(1033)

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 1998

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, 1980–98

International Health Spending

References

NATIONAL HEALTH EXPENDITURES

In 1965, the year prior to the beginning of the Medicare and

Medicaid Programs, national health expenditures were only $41.1

billion. After adjusting for inflation, this spending figure represented $212.9 billion, or $1,043 per capita in constant 1998 dollars. Health care expenditures increased substantially over the

next 30 years and reached $1 trillion for the first time in 1996. In

1998, the Nation’s health care bill was $4,094 per capita, or

$1,149.1 billion for the 270 million persons residing in the United

States (tables C–1, C–2, and C–3).

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. The rate decelerated to 3.0 percent for 1990–95. Over

the 1995–98 period, growth averaged 1.7 percent per year. After

growing only 0.7 percent from 1995 to 1996, however, growth in

health spending again increased by 1.4 percent between 1996 and

1997. Between 1997 and 1998 the growth rate was 3.0 percent

(table C–3). While growth in spending remains its slowest in more

than three decades, this latest upswing may ‘‘signal important

changes taking place in the Nation’s health care system’’ (Levit et

al., 2000).

TABLE C–1.—NATIONAL HEALTH EXPENDITURES, AGGREGATE AMOUNTS FOR SELECTED CALENDAR YEARS 1960–98

[In billions of dollars]

Spending category 1960 1965 1970 1975 1980 1985 1990 1995 1996 1997 

Health services and supplies ............................... $25.2 $37.7 $67.9 $122.3 $235.6 $412.3 $674.8 $962.5 $1,007.5 $1,053.5 

Personal health care ................................... 23.6 35.2 63.8 114.5 217.0 376.4 614.7 879.1 924.0 968.6 

Hospital care ...................................... 9.3 14.0 28.0 52.6 102.7 168.3 256.4 347.0 359.4 370.2 Physicians’ services ............................ 5.3 8.2 13.6 23.9 45.2 83.6 146.3 201.9 208.5 217.8 Dentists’ services ............................... 2.0 2.8 4.7 8.0 13.3 21.7 31.6 45.0 47.5 51.1 Other professional services ................ 0.6 0.9 1.4 2.7 6.4 16.6 34.7 53.6 57.4 61.5 Home health care ............................... 0.1 0.1 0.2 0.6 2.4 5.6 13.1 29.1 31.2 30.5 Drugs and other medical nondurables 4.2 5.9 8.8 13.0 21.6 37.1 59.9 88.6 98.0 108.6 Vision products and other medical

durables ......................................... 0.6 1.0 1.6 2.5 3.8 6.7 10.5 13.3 14.1 15.1 

Nursing home care ............................. 0.8 1.5 4.2 8.7 17.6 30.7 50.9 75.5 80.2 84.7 Other personal health care ................ 0.7 0.8 1.3 2.5 4.0 6.1 11.2 25.1 27.6 29.2 

Program administration and net cost of

private health insurance ......................... 1.2 1.9 2.7 4.9 11.9 24.3 40.5 53.6 52.1 50.3 

Government public health activities ........... 0.4 0.6 1.3 2.9 6.7 11.6 19.6 29.8 31.3 34.6 

Research and construction of medical facilities 1.7 3.4 5.3 8.4 11.6 16.4 24.5 30.8 32.0 34.8 

Total ........................................... 26.9 41.1 73.2 130.7 247.3 428.7 699.4 993.3 1,039.4 1,088.2 Percent of gross domestic product ......................................... 5.1 5.7 7.1 8.0 8.9 10.3 12.2 13.7 13.6 13.4 

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 1998 DOLLARS, SELECTED CALENDAR YEARS 1960–98

[In billions of dollars]

Spending category 1960 1965 1970 1975 1980 1985 1990 1995 1996 1997 

Health services and supplies ..................... $138.7 $196.2 $285.2 $370.7 $466.1 $524.7 $841.6 $1,029.5 $1,045.6 $1,069.9 

Personal health care ......................... 130.2 182.0 268.1 346.9 429.3 570.3 766.6 940.3 959.9 983.7 

Hospital care ............................ 51.1 72.5 117.6 159.3 203.2 254.9 319.8 371.1 373.4 376.0 Physicians’ services .................. 29.1 42.4 57.0 72.4 89.5 126.7 182.5 216.9 218.6 221.1 Dentists’ services ..................... 10.8 14.6 19.8 24.1 26.4 32.8 39.4 48.1 49.4 51.9 Other professional services ...... 3.3 4.6 6.9 8.3 12.6 25.2 43.2 57.4 59.7 62.4 Home health care ..................... 0.3 0.5 0.5 1.9 4.7 8.6 15.4 31.1 32.4 30.9 Drugs and other medical nondurables ............................... 23.4 30.6 37.0 39.5 42.8 55.1 74.7 94.8 101.3 110.3 Visions products and other

medical durables ................. 3.6 5.2 6.8 7.7 7.6 10.2 13.0 14.3 14.7 15.3 

Nursing home care ................... 4.7 7.6 17.7 26.3 34.9 48.5 63.6 80.7 83.4 86.0 Other personal health care ...... 3.8 4.3 5.5 7.6 7.9 9.3 14.0 26.9 28.7 29.7 

Program administration and net cost

of private health insurance .......... 6.4 10.0 11.4 14.9 23.5 35.8 50.6 57.3 64.1 61.1 

Government public health activities 2.0 3.2 5.7 8.9 13.3 17.6 24.5 31.9 32.6 35.1 

Research and construction of medical facilities ..................................................... 9.4 17.3 22.6 25.4 23.0 24.8 30.6 32.9 33.2 36.3 

Total ................................. 148.0 212.9 307.7 396.1 489.1 649.5 872.2 1,062.4 1,079.8 1,105.2 

Note.—Constant dollar expenditures are calculated using the Consumer Price Index for All Urban Consumers.Source: Health Care Financing Administration, Office of the Actuary, National Health Statistics Group.

