon individual analysis the Part A and B contributions and disbursements 

do significantly associate with logical causes such as average income, proportion of 

elderly residents , and availability of health care servces. The juxaposition of unusual 

combinations of characteristics in a state accounts for the seeming randomness of the 

flow of Medicare funds (e.g., high average income and few elderly residents). 
Accordingly, the net flow of Medicare funds discharges the program s current 

legislative objectives. Policy manipulations of this flow should address the underlying 

causes, rather than directly affecting the flow itself. Medicare contributions and 

disbursements constitute a important share of some states' total revenues. 

Figure 24: Accuracy of Part B disbursement prediGt---€

1.40 

1. 

1.20 

1.1.0 

1.00 

Predicted 1.1.0 1.30 
, 

€

REFERENCES


1. U.S. Department of Health & Human Servces, Health Care Financing Administration Office of Research and Demonstrations. Health care financing -- program statistics: 

Medicare and Medicaid Databook, 1988. Baltimore, MD: Health Care Financing Administration, 1989: 15. Table 2. 1. HCFA pub. no. 03270. 

2. Horner ER, ed. Almanac of the fifty states, 1988. 3rd ed. Palo Alto, CA: Information 

Publications, 1988. 

3. U.S. Bureau of the Census. Statistical abstract of the United States, 1988. 108th ed. 

Washington, DC: U.S. Government Printing Office, 1988. 

4. Northwestern National Life Insurance state health rankings: Results, methodology, and discussion, 1989 edition. Minneapolis, MN: Northwestern National Life Insurance 

Company, 1989. 

5. U.S. Bureau of the Census. Statistical abstract of the United States: 1988. 108th ed. 

Washington, DC: U.S. Government Printing Office, 1988. 

6. U.S. Bureau of the Census. State population and household estimates, with age, sex 

and component of change: 1981-1987. Current population reports, series P- , no. 1024. 

Washington, DC: U.S. Government Printing Office, 1988. 

7. For a more detailed discussion of the relationship between medical resource intensity 

and medical servces utilzation, see Hamilton, Robert Crisis in the Health Care System 

Connecticut, May, 1990, pp. 95- 100. 
Appendix 1: Old age, survors, disabilty health insurance contributions by state, 1985 ($ millon) 

Part- A COl1tl'ibutions: 

Wage Self Total Wag Self Total 

2750 170 2920 527 559 

771 820 148 157 

-AZ 2627 166 2793 503 535 

1698 136 1834 325 351 

25434 1908 27342 4870 365 5236 

.CO 2943 241 3184 564 610 

4145 234 4379 794 838 

1132 1162 217 223 

1556 1588 298 304 

8335 635 8970 1596 122 1718 

311 5175 931 991 

838 890 160 170 

694 758 133 145 

11931 663 12594 2285 127 2412 

4626 281 4907 940 

2115 222 2337 405 

2047 199 224 392 430 

2162 190 2352 414 450 

3057 202 3259 585 624 

682 756 131 145 

4309 224 4533 825 868 

6434 401 6835 1232 1309 

10397 412 10809 1991 2070 

4593 285 4878 880 934 

1240 120 1360 237 260 

45% 295 4891 880 936 

515 575 11 . 110 

1328 139 1467 254 281 

;'N 744 793 142 152 

943 1020 181 195 

8879 480 9359 1700 1792 

976 1047 187 200 

24635 981 25616 4717 188 4905 

4895 336 5231 937 1002 

427 506 

10729 516 11245 2055 2153 

2471 204 2675 473 512 

2370 178 2548 454 488 

11189 666 11855 2143 128 2270 

942 995 180 191 

2196 144 2340 421 

400 470 

3714 25' 3972 711 761 

13976 1036 15012 2676 198 2875 

1100 1175 211 225 

398 436 

4628 296 4924 886 943 

3647 285 3932 698 753 

1130 1200 216 230 

4632 252 4884 887 935 

375 407 

Outlyini 1654 1741 317 333 

Other 4677 4677 896 896 

Total 229548 14128 243676 43956 2705 461 

State Total OASDHI contributions 

1. Diez G & Long W. OASDHI covered 

workers. Social Security Bulletin, Annual 

Statistical Supplement, 1988: 136. Table 

BlO. 