TABLE C–3.—NATIONAL HEALTH EXPENDITURES: PER CAPITA AMOUNTS IN CONSTANT 1998 DOLLARS AND AVERAGE ANNUAL PERCENTAG

INCREASES, SELECTED CALENDAR YEARS 1960–98

[Dollar amounts per capita]

Spending category 1960 1965 1970 1975 1980 1985 1990 1995 1996 1997 

Health services and supplies .............. $729 $958 $1,328 $1,851 $1,952 $2,527 $3,235 $3,769 $3,798 $3,845 

Personal health care ................... 685 892 1,248 1,545 1,828 2,307 2,947 3,442 3,483 3,537 

Hospital care ...................... 269 356 548 709 884 1,031 1,229 1,359 1,365 1,352 Physicians’ services ........... 153 208 205 323 381 512 702 790 785 795 Dentists’ services ............... 57 71 91 107 112 133 151 176 179 187 Other professional services 18 22 27 37 53 102 166 210 217 224 Home health care .............. 2 2 4 8 20 35 63 114 117 111 Drugs and other medical

nondurables ................... 123 149 172 175 182 227 287 347 369 395 

Vision products and other

medical durables ........... 19 25 32 34 32 41 50 52 53 55 

Nursing home care ............ 25 37 82 117 148 155 244 296 302 308 Other personal health care 20 20 25 33 34 37 54 98 104 107 

Program administration and net

cost of private health insurance ........................................ 34 49 53 65 100 149 194 210 196 184 

Government public health activities .......................................... 11 16 26 40 57 71 94 117 118 126 

Research and construction of medical

facilities ........................................... 49 87 105 113 98 100 118 120 120 127 

Total .......................... 779 1,043 1,433 1,764 2,080 2,627 3,353 3,889 3,918 3,973 

Average annual percentage increase

1960–

65

1965–

70 1970–75 1975–80 1980–85 1985–90 1990–95 1995–96 1996–97 1997–98 

Health services and supplies .............. 5.6 6.8 4.4 3.7 5.0 6.1 3.1 0.8 1.3 3.2 

Personal health care ................... 5.4 7.0 4.4 3.4 4.8 5.0 3.2 1.2 1.6 2.7 

Hospital care ...................... 5.8 9.0 5.3 4.0 3.6 3.6 2.0 0.4

¥1.0 0.9 

Physicians’ services ........... 6.3 5.0 4.0 3.4 6.1 6.5 2.4

¥0.5 1.1 2.9 

Total .......................... 6.0 6.5 4.2 3.4 4.8 5.0 3.0 0.7 1.4 3.0 

Note.—Constant dollar expenditures are calculated using the Consumer Price Index for All Urban Consumers.Source: Health Care Financing Administration, Office of the Actuary.

1038

The majority of health spending is for personal health care services that treat or prevent illness and disease in individuals. In

1998, 88.7 percent of all health spending ($1,019.3 billion) was for

personal health care. The remaining 11.3 percent ($129.8 billion)

was spent on health program administration; administrative costs

and profits earned by private health insurers; public health activities; noncommercial health research; and new construction of

health facilities.

Hospital care ($382.8 billion) and physician services ($229.5 billion) are the two largest categories of personal health care spending. They accounted for 33.3 percent and 20 percent of total national health expenditures. Another major service area, prescription drugs and other medical nondurables, grew from 8.6 percent

of all national health expenditures in 1990 to 10.6 percent in 1998

(table C–3).

The private sector, including private health insurance, out-ofpocket spending, and philanthropy, continues to finance the majority of personal health care expenditures (56.4 percent) with combined expenditures in 1998 of $574.5 billion (table C–4).

The share paid by private sources remained stable at about 60

percent from 1980 to 1990, and then declined to 55.2 percent in

1996 reflecting the influence of increased enrollment in managed

care plans which had lower rates of increase than fee-for-service.

In 1997, however, private spending increased to 55.5 percent and

in 1998, to 56.4 percent of personal health expenditures. Acceleration in private spending comes primarily from private health insurance premiums, which jumped from a 3.5-percent increase in 1997

to an 8.2-percent increase in 1998 (Levit et al., 2000).

With the private share increasing, public spending as a share of

personal health care expenditures declined in 1997 for the first

time in 10 years. Government’s share had grown from 20.6 percent

in 1965 to 44.8 percent in 1996. In 1997, this decreased to 44.5 percent. In 1998, public sources (Federal, State, and local governments) were responsible for 43.6 percent of personal health expenditures or a total of $444.9 billion (table C–4).

The initial growth in Federal Government spending is attributed

to the beginning of the Medicare and Medicaid Programs and the

expansion of Medicare to cover the disabled population in 1973. In

1965, before the enactment of these programs, the Federal Government contribution represented 8.4 percent of personal health

spending. By 1970, the Federal Government’s share had increased

to 23 percent and to 27 percent by 1975. Between 1980 and 1990

the portion remained steady at approximately 29 percent, but since

1990, this figure gradually increased to 34.5 percent in 1996.

The initial impact of the Balanced Budget Act of 1997 and successful efforts to combat fraud and abuse helped to reduce this

share to 33.7 percent in 1998 (Levit et al., 2000). The Federal Government is still the single largest contributor, accounting for 33.7

percent ($343.6 billion) of personal health spending in 1998. State

and local governments funded another 9.9 percent ($101.3 billion;

table C–4).

TABLE C–4.—PERSONAL HEALTH CARE EXPENDITURES: AGGREGATE AMOUNTS AND PERCENTAGE DISTRIBUTION, SELECTED CALENDAR YEARS 

98

Spending source 1960 1965 1970 1975 1980 1985 1990 1995 1996 1997 

Amount in billions of dollars

Private .................................................................... $18.5 $27.9 $41.3 $69.2 $130.1 $228.8 $373.5 $487.9 $510.0 $537.7 

Private health insurance .............................. 5.0 8.7 14.8 28.4 62.0 114.1 207.7 286.3 298.1 312.4 Out-of-pocket payments ............................... 13.1 18.5 24.9 38.1 60.3 100.7 145.0 170.5 178.1 189.1 Other private sources of funds .................... 0.4 0.7 1.6 2.7 7.8 14.0 20.8 31.1 33.8 36.3 

Public ..................................................................... 5.1 7.3 22.5 45.3 87.0 147.7 241.1 391.2 414.0 430.9 

Federal .......................................................... 2.1 3.0 14.7 30.9 63.4 111.1 177.0 299.0 319.1 333.4 State and local ............................................. 3.0 4.3 7.8 14.4 23.6 36.6 64.2 92.2 94.9 97.5 

Total ..................................................... 23.6 35.2 63.8 114.5 217.0 376.4 614.7 879.1 924.0 968.6 

Percentage distribution

Private .................................................................... 78.3 79.4 64.7 60.4 59.9 60.8 60.8 55.5 55.2 55.5 

Private health insurance .............................. 21.2 24.7 23.2 24.8 28.6 30.3 33.8 32.6 32.3 32.3 Out-of-pocket payments ............................... 55.3 52.7 39.0 33.3 27.8 26.7 23.6 19.4 19.3 19.5 Other private sources of funds .................... 1.8 2.0 2.6 2.4 3.6 3.7 3.4 3.5 3.7 3.7 

Public ..................................................................... 21.7 20.6 35.3 39.6 40.1 39.2 39.2 44.5 44.8 44.5 

Federal .......................................................... 9.0 8.4 23.0 27.0 29.2 29.5 28.8 34.0 34.5 34.4 State and local ............................................. 12.6 12.2 12.2 12.5 10.9 9.7 10.4 10.5 10.3 10.1 

Note.—Totals may not equal sum of rounded components. Percentage amounts are calculated on unrounded numbers.Source: Health Care Financing Administration, Office of the Actuary. Data from the National Health Statistics Group.

1040

EXPENDITURES FOR HOSPITAL CARE

In 1998, hospitals accounted for 33 percent of total national

health expenditures, down from 42 percent in 1980. Table C–5

shows several measures of costs incurred by community hospitals,

which include all non-Federal short-term general hospitals. These

hospitals’ total expenses (including inpatient and outpatient acute

and postacute care, as well as nonpatient care activities) reached

$331.5 billion in 1997. This was up 3.3 percent from the previous

year, the smallest rise in hospital costs in over 30 years. Inpatient

expenses actually decreased in 1997, reflecting 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 1.1 percent to $1,202 in 1997. The 1997

data continues the trend of declining growth rates which began in

the early 1990s.

The average cost per case (also adjusted to reflect outpatient

care) fell to $6,526, a decrease of 0.4 percent. From 1992 through

1997, the increase in costs per case averaged 2.0 percent per year,

compared with 9 percent from 1985 through 1992 and 14 percent

from 1975 through 1982. Even after taking inflation into account,

the recent trend in hospital costs differs sharply from previous

years. In 1994, hospital costs per case rose more slowly than inflation for the first time since 1979. Costs per case grew even more

slowly relative to inflation in 1995 and 1996; in 1997, the inflation

rate was 2.3 while the percent change in average cost per case fell

0.4 percent.

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. Using data compiled in periodic studies

by the Prospective Payment Assessment Commission, chart C–1

displays the contributions of five factors: general inflation, hospital

input prices, population growth, utilization, and intensity. Between

1985 and 1992, total hospital expenses rose at an annual rate of

10 percent. The largest contributor to this increase was the intensity of hospital care; that is, the resources used per patient. During

this period, general inflation also accounted for a large share of the

increase in hospital expenses. Hospital input prices rose faster

than the general price level, and hospital utilization per person actually fell (as the number of adjusted admissions grew more slowly

than the population).

Between 1992 and 1996, the increase in total hospital expenses

was only 5.3 percent per year. Because of this, although it slowed

from 3.9 percent between 1985 and 1992 to 2.8 percent between

1992 and 1996, general inflation accounted for more than half of

the hospital cost increase in the latter period. Hospital utilization

per person, which had fallen in the earlier period, rose substantially between 1992 and 1996, accounting for a large share of the

growth in hospital expenses. Finally, intensity, which had been the

major contributor to cost growth in the earlier period, was almost

level between 1992 and 1996.

1041

TABLE C–5.—SELECTED DATA ON COMMUNITY HOSPITAL EXPENSES, 1965–97

Year

Total expenses Expenses per adjusted inpatient dayExpenses per adjusted admissionInpatient expenses 1

Amount (in

billions)

Percent

change Amount Percent

change Amount Percentchange

Amount (in

billions)