2. OASDHI contributions * 2.7 /14. 

Puerto Rico Virgin Islands Guam 

American Samoa, ocean-going vessls, and


S. citizens employed abroad by American 

employers. 

Armed forces and funds otherwise 

unaccounted for. 
Appendix 2: General revenue contributions by state, 1985 

State Federal tax burden General revenue $ millon 

$ milion percent Part Part B Total 

8996 1.25 238 294€

2355 0.33 1. Tax Foundation. Memorandum on the allocation


8271 1.5 219 270 of the federal ta burden and federal grants-in-aid by 

5011 133 164 state, fiscl year 1988. 

86183 11.97 532 2280 2812 2. Board of trustees of the federal hospital insurance 

10178 1.41 269 332 fund. The 1988 annual report of the board of 

13282 1.84 351 433 trustees of the federal hospital insurance fund. 

1994 Washington, DC: U.S. Government Printing Offce 

2506 0.35 1988: 36. 

15395 407 502 insurance fund. The 1988 annual report of the 

2974 0.41 board of trustees of the federal supplementary 

2179 0.30 insurance fund. Washington, DC: U.S. Government 

38475 5.34 237 1018 1255 Printing Offce, 1988: 26. 

33177 205 878 1083 3. Board of trustees of the federal supplementary 

14915 395 487 4. Projection from federal individual income tax 

8078 1.2 214 264 receipts. U.S. Department of Commerce, Bureau of 

7480 1.04 198 244 the Census. Statistical abstract of the United States 

11522 

2752 

1.60 

0.38 

305 376 Printing Offce 199; Table 504. Includes 

international operations and unallocated receipts, in 

15193 402 496 addition to outlying areas. 

20451 126 541 667 

26213 162 694 856 

1247 1.73 330 407 

4948 131 162 

14124 1.96 374 461 

4433 117 144 

3005 0.42 

3142 0.44 102 

29802 184 789 973 

3409 0.47 111 

59251 366 1568 1934 

15225 403 497 

1889 

30657 189 811 1000 

9101 1.26 241 297 

7047 186 229 

34297 212 908 1120 

2896 0.40 

7391 1.03 196 242 

1641 

11605 1.61 307 379 

50557 312 1338 1650 

3669 0.51 120 

128 

8502 1.8 225 277 1989. 109th ed. Washington, DC: U.S. Governmen 

17305 2.40 107 458 565 

13232 1.84 350 432 

4183 0.58 111 137 

13153 1.83 348 429 

1537 

Outlying 1061 1.48 282 348 

Other 

Total 720041 100. 4443 19053 23496 
Appendix 3: Part B premium contributions by state, 1985 

State Beneficiariesl Premiums 

(thousand) ($ millon) 

519€

395€

358€

2858 532€

294€

426€

1965 366€

637 118€

114€

1407 262€

680 127€

428€

336€

482€

453€

166€

463€

797 148€

1108€

538 100€

334€

719 134€

103€

223€

121€

1006 187€

145€

2361 439€

756 141€

1373 255€

408€

364€

1779 331€

145€

369€

101€

615 114€

1561 290€

131€

613 114€

519€

283€

652 121€

Outlying 303€

Othe 230€

Total 30199 5617€

1. U.S. Department of Health & Human Servces, Health Care 

Financing Administration, Bureau of Data Management & Statistics.€

Medicare program statistics: Medicare enrollment 1985. Baltimore 

MD: Health Care Financing Administration, 1989: 19-20. Table 

HCFA pub. no. 0326. 

2. Number of beneficiaries * $186.€

3. From foreign countries.€

4. Moaney-Howze A Hospital insurance: Number of enrollees, by 

state, July 1 , 196-87. Social Security Bulletin, Annual Statistical 

Supplement, 1988: 285. Table 7.B3. 
Appendix 4: Total Part A contributions and disbursments by state, 1% ($ milIon) 

State	 Contributed Disbursed Net 

OASDHI General Total 

559 615 775 160 

157 172 143 1. U.S. Department of Health & Human Services 

351 

5236 532 

382 

5768 

462 

5410 358 

Data Management and Statistics. Medicare 

estimated benefit payments, calendar year 1985. 