Percent

change

1965 ........... $9.220 8.6 $41 7.5 $315 8.1 $8.414 8.7

1966 ........... 10.497 13.8 46 11.4 356 13.1 9.611 14.2

1967 ........... 12.624 20.3 53 15.3 425 19.1 11.551 20.2

1968 ........... 14.720 16.6 59 11.5 482 13.4 13.372 15.8

1969 ........... 17.247 17.2 68 15.4 551 14.5 15.636 16.9

1970 ........... 20.261 17.5 78 13.8 608 10.3 18.329 17.2

1971 ........... 22.496 11.0 87 12.3 670 10.1 20.269 10.6

1972 ........... 25.223 12.1 96 10.3 729 8.8 22.622 11.6

1973 ........... 28.248 12.0 105 9.2 784 7.5 25.173 11.3

1974 ........... 32.759 16.0 118 12.3 873 11.4 29.077 15.5

1975 ........... 38.492 17.5 138 16.4 1,017 16.5 33.971 16.8

1976 ........... 45.842 19.1 158 15.0 1,168 14.8 40.321 18.7

1977 ........... 53.006 15.6 181 14.3 1,312 12.3 46.437 15.2

1978 ........... 59.802 12.8 203 12.1 1,466 11.8 52.131 12.3

1979 ........... 67.833 13.4 226 11.5 1,618 10.4 59.060 13.3

1980 ........... 79.340 17.0 256 12.9 1,836 13.5 68.962 16.8

1981 ........... 94.187 18.7 299 16.9 2,155 17.4 81.634 18.4

1982 ........... 109.091 15.8 348 16.2 2,489 15.5 94.346 15.6

1983 ........... 120.220 10.2 391 12.4 2,742 10.2 103.361 9.6

1984 ........... 126.028 4.8 443 13.3 2,947 7.5 107.005 3.5

1985 ........... 134.043 6.4 493 11.3 3,226 9.5 111.416 4.1

1986 ........... 146.032 8.9 535 8.6 3,527 9.3 119.286 7.1

1987 ........... 161.322 10.5 581 8.6 3,860 9.5 129.824 8.8

1988 ........... 177.770 10.2 632 8.8 4.194 8.7 140.482 8.2

1989 ........... 195.378 9.9 690 9.3 4,586 9.3 152.147 8.3

1990 ........... 217.113 11.1 765 10.7 5,021 9.5 165.792 9.0

1991 ........... 238.633 9.9 844 10.3 5,461 8.8 178.401 7.6

1992 ........... 260.994 9.4 927 9.9 5,905 8.1 191.401 7.3

1993 ........... 278.880 6.9 1,000 7.8 6,188 4.8 202.055 5.6

1994 ........... 292.801 5.0 1,060 6.0 6,312 2.0 207.918 2.9

1995 ........... 308.411 5.3 1,127 6.3 6,427 1.8 214.594 3.2

1996 ........... 320.789 4.0 1,188 5.4 6,553 2.0 218.013 1.6

1997 ........... 331.482 3.3 1,202 1.1 6,526 ¥0.4 217.888 ¥0.1

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: Medicare Payment Advisory Commission analysis of data from the American Hospital Association National Hospital Panel Survey.

1042

CHART C–1. FACTORS CONTRIBUTING TO GROWTH OF TOTAL HOSPITAL EXPENSES,

1985–92 AND 1992–96

Note.—Hospital expenses grew at an annual rate of 10.0 percent between 1985 and 1992 and 5.3 percent between 1992 and 1996.

Source: Prospective Payment Assessment Commission.

Expenditures for hospital care are financed primarily by third

parties, as shown in table C–6. In 1998, private health insurers

paid 30.8 percent of the total, Medicare 32.4 percent, and Medicaid

(including both the Federal and State shares) 15.9 percent. The

share financed by out-of-pocket payments from individuals was

only 3.4 percent in 1998, down from 5.2 percent in 1980, and 9.0

percent in 1970.

TRENDS IN HOSPITAL UTILIZATION

ADMISSIONS

For a number of years, the average annual rate of growth in hospital admissions has either been relatively modest or even declined.

From 1978 through 1983, total inpatient admissions increased at

an annual rate of 1.0 percent, and admissions for persons 65 and

older 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. However, admissions of patients under

65 fell even more during the first few years of PPS. From 1987

through 1992, total admissions continued to decrease, but at a

slower rate, due to an increase in admissions 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 older. With the exception of

1996, this trend continued through 1997.

TABLE C–6.—NATIONAL EXPENDITURES FOR HOSPITAL CARE BY SOURCE OF FUNDS, SELECTED YEARS 1980–98

[In billions of dollars]

Source of payment

1980 1985 1990 1995 1998

Amount Percent Amount Percent Amount Percent Amount Percent Amount 

Out of pocket .................................................... $5.3 5.2 $8.8 5.2 $9.8 3.8 $11.4 3.3 $12.8 Third-party ........................................................ 97.4 94.8 159.4 94.8 246.8 96.2 338.7 96.7 370.0 

Private health insurance .............................. 38.7 37.7 61.0 36.3 95.7 37.3 113.1 32.3 118.0 Other private funds ...................................... 5.0 4.9 8.3 4.9 13.8 5.4 11.3 3.2 19.1 Government .................................................. 53.7 52.3 90.1 53.6 137.3 53.5 214.3 61.2 232.9 

Federal ..................................................... 40.9 39.8 71.1 42.3 103.4 40.3 175.4 50.1 187.4 

Medicare .............................................. 26.3 25.6 48.9 29.1 68.5 26.7 112.6 32.2 123.9 Medicaid 1 ............................................ 4.6 4.4 7.4 4.4 14.9 5.8 37.2 10.6 37.4 Other Federal ....................................... 9.9 9.7 14.8 8.8 20.0 7.8 25.5 7.3 26.0 

State and local ........................................ 12.8 12.5 19.0 11.3 33.9 13.2 39.0 11.1 45.5 

Medicaid 2 ............................................ 3.9 3.8 6.3 3.7 11.6 4.5 14.8 4.2 23.4 Other State and local ......................... 8.9 8.7 12.8 7.6 22.3 8.7 24.2 6.9 22.1 

Total ................................................ 102.7 100.0 168.2 100.0 256.5 100.0 350.1 100.0 382.8 

1 Federal share only.2 State and local share only.

Source: Health Care Financing Administration, Office of the Actuary. Data from the National Health Statistics Group.

1044

TABLE C–7.—ANNUAL CHANGE IN HOSPITAL ADMISSIONS BY AGE GROUP, 1978–97

Year

Percent change in admissions

All Under 65 65 and

older

1978 ....................................................................... 0.4 ¥1.0 4.9

1979 ....................................................................... 2.7 1.7 5.3

1980 ....................................................................... 2.9 1.5 6.7

1981 ....................................................................... 0.9 0.0 3.0

1982 ....................................................................... 0.0 ¥1.6 4.1

1983 ....................................................................... ¥0.5 ¥2.8 4.7

1984 ....................................................................... ¥3.7 ¥4.2 ¥2.6

1985 ....................................................................... ¥4.9 ¥4.7 ¥5.2

1986 ....................................................................... ¥2.1 ¥2.5 ¥1.0

1987 ....................................................................... ¥0.6 ¥1.0 0.4

1988 ....................................................................... ¥0.4 ¥1.6 2.0

1989 ....................................................................... ¥1.0 ¥2.0 1.2

1990 ....................................................................... ¥0.5 ¥1.6 1.7

1991 ....................................................................... ¥1.1 ¥2.9 2.5

1992 ....................................................................... ¥0.8 ¥2.2 1.7

1993 ....................................................................... 0.7 ¥0.5 2.9

1994 ....................................................................... 0.9 0.2 2.0

1995 ....................................................................... 1.4 0.4 2.9

1996 ....................................................................... ¥0.4 ¥0.8 0.4

1997 ....................................................................... 0.4 ¥0.3 1.4

Average annual percent change

1978–83 ................................................................. 1.0 ¥0.4 4.8

1984–86 ................................................................. ¥3.5 ¥3.8 ¥3.0

1987–92 ................................................................. ¥0.7 ¥1.9 1.6

1992–97 ................................................................. 0.6 ¥0.2 1.9

Source: Medicare Payment Advisory 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 there was a significant drop in length of stay. From 1982 to 1984, the average stay

fell from 7.2 days to 6.7 days for all patients and from 10.1 days

to 8.9 days for patients 65 and older. Average length of stay stabilized at these levels throughout the rest of the 1980s, but has declined again in the 1990s. Hospital stays for elderly patients were

2.2 days shorter, on average, in 1997 than in 1990, and for patients

under 65 the average stay was 0.7 days shorter. This decline was

even steeper than in the first years of PPS.

1045

TABLE C–8.—AVERAGE LENGTH OF STAY AND ANNUAL CHANGE BY AGE GROUP, 1978–

97

Year

All Under 65 65 and older

Average length

of stay

(in days)

Percent

change

Average length

of stay

(in days)

Percent

change

Average length

of stay

(in days)

Percent

change

1978 ......... 7.2 ¥0.3 6.0 ¥0.9 10.6 ¥1.2

1979 ......... 7.1 ¥1.0 5.9 ¥1.2 10.4 ¥1.9

1980 ......... 7.2 0.5 5.9 ¥0.2 10.4 ¥0.1

1981 ......... 7.2 0.4 5.9 0.1 10.4 ¥0.1

1982 ......... 7.2 ¥0.6 5.9 ¥0.6 10.1 ¥2.3

1983 ......... 7.0 ¥2.0 5.8 ¥1.7 9.7 ¥4.4

1984 ......... 6.7 ¥5.1 5.6 ¥3.5 8.9 ¥7.5

1985 ......... 6.5 ¥1.7 5.5 ¥1.3 8.8 ¥2.1

1986 ......... 6.6 0.6 5.6 0.5 8.8 0.4

1987 ......... 6.6 0.8 5.6 0.4 8.9 1.0

1988 ......... 6.6 ¥0.1 5.6 ¥0.3 8.8 ¥0.7

1989 ......... 6.6 0.1 5.5 ¥0.7 8.8 0.2

1990 ......... 6.6 ¥1.1 5.4 ¥1.5 8.7 ¥1.5

1991 ......... 6.5 ¥1.4 5.3 ¥2.1 8.5 ¥2.0

1992 ......... 6.4 ¥1.6 5.2 ¥1.9 8.3 ¥2.2

1993 ......... 6.2 ¥2.8 5.1 ¥1.8 7.9 ¥4.7

1994 ......... 6.0 ¥3.8 4.9 ¥3.8 7.6 ¥4.2

1995 ......... 5.7 ¥4.2 4.8 ¥2.4 7.1 ¥6.6

1996 ......... 5.5 ¥3.3 4.8 ¥1.3 6.7 ¥5.6

1997 ......... 5.4 ¥1.5 4.7 ¥0.6 6.5 ¥2.7

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

1992–97 .. .................... ¥3.1 .................... ¥2.0 .................... ¥4.8

Source: Medicare Payment Advisory Commission analysis of data from the American Hospital Association National Hospital Panel Survey.

HOSPITAL OCCUPANCY

Table C–9 shows that, with slight increases in admissions and

stable average length of stay, occupancy rates were over 70 percent

in the early 1980s. The number of hospital beds was increasing, exceeding 1 million by 1983. During the early years of PPS, however,

occupancy rates decreased dramatically. From 1983 to 1986, the

aggregate occupancy rate fell from 72.2 percent to 63.4 percent.

There was a slight increase in occupancy rates in the late 1980s,

but the sharp reduction in average length of stay lowered the occupancy rate below 60 percent by 1995, despite almost 130,000 fewer

beds than in 1983. In 1997, occupancy rates rose by 1.2 percent

over the previous year, to 59.6 percent.

1046

TABLE C–9.—INPATIENT HOSPITAL OCCUPANCY RATE AND NUMBER OF BEDS, 1978–97

Year Inpatient days

Occupancy

rate (in percent)

Percent

change

Number of

beds

Percent

change

1978 ..................... 256,708,259 73.7 ¥0.8 954,001 0.9

1979 ..................... 260,791,942 74.5 1.0 959,269 0.6

1980 ..................... 269,615,111 76.1 2.2 970,456 1.2

1981 ..................... 272,956,933 75.8 ¥0.4 986,917 1.7

1982 ..................... 271,422,385 74.5 ¥1.6 997,720 1.1

1983 ..................... 264,504,444 72.2 ¥3.1 1,003,658 0.6

1984 ..................... 241,779,724 66.7 ¥7.6 992,616 ¥1.1

1985 ..................... 226,128,547 63.6 ¥4.7 974,559 ¥1.8

1986 ..................... 222,903,834 63.4 ¥0.3 963,133 ¥1.2

1987 ..................... 223,441,342 64.1 1.2 954,458 ¥0.9

1988 ..................... 222,312,614 64.6 0.8 942,306 ¥1.3

1989 ..................... 220,360,991 64.8 0.3 930,994 ¥1.2

1990 ..................... 216,836,360 64.5 ¥0.6 921,447 ¥1.0

1991 ..................... 211,474,700 63.5 ¥1.4 911,781 ¥1.0

1992 ..................... 206,440,330 62.3 ¥1.9 907,661 ¥0.5

1993 ..................... 202,077,589 61.4 ¥1.5 901,669 ¥0.7

1994 ..................... 196,116,784 60.3 ¥1.7 890,575 ¥1.2

1995 ..................... 190,377,347 59.7 ¥1.1 874,250 ¥1.8

1996 ..................... 183,495,155 58.9 ¥1.3 853,561 ¥2.4

1997 ..................... 181,313,462 59.6 1.2 833,254 ¥2.4

Average annual percent change

1978–83 ............... ............................ ................ ¥0.5 .................... 1.0

1984–86 ............... ............................ ................ ¥4.2 .................... ¥1.4

1987–92 ............... ............................ ................ ¥0.3 .................... ¥1.0

1992–97 ............... ............................ ................ ¥0.9 .................... ¥1.7

Source: Medicare Payment Advisory Commission analysis of data from American Hospital Association

National Hospital Panel Survey.