610 672 451 221 

838 920 665 255 

235 120 115 

304 320 180 140 

1718 205 1922 3148 1226 

991 1086 893 193 

170 189 133 

145 159 137 

2412 237 269 2772 123 

940 1032 1026 

448 497 564 -67 

430 476 515 

450 503 624 121 

624 695 839 144 

145 162 242 -80 

962 811 151 

1309 126 1435 1322 113 

2070 162 2232 2124 108 

934 1011 774 237 

260 291 497 206 

936 1024 1373 349 

110 123 113 

281 308 293 

152 170 175 

195 215 165 

1792 184 1976 1547 429 

222 204 

4905 366 5271 3517 1754 

1002 1096 860 236 

109 142 

2153 189 2343 2317 

512 568 560 

486 531 484 

2270 212 2482 3269 787 

191 208 250 -42 

448 494 529 

100 131 

761 832 865 

2875 312 3187 2480 707 

225 248 119 129 

943 107 1050 666 384 

753 834 742 

230 256 427 171 

935 1016 931 

Outlying 333 399 134 265 

Other 896 896 896 

535 586 630 Health Care Financing Administration, Bureau of 

Total 461 4443 51104 47582 3522 
. 

Appendix 5: Total Part B contributions and disbursements by state, 1985 ($ millon)€

State Contributed Disbursed Net 

Premiums General Total 

238 335 304€ 1. U.S. Department of Health & Human Servces 

219 292 326 Health Care Financing Administration, Bureau of 

133 199 227 Data Management and Statistics. Medicare 

532 2280 2812 3245 -433 estimated benefit payments, calendar year 1985. 

269 324 202 122€

351 431 315 116€

366 878 1243 1821 578€

118 407 526 445€

262 1018 1280 1098 182 

127 395 521 372 149 

214 293 241 

198 260 222 

225 315 221 

305 389 105 

104 

402 488 410 

148 541 689 685 

206 694 900 996 

100 330 431 346 

131 193 179 

134 374 507 462 

117 159 101 

106€

187 789 976 778 198€

117€

439 1568 2007 2159 152€

141 403 543 412 131€

255 811 1067 927 140 

241 317 198 119 

186 254 262 

331 908 1238 1573 335 

104 122 

196 264 184 

114 307 421 341€

290 1338 1628 1110 518€

121€

114 458 572 401 171 

350 447 373 

111 163 180 

121 348 469 406 

Outlying 282 338 110 228 

Other 

Total 5617 19053 24670 22948 1722 
Appendix 6: Net Part A and Part B contributions and disbursements by state, 1985 ($ milion) 

Part B Total 

Contributed Disbursed Net Contributed Disbursed Net Contributed Disbursed Net 

615 775 160 335 304 949 1079 130 

172 143 '27 194 

586 630 292 326 878 956 

382 462 -80 199 227 581 689 108 

5768 5410 358 2812 3245 -433 8580 8655 

672 451 221 324 202 122 997 653 344 

920 665 255 431 315 116 1351 980 371 

'25 120 115 302 177 125 

320 180 140 399 265 134 

1922 3148 1226 1243 1821 578 3166 4969 1803 

1086 893 193 526 445 1612 1338 274 

189 133 286 204 

159 137 237 199 

2649 2772 1'2 1280 1098 182 3929 3870 

1032 1026 521 372 149 1553 1398 155 

497 564 -67 293 241 791 805 

476 515 260 222 737 737 

503 624 121 315 221 817 845 

695 839 144 389 284 105 1084 11'2 

162 242 -80 104 265 319 

811 151 488 410 1450 1221 229 

1435 1322 113 689 685 2124 2007 117 

2'22 2124 108 900 996 3131 3120 

1011 774 '27 431 346 1442 1120 322 

291 497 206 193 179 484 676 192 

1024 1373 349 507 462 1531 1835 304 

1'2 113 196 173 

308 293 159 101 467 394 

170 175 268 264 

215 165 106 320 228 

1976 1547 429 976 778 198 2952 '225 627 

222 204 117 339 295 

5271 3517 1754 2007 2159 152 7278 5676 1602 

1096 860 '26 543 412 131 1639 1272 367 

109 142 175 199 

2343 2317 1067 927 140 3409 3244 165 

568 560 317 198 119 885 758 127 

531 

242 

484 

3269 

254 

787 1238 

262 

1573 

785 

335 3720 

746

4842 1122 

208 250 -42 104 122 312 372 

494 529 184 758 713 

100 131 162 180 

832 865 421 341 1254 1206 

3187 2480 707 1628 1110 518 4815 3590 1225 

248 119 129 121 369 197 172 

138 121 

1050 666 384 572 401 171 1622 1067 555 

834 742 447 373 1281 1115 166 

256 427 171 163 180 419 607 188 

1016 931 469 406 1486 1337 149 

136 

Outlying 399 134 265 338 110 228 737 244 493 

State Part A 

Other 896 896 938 938 

Total 51104 47582 3522 24670 22948 1722 75774 70530 5244 
Appendix 7: Ratio of Part A and Part B contributions to disbursements by state, 1985 

State Part A Part B Total 

1.07 

1.49 

1.38 

1.96 

1.78 

1.22 

1.42 

1.6 

1.01 

1.9 

1.09 

1.05 

131 

0.59 

1.09 

1.05 

NtI€ 1.30 

1.28 

1.09 

1.50 

1.27 

1.01 

1.01 

1.0 

1.28 

1.03 

1.58 

1.2 

1.09 

1.53 

Other 

Outlying 

Average 1.07 

1.0 

5.51 

1.60 1.53 

1.37 1.38 

1.7 1.70 

1.51 

1.8 1.20 

137 1.40 

1.27 1.9 

1.7 1.02 

1.40 1.11 

1.22 

1.7 1.00 

1.42 

1.37 

1.35 

1.9 1.9 

1.01 1.06 

1.00 

1.24 1.29 

1.08 

1.0 

1.22 1.3 

1.57 1.9 

1.0 1.01 

1.68 1.41 

1.25 1.27 

1.29 1.5 

1.28 

1.32 1.29 

1.7 

1.5 1.05 

1.60 1.7 

1.05 

1.44 1.06 

1.7 

1.24 1.04 

1.47 134 

1.56 1.87 

1.46 1.4 

1.43 1.52 

1.20 1.5 

1.6 1.1 

1.95 1.66 

1.08 1.07 
Appendix 8: Part A and Part B contributions and disbursements per beneficiary by state, 1985 ($) 