HOSPITAL EMPLOYMENT

Hospitals experienced a significant downturn in total employment levels at the time PPS was introduced, as shown in table C–

10. During 1984 and 1985, full-time equivalent employees declined

by 2.3 percent. From 1986 through 1993, however, hospital employment increased.

During the late 1970s and through the 1980s, growth in the

number of part-time personnel exceeded growth in the number of

full-time personnel in every year. In 1992, however, the number of

full-time personnel grew faster than the number of part-time personnel for the first time in more than 20 years. This trend continued in 1993, but the increase in both types of personnel slowed dramatically. In 1994 hospital employment declined for the first time

since the early years of PPS. This was only the second such period

in the past three decades. The number of hospital employees continued to decrease until 1997 when both full- and part-time employees increased. Total personnel increased by 0.5 percent over

1996 levels.

1047

TABLE C–10.—ANNUAL PERCENT CHANGE IN HOSPITAL EMPLOYMENT, 1978–97

Year

Total fulltime equivalent employeesPersonnel

Total Full time Part time

1978 .................................................. 3.7 4.1 3.3 6.8

1979 .................................................. 3.5 3.9 2.9 6.7

1980 .................................................. 4.7 5.2 4.0 9.1

1981 .................................................. 5.4 6.0 4.8 9.4

1982 .................................................. 3.7 3.7 3.6 4.1

1983 .................................................. 1.4 1.5 1.2 2.3

1984 .................................................. ¥2.3 ¥2.1 ¥2.6 ¥0.8

1985 .................................................. ¥2.3 ¥2.0 ¥2.7 ¥0.1

1986 .................................................. 0.3 0.4 0.2 0.9

1987 .................................................. 0.7 0.9 0.4 2.3

1988 .................................................. 1.1 1.4 0.7 3.3

1989 .................................................. 1.6 1.9 1.2 3.6

1990 .................................................. 2.1 2.3 1.8 3.6

1991 .................................................. 0.6 0.7 0.6 1.0

1992 .................................................. 1.6 1.5 1.7 0.9

1993 .................................................. 0.7 0.6 0.8 0.2

1994 .................................................. ¥0.8 ¥0.8 ¥0.7 ¥0.9

1995 .................................................. ¥1.4 ¥1.4 ¥1.5 ¥0.9

1996 .................................................. ¥0.2 ¥0.3 0.0 ¥1.1

1997 .................................................. 0.2 0.5 0.1 1.7

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

1992–97 ............................................ ¥0.3 ¥0.3 ¥0.3 ¥0.2

Source: Medicare Payment Advisory Commission analysis of data from the American Hospital Association National Hospital Panel Survey.

EXPENDITURES FOR PHYSICIANS’ SERVICES

Health care expenditures for physician services were $229.5 billion in 1998, an increase of 5.4 percent from 1997. This amounted

to 20.0 percent of national health expenditures.

Third-party (public expenditures and private insurance) payments financed over 84 percent of physician services. In 1998 private health insurance continued to be the single largest payer. This

portion grew from 37.9 percent in 1980 to 50.6 percent in 1993.

‘‘The substantial and rapid shift to managed care among employersponsored private health insurance and public-program enrollment

in the early to mid 1990s,’’ however, resulted in the stabilization

of the share of physician spending covered by private health insurance. From 1993, this share changed very little and, in 1998, was

50.5 percent (Levit et al., 2000).

Public expenditures in this area have grown much more slowly, rising from 28.9 percent in 1980 to 31.9 percent ($73.3 billion) in

1998. Of this last figure, $49.4 billion was for Federal Medicare

1048

payments. In contrast, out-of-pocket payments by individuals for

physician services have decreased from 32.4 percent in 1980 to 15.6

percent ($35.7 billion) in 1998 (table C–11).

Inflation in physicians’ fees has outpaced that of the U.S. economy as a whole since 1981 as measured by the Consumer Price

Index (CPI). The inflation rate of 2.8 for 1999, however, is the lowest since 1964 (table C–12). Also, the ‘‘excess’’ rate of increase in

physician services prices above overall inflation since 1993 decreased to an average 1.3 percentage points per year, down from

2.5 percent for the years from 1987 to 1993 (American Medical Association, 1999).

Physician revenue and income are directly tied to the prices of

physicians’ services. The American Medical Association (AMA) reports that, over the 10 years from 1987 to 1997, mean physician

income rose from $132,300 to $199,600, an average of 4.2 percent

a year. In 1994, however, the average physician net income experienced the first decrease ever recorded by the AMA. After expenses

but before taxes, average physician income was $182,400, a 3.6 percent decrease from $189,300 in 1993. From 1993 to 1997, average

physician income grew only $10,000 or an average of 1.3 percent

per year. Average net income in 1997 was up just 0.3 percent from

$199,000 in 1996. Physicians’ inflation-adjusted mean income

showed no increase between 1993 and 1997 (Levit et al., 2000).

According to the AMA, the proportion of physicians who are employees, i.e., who do not have an ownership interest in their main

practice, rose at a fairly rapid rate between 1985 and 1992 to 32

percent and increased even more quickly over the next 3 years, rising from 32 percent in 1992 to 43 percent in 1994. This is attributed to a variety of factors, including the growth of managed care,

increased competition among health providers, and uncertainty

about the Clinton administration’s health care reform efforts and

its effect on small physician practices. Since 1994, however, the

share of employee physicians has declined to 36.1 percent in 1998.

This reversal in trend may be due to a change in the health care

system and the fact that small physician practices are becoming

more viable competitors for managed care contracts (American

Medical Association, 1998b). At the same time, the portion of the

physician work force who are self-employed (full or part owners of

their practices), has risen from 55 percent in 1995 to 62.3 percent

in 1998. The average net income for self-employed physicians in

1997 was $228,200, down from $231,600 in 1996 (table C–13). This

was still almost 50 percent higher than employee-doctors whose average net income also fell in 1997 to $154,000 from $159,200 in

1996. Self-employed physicians, however, tend to work more hours

and see more patients, have additional years of experience, be

board certified, and are more likely to be male, all factors associated with higher physician earnings.