- State Part A Part B Total 

Contributed Disbursed Net Contributed Disbursd Net Contributed Disbursed Net 

1185 1494 309 645 586 1830 2080 250 

10481 1771 8710 3992 855 3137 14474 2627 11847 

1484 1596 112 740 826 -85 2225 2422 197 

1067 1291 223 556 634 1624 1925 301 

2018 1893 125 984 1135 151 3002 3028 

2286 1533 753 1101 687 415 3387 2220 1168 

2160 1561 599 1011 739 272 3171 2300 871 

3147 1608 1539 893 764 129 4040 2372 1668 

4380 2467 1913 1095 1165 5475 3632 1843 

978 1602 -624 633 927 294 1611 2529 918 

1705 1402 303 826 699 127 2531 2101 430 

1922 1354 568 987 723 2909 2076 832 

1389 1200 189 691 543 148 2080 1744 337 

1883 1971 -87 910 781 129 2793 2751 

1516 1508 766 547 219 2282 2055 228 

1161 1317 156 685 563 122 1846 1879 

1419 

104 

1535 

1296 

116 776 

252 653 

662 

459 

114 2195 

194 1697 

2196

1755 

1534 1851 317 859 627 232 2392 2478 -85 

976 1459 625 464 161 1601 1924 323 

2077 1752 326 1054 169 3132 2637 495 

1800 1659 142 865 859 2665 2518 147 

2014 1917 812 899 -87 2826 2816 

. MS 

:MT 

1879 

871 

1424 

1193 

1438 

1488 

1910 

1097 

441 800 

-617 578 

-46 706 

712 

643 

536 

643 

583 

157 2679 

1449 

2130 

129 1904 

2081 

2024 

2552 

1680 

598 

575 

-423

224 

1385 1316 713 454 259 2098 1770 328

1774 1363 411 873 521 352 267 1884 763 

1963 1537 426 970 773 197 2933 2310 623 

1529 1408 121 808 628 181 2337 2036 301 

2233 1490 743 850 914 3083 2404 678 

1449 1138 312 719 545 174 2168 1683 486 

1195 1562 367 736 627 109 1930 2189 259 

1706 1688 777 675 102 243 2363 120 

1392 1372 776 485 291 2168 1857 311 

1461 1331 130 699 720 2160 2051 109 

1395 1837 -442 696 884 188 2091 2721 -630 

1438 1725 287 715 842 127 2153 2567 -414 

1338 1434 716 499 217 2054 1932 122 

989 1294 305 615 484 131 1604 1778 174 

1353 1407 685 . 555 131 2039 1961 

2041 1589 453 1043 711 332 3085 2300 785 

1892 909 983 928 596 332 2819 1505 1315 

1348 1313 688 472 216 2036 1785 251 

1711 1086 625 933 654 279 2644 1740 904 

1607 1429 178 860 718 142 2468 2148 320 

. I4v 1767 1814 -47 1010 923 2777 2737 

903 1508 -65 577 636 5': 1480 2144 

1558 1427 131 719 622 2277 2049 228€

2010 1310 701 1120 574 546 3130 188 1247€

Outlying 1317 442 875 1115 363 752 2432 805 1627€ Other 3894 3894 186 186 4080 4080 Total 1692 1576 117 817 760 2509 2335 174 
Appendix 9: Part A and Part B contributions and disbursements per population by state, 1985 ($) 

Part B Total 

State (thousand) Contributed Disbursed Net Contributed Disbursed Net Contributed Disbursed Net 

4021 153 193 -40 236 268 

521 329 274 125 455 372 

3161 185 199 103 278 302 

Populationl Part A 

2360 162 196 246 292 

-CA 26353 219 205 107 123 326 328 

3232 208 140 100 308 202 106 

3175 290 209 136 426 309 117 

626 375 192 183 106 482 283 199 

623 513 289 224 128 136 641 425 216 

11367 169 277 108 109 160 279 437 159 

5976 182 149 270 224 

1050 180 127 272 194 

1005 158 136 236 198 

11539 230 240 111 340 335 

5500 188 187 282 254 

2873 

248 

173 

195 

196 

210 

102 

106 

275 

301 

280

301 

3724 135 168 219 227 

155 187 242 250 

1164 139 208 -69 228 274 -46 

4391 219 185 111 330 278 

5823 246 227 118 118 365 345 

9088 246 234 110 345 343 

4191 241 185 103 344 267 

2613 111 190 185 259 

5036 203 273 -69 101 304 364 

825 149 137 238 210 

1605 192 183 291 245 

939 181 186 104 285 281 

998 215 165 106 321 228 

7568 261 204 129 103 390 307 

1450 153 141 234 203 

17767 297 198 113 122 410 319 

6258 175 137 262 203 

685 159 207 -49 256 291 

10774 217 215 316 301 

3302 172 170 230 

198 180 292 278 

11865 209 276 104 133 314 408 

967 215 259 -43 107 126 323 385 -62 

3333 148 159 227 214 

708 

4766 

141 

175 

185 

181 

229 

263 

2.')4

253 

16382 195 151 294 219 

1644 151 120 105 

535 171 166 258 226 

5704 184 117 100 284 187 

4407 189 168 101 291 253 

1936 132 221 -89 216 314 

4775 213 195 311 280 

509 172 112 268 161 107 

Outlyingl 3282 122 103 225 150 

Other3 4236 211 211 222 222 

Total 238736 214 199 103 317 295 
1. u.s. Department of Commerce, Bureau of the Census. Statistical abstract of the United States, 1990. 1 10th ed. Washington, DC: U.€

Government Printing Offce, 1990: 20. Table 26,€

. 2. U.S. Department of Commerce, Bureau of the Census. Estimates of the population of Puerto Rico and the outlying areas: 1980 to 1986.


Current Population Reports, Series P- , No. 1009. Washington, DC: U.S. Government Printing Office, July 1987.€

3. U.S. Department of Commerce, Bureau of the Census. Statistical abstract of the United States, 1987. 107th ed. Washington, DC: U.€

Government Printing Offce, 1987: 9. Table 4.€
Appendix 10: Part A and Part B contributions and disbursements per employee by state, 1985 ($) 

Part B Total 

State (thousand) Contributed Disbursed Net Contributed Disbursed Net Contributed Disbursed Net 

1803 341 

.AK 253 678 

1477 397 

430 

115 

427 

-89 186 

564 258 

198 

169 

221 

526 

203 937 

595 

598 

170 

647 

767 

1051 364 440 190 216 553 656 102

Employees! Part A 

€r'€ l29 418 217 251 663 669 

1720 391 262 129 188 117 579 380 200

1711 538 389 149 252 184 790 573 217

315 746 381 365 212 181 957 562 395 322 992 559 433 248 1241 823 418

2865 379 312 184 155 563 467 

481 

471 

393 

337 

277 

291 

116 202 

167 

148 

132 

594 

504 

424 

423 

170

5673 467 489 226 194 693 682 

2735 377 375 191 136 568 511 

1416 351 398 -47 207 170 558 569 

1244 383 414 209 178 592 592 

1695 297 368 186 130 482 499 

1987 350 422 196 143 546 565

5338 360 590 230 233 341 108 593 931 338

--E 552 293 438 145 188 139 481 578 

2253 427 360 217 182 644 542 102 3061 469 432 225 224 694 656

4352 513 207 229 719 717

2234 453 346 106 193 155 645 501 144

1211 240 410 170 159 148 400 558 159

405 303 279 181 148 484 427 

813 379 360 195 124 574 485 

509 

537 

3853 

335 

400 

513 

344 

307 

402 111 

191. 

197 

253 

175 

117 

202 

526 

597 

766 

519 

425 

603 

172

163 

343 316 181 141 524 457 

8308 

3106 

336 

634 

353 

323 

423 

277 

423 

211 242 

175 

199 

260 

133 

170 

876 

528 

522 

683 

410 

592 

193

118

5130 457 452 208 181 665 632 

1573 361 356 201 126 563 482 

1327 

5519 

400 

450 

365 

592 143 

192 

224 

197 

285 -61 

592 

674 

562

877 203

2472 414 555 141 205 187 619 742 123

500 417 500 -83 207 624 744 120 

1563 316 338 169 118 485 456 

347 289 378 -89 179 141 468 519 

2245 371 385 188 152 558 537 

8053 396 308 202 138 598 446 152 730 339 163 176 166 107 506 270 236 277 330 321 168 116 498 437 

2872 365 232 134 199 140 565 372 193 2105 396 352 212 177 530 

765 334 558 224 214 235 548 793 246 2374 428 392 198 171 626 563 

253 346 225 121 193 539 324 214 Outlying2 837 477 160 317 404 131 272 880 292 589 Othe 2151 416 416 436 436 Total 118763 430 401 208 193 638 594 
1. U.S. Department of Commerce, Bureau of the Census. Statistical abstract of the United States, 1987. 107th ed. Washington, DC: U. Goernment Printing Offce, 1987: 377. Table 641. 1 2. U.S. Department of Commerce, Bureau of the Census. Statistical abstract of the United States, 199. 1l0th ed. Washington, DC: U. Government Printing Offce, 1990: 820. Table 1420. 

Hiles G. Current employment report, March 1986. Tamuning, GU: Guam Department of Labor, Bureau of Labor Statistics, 1986: 3. 