TABLE C–11.—EXPENDITURES FOR PHYSICIAN SERVICES 1 BY SOURCE OF FUNDS, SELECTED YEARS 1980–98

[In billions of dollars]

Source of payment

1980 1985 1990 1995 1997 1998

Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount 

Out of pocket .................. $14.7 32.4 $24.4 29.2 $32.2 22.0 $30.3 16.0 $33.8 15.5 $35.7 Third party ....................... 30.6 67.6 59.2 70.8 114.2 78.0 171.6 85.0 184.0 84.5 193.8 

Private health insurance ........................ 17.1 37.9 33.5 40.1 66.8 45.7 104.2 51.6 109.4 50.2 116.0 Other private funds .... 0.4 0.8 1.4 1.6 2.7 1.8 3.8 1.9 4.6 2.1 4.5 Government ................. 13.1 28.9 24.3 29.1 44.7 30.5 63.6 31.5 70.1 32.2 73.3 

Federal .................... 10.0 22.1 19.4 23.2 35.6 24.3 50.9 25.2 57.4 26.3 60.8 

Medicare ............ 8.0 17.6 16.3 19.5 29.2 20.0 39.9 19.8 45.6 20.9 49.4 Medicaid ............ 1.4 3.1 2.0 2.4 4.1 2.8 8.5 4.2 9.1 4.2 8.8 Other Federal ..... 0.6 1.4 1.1 1.3 2.2 1.5 2.5 1.3 2.7 1.2 2.6 

State and local ...... 3.1 6.8 4.9 5.9 9.1 6.2 12.6 6.3 12.8 5.9 12.4 

Medicaid ............ 1.1 2.5 1.5 1.8 2.9 2.0 6.0 3.0 6.3 2.9 6.1 Other State and

local ............... 2.0 4.3 3.4 4.0 6.2 4.2 6.7 3.3 6.5 3.0 6.3 Total .............. 45.2 100.0 83.6 100.0 146.3 100.0 201.9 100.0 217.8 100.0 229.5 

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 institut

the cost of diagnostic work performed in independent clinical laboratories. The salaries of staff physicians are counted with expenditures for the services of the employintion.

Note.—Numbers may not add to totals because of rounding.Source: Health Care Financing Administration, Office of the Actuary.

1050

TABLE C–12.—ANNUAL PERCENTAGE CHANGE IN SELECTED COMPONENTS OF THE

CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS, 1 1963–99

Year All items All items less

medical care

Medical care

total

Physicians’

services

1963 .......................................... 1.3 1.0 2.6 2.2

1964 .......................................... 1.3 1.3 2.1 2.5

1965 .......................................... 1.6 1.6 2.4 3.7

1966 .......................................... 2.9 3.1 4.4 5.6

1967 .......................................... 3.1 2.1 7.2 7.2

1968 .......................................... 4.2 4.2 6.0 5.6

1969 .......................................... 5.5 5.4 6.7 7.0

1970 .......................................... 5.7 5.9 6.6 7.5

1971 .......................................... 4.4 4.1 6.2 7.0

1972 .......................................... 3.2 3.2 3.3 3.0

1973 .......................................... 6.2 6.4 4.0 3.4

1974 .......................................... 11.0 11.2 9.3 9.2

1975 .......................................... 9.1 9.0 12.0 12.1

1976 .......................................... 5.8 5.3 9.5 11.4

1977 .......................................... 6.5 6.3 9.6 9.1

1978 .......................................... 7.6 7.6 8.4 8.4

1979 .......................................... 11.3 11.5 9.2 9.1

1980 .......................................... 13.5 13.6 11.0 10.5

1981 .......................................... 10.3 10.4 10.7 11.0

1982 .......................................... 6.2 5.9 11.6 9.4

1983 .......................................... 3.2 2.9 8.8 7.8

1984 .......................................... 4.3 4.1 6.2 6.9

1985 .......................................... 3.6 3.4 6.3 5.9

1986 .......................................... 1.9 1.5 7.5 7.2

1987 .......................................... 3.6 3.5 6.6 7.3

1988 .......................................... 4.1 3.9 6.5 7.2

1989 .......................................... 4.8 4.6 7.7 7.4

1990 .......................................... 5.4 5.2 9.0 7.1

1991 .......................................... 4.2 3.9 8.7 6.0

1992 .......................................... 3.0 2.8 7.4 6.3

1993 .......................................... 3.0 2.7 5.9 5.6

1994 .......................................... 2.6 2.5 4.8 4.4

1995 .......................................... 2.8 2.7 4.5 4.5

1996 .......................................... 3.0 2.8 3.5 3.6

1997 .......................................... 2.3 2.3 2.8 3.0

1998 .......................................... 1.6 1.5 3.2 3.0

1999 .......................................... 2.2 2.1 3.5 2.8

1 Consumer Price Index for All Urban Consumers, changes in annual averages.

Source: U.S. Department of Labor, Bureau of Labor Statistics.

TABLE C–13.—PHYSICIANS’ AVERAGE NET INCOME 1 AFTER EXPENSES BUT BEFORE TAXES, SELECTED YEARS 1983–97

[In thousands of dollars]

Category 1983 1985 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Specialty:

General/family practice ............... $68.5 $77.9 $91.5 $94.6 $95.9 $102.7 $111.5 $114.4 $116.8 $121.4 $131.2 $139.1 $140.9 Internal medicine ......................... 93.3 101.0 121.8 130.9 146.5 152.5 149.6 162.1 180.8 174.9 185.7 185.7 193.9 Surgery ......................................... 145.5 155.4 187.9 207.5 220.5 236.4 233.8 250.5 262.7 255.2 269.4 275.2 261.4Pediatrics ..................................... 70.7 77.1 85.3 94.9 104.7 106.5 119.3 123.9 135.4 126.2 140.5 140.6 143.5 Obstetrics/gynecology .................. 119.9 122.7 163.2 180.7 194.3 207.3 221.8 220.7 221.9 200.4 244.3 231.0 228.7Radiology ...................................... 148.0 150.8 180.7 188.5 210.5 219.4 229.8 257.3 259.8 237.4 244.4 275.1 273.4Psychiatry ..................................... 80.0 88.6 102.7 111.4 111.7 116.5 127.6 132.1 131.3 128.5 137.2 133.7 135.7 Anesthesiology .............................. 144.7 140.2 163.1 194.5 185.8 207.4 221.1 231.1 224.1 218.1 215.1 228.4 236.2 