Release #86-0.€

I. Bureau of Labor Statistics. U.S. Virgin Islands economic indicators. St. Croix, VI: WSVI- , Channel 8, 1988: 7. 

3. U.S. Department of Commerce, Bureau of the Census. Statistical abstract of the United States, 1990. llOth ed. Washington, DC: U. 

Government Printing Offce, 1990: 339. Table 552. 
Appendix 11: Part A and Part B contributions and disbursements per gross state product ($ millon) by state, 1985 (percent) 

Part B Total 

State productl Contributed Disbursed Net Contributed Disbursed Net Contributed Disbursed Net 

51919 1.8 1.49 0.31 059 1.83 -0. 

21237 0.31 1.2 

48589 1.21 1.30 -0. -0. 1.81 1.97 -0.

Gross state Part A 

299 1.28 1.54 -0. -0. 1.94 2.30 -0.36

49650 1.6 1.09 0.57 -0. 1.73 1.74 -0. 

56713 1.9 0.39 0.57 0.36 1.6 1.5 6496 1.42 1.03 0.39 0.49 1.51 0.57 

10966 1.09 1.05 0.52 1.61 1.4 

164340 

94121 

1.7 

1.5 

1.92 -0. 

0.56 

1.1 -0. 1.93 

1.71 1.42 

1.0 

0.29 

17994 1.05 0.31 0.54 0.39 1.59 1.3 0.45 

13027 1.22 1.05 1.82 1.53 0.30 

198138 1.34 1.40 -0. 0.55 1.98 1.95 

80262 

42100 

40364 

1.29 

1.8 

1.8 

1.28 

1.34 

1.28 

-0. 

-0. 0.55 

1.93 

1.88 

1.82 

1.74 

1.91 

1.83 

-0. 

-0. 

51234 1.22 -0. 1.60 1.65 -0. 

79719 1.05 -0. 0.49 0.36 1.36 1.41 -0. 

15896 

70580 

106148 

1.02 

1.36 

1.5 

1.52 

1.5 

1.25 

-0.50 

0.58 

1.67 

1.73 

1.89 

-0.34 

0.32 

143719 155 1.48 -0. 

71183 1.42 1.09 0.33 0.49 1.57 0.45 

30819 1.61 -0. 0.58 1.57 -0. 

79220 1.29 1.73 -0. 0.58 1.93 2.32 -0.38 

11543 

25639 

1.06 

1.20 1.4 

0.52 

0.39 

1.70 

1.82 

1.50 

1.54 

17918 -0. 0.54 0.50 1.50 1.47 

16585 1.29 0.38 1.93 1.37 0.56 

142302 1.39 1.09 0.55 1.63 0.44 

23887 0.49 0.38 1.42 1.23 

336071 

93821 

1.57 

1.7 

1.05 0.52 

0.58 0.44 1.75 

1.69 

1.36 

0.48 

0.39 

10725 1.01 1.32 -0. 0.53 1.64 1.86 -0. 

27185 1.8 0.51 0.31 1.47 0.49 

167645 1.40 1.38 0.55 1.94

5082 1.2 1.0 0.39 1.4 1.49 0.25 

38922 1.37 1.24 -0. 1.92 

13961 

41832 

1.49 

1.8 

1.9 

1.26 

-0.30 

-0. 

-0. 

1.81 

2.66 

1.70 

-0.43 

9297 1.08 1.41 -0.33 0.53 1.75 1.94 -0. 

67560 1.23 1.28 -0. 0.50 1.86 1.79 

307615 1.04 0.53 0.36 1.57 1.7 0.40 

23172 1.07 0.51 0.56 0.52 0.34 1.59 

7915 

95369 

1.5 

1.0 

1.2 

0.40 

0.59 0.40 

0.42 

1.74 

1.70 

1.53 

1.2 0.58 

17299 1.43 1.89 -0. -0. -0. 

71756 1.6 1.03 0.52 1.79 1.55 0.23 

23541 1.09 1.81 -0. -0. 1.78 2.58 

72716 1.40 1.28 0.56 1.84 . 0. 

12777 0.45 0.38 1.07 0.42 

Outlying2 17534 1.51 1.93 1.30 1.9€

Othe 31100€

Total 4011980 1.27 1.9 0.57 1.89 1.76€
1. U.S. Department of Commerce, Bureau of the Census. Statistical abstract of the United States, 1990. 110th ed. Washington, DC: U. Government Printing Offce, 199: 433. 

2. U.S. Department of Commerce, Bureau of the Census. Statistical abstract of the United States, 1990. 110th ed. Washington, DC: U.€ Government Printing Office, 1990: 820. Table 1420.€

Hutchersn IT. Annual economic revew and statistical abstract, 1989. Tamuning, GU: Guam Department of Commerce, Economic€

Research Center, 1989: 36. Table 12.€

V.I. Bureau of Labor Statistics. U.S. Virgin Islands economic indicators. St. Croix, VI: WSVI- , Channel 8, 1988: 2. 

3. U.S. Department of Commerce, Bureau of the Census. Statistical abstract of the United States, 199. 110th ed. Washington, DC: U. Goernment Printing Offce, 1990: 426. Table 691. 
Appendix 12: Population, employees, and gross state product per beneficiary by state, 1985€

State Per beneficiary 

Population Employees Gross state product ($ thousand) 

3.5 1001 

31.8 15.5 12972 

8.0 1231 

836 

4.5 1739 

11.0 192 

7.5 1518 

8.4 1469 

8.5 4.4 3726 

836 

4.5 1478 

10. 1831 

8.8€ 1141

140

1180

983

1203 

3.5 1064 

4.4 1759 

3.3 959 

9.5 1524 

7.3 1332 

1297 

1323 

923

1102

1121

1152

5.3 1857

4.4 1370

7.5 1414

10.€ 4.5 1648

7.5 3.5 1423

8.3 1241

7.5 1180

1221

1245

1070

972

3.5 964

1134

3.4 918

1099

10.5 1971

12. 1770

1167

9.3 1555

8.5 1382 

831 

7.3 1114 

11.7 2935 

Outlying 10. 579 

Other 18.4 1352 

Total 1328 
Appendix 13: Payroll tax and Part A general revenue contribution per beneficiary, population, employees, and gross state product by state€ 1985€

State Per beneficia Per ulation Per em Per ross state roduct ercent€

OASDHI General OASDHI General OASDHI General OASDHI General€ revenue revenue revenue revenue€

1078 107 139 310 1.08 

9593 888 301 621 

1355 129 169 362 1.0 

981 149 334 1.7 

1832 186 199 405 1.05 

2072 213 189 354 1.08 

1968 192 264 490 1.30 

2982 165 356 707 

4168 212 944 1.2 

874 104 151 322 1.05 

1556 149 166 346 1.05 

1735 187 162 354 

1271 118 144 308 1.1 

1714 169 209 425 1.22 

1381 135 171 344 1.7 

1045 116 156 316 1.06 

1282 138 176 346 1.07 

935 109 121 266 

1377 157 139 314 

873 102 124 262 

1875 202 198 385 1.23 

1642 158 225 428 1.23 

186 146 228 476 1.44 

1736 143 223 418 1.31 

780 100 215 

1303 121 186 379 1.8 

1070 123 134 272 

1262 123 175 346 1.0 

1575 192 162 298 

1614 160 196 364 1.8 

1781 183 237 465 1.26 

1383 145 138 310 

2078 155 276. 590 1.46 

1325 124 160 322 1.07 

1066 128 142 289 

1569 138 200 420 1.28 

1255 138 155 326 1.01 

1341 120 182 368 1.25 

1276 119 191 411 1.31 

1315 123 197 381 1.36 

1215 124 134 287 1.07 

889 100 127 259 

1237 116 160 339 1.3 

1842 200 175 357 

1719 173 137 308 

1231 117 156 301 1.05 

1537 174 165 328 

1450 157 171 358 1.05 

812 119 300 

1433 124 196 394 1.29 

1792 218 153 308 

Outlying 

bther 

1100 

3894 

217 102 

211 

398 

416 

1.90 0.37 

Total 1545 147 195 393 1.6