Geographic area:

New England ................................ 84.5 108.3 110.6 132.9 128.3 142.5 143.8 171.2 171.5 156.1 161.0 169.1 182.5 Middle Atlantic ............................. 98.6 107.9 126.1 135.0 152.5 156.1 171.0 172.4 185.3 177.8 207.0 200.3 193.0East North Central ....................... 114.3 118.9 137.6 147.0 155.6 172.4 174.1 187.1 199.2 191.9 198.8 199.8 199.3West North Central ...................... 110.5 113.7 133.9 138.0 159.2 151.4 164.2 187.5 198.2 183.8 184.6 212.6 215.9 South Atlantic .............................. 106.7 112.6 133.8 156.0 165.6 169.0 168.8 186.4 192.5 189.3 198.8 196.4 199.9 East South Central ...................... 114.9 115.0 141.2 164.8 173.0 169.0 179.4 180.0 195.0 199.2 216.0 229.6 234.7 West South Central ...................... 124.4 123.3 140.4 160.7 170.5 178.8 193.3 193.8 189.1 195.5 205.9 217.5 218.4 Mountain ...................................... 91.4 97.5 125.5 132.1 142.6 170.9 155.0 175.7 193.2 175.4 178.8 199.1 201.1 Pacific .......................................... 103.1 113.6 135.4 136.0 148.1 162.5 172.4 178.1 181.2 171.8 189.9 184.6 180.9

Employment status:

Self-employed ............................... 115.9 124.5 146.2 160.0 175.3 185.6 191.0 202.3 218.0 210.2 230.8 231.6 228.2Employee ...................................... 77.6 83.8 99.6 113.0 119.2 119.8 134.0 136.1 150.7 148.2 152.5 159.2 154.0

All physicians 2 ................... 104.1 112.2 132.3 144.7 155.8 164.3 170.6 181.7 189.3 182.4 195.5 199.0 199.6 

1 Average net income after expenses but before taxes. These figures include contributions made into pension, profit-sharing, and deferred compensation plans. 2 Includes physicians in specialties not reported separately.

Source: American Medical Association (1998b and 1999).

1052

Growth in average net income for physicians in the Middle Atlantic and Pacific areas, well above average in 1995, experienced a

decrease in 1996 and 1997. The West, in particular, has been associated with managed care growth and cost containment, so that region’s position is not unexpected (American Medical Association,

1999). After several years of the lowest average net income, physicians in the New England States had the highest percent increase

in 1997 and have passed the Pacific Division. The East South Central region remained the highest at $234,700 (table C–13).

Physician net income varies more by specialty than across geographic areas. Radiologists had the highest average net incomes in

1997 ($273,400) and psychiatrists the lowest ($135,700). Incomes

for general and family practitioners, however, continued to increase

though the gain of 1.3 percent for 1997 was not as healthy as the

8.1 percent gain in 1995 and 6.0 percent in 1996. The largest gain

from 1996 to 1997 was by specialists in internal medicine with an

increase of 4.4 percent to $193,900. Income for surgeons fell by 5

percent from 1996 to 1997, the largest decline among all specialties

(table C–13).

Table C–14 shows median net income for physicians, the level

below and above which lie half of all earnings. While average physician net income reached $199,600 in 1997, median income which

may be more representative of the typical physician’s earnings, fell

1.2 percent in 1997 to $164,000. Over the decade from 1987 to

1997, the average annual rate of increase in the median income for

all physicians was 4.3 percent. Most of this growth had occurred

by 1993. After adjusting for inflation, this represents a real growth

of only 0.7 percent yearly.

Table C–15 shows the distribution of physicians’ net incomes in

1997 for all physicians and selected specialties. While the average

net income of all physicians was $199,600. Half of all physicians

earned $164,000 or less. One-fourth of all physicians earned

$120,000 or less, while one-fourth earned $250,000 or more. Median incomes across all physician specialties remain far apart in

1997 with the median income for orthopedic surgery at $275,000.

On the lower side, pediatrics and psychiatry reported median incomes of $120,000 and $130,000.

The AMA’s Physician Socioeconomic Statistics 1999–2000 reported that, on average, non-Federal patient care physicians received 42.8 percent of their incomes from private insurers. Medicare payments were 28.6 percent; Medicaid was a source of another

12 percent of doctor revenue. Patient out-of-pocket payments accounted for 12.2 percent (table C–16). The importance of each

source varied by specialty, with physicians specializing in internal

medicine receiving the highest percentage of revenue from Medicare. Pediatricians, on average, received only 1.1 percent of their

income from Medicare, but received the highest percentage of income of any specialty group from Medicaid (25.5 percent).

1053

TABLE C–14.—MEDIAN PHYSICIAN NET INCOME, BY SELECTED CHARACTERISTICS,

1987, 1993, AND 1997

[In thousands of dollars]

Category

Median net income Annualized percentage change 1987–

97 real

1987 1993 1997 percent 1987–

97

1987–

93

1993–

97

Primary care specialties $90 $130 $140 4.5 6.3 1.9 1.0

Nonprimary care specialties ...................... 125 180 195 4.5 6.2 2.1 1.0

Male .............................. 114 170 175 4.4 6.9 0.7 0.9

Female ........................... 72 110 120 5.2 7.3 2.2 1.7

U.S. medical graduate .. 110 158 170 4.4 6.2 1.8 0.9

International medical

graduate ................... 100 150 150 4.1 7.0 0.0 0.6

Board certified .............. 120 170 175 3.8 6.0 0.7 0.3

Not board certified ........ 90 124 138 4.4 5.5 2.7 0.8

Self employed ................ 120 186 200 5.2 7.6 1.8 1.7

Employee ....................... 84 136 140 5.2 8.4 0.7 1.7

Independent contractor 100 150 165 5.1 7.0 2.4 1.6

Northeast ....................... 100 150 160 4.8 7.0 1.6 1.3

North Central ................ 108 155 173 4.8 6.2 2.8 1.3

South ............................. 112 160 171 4.3 6.1 1.7 0.8

West .............................. 110 160 155 3.5 6.4 ¥0.8 0.0

All physicians ....... 108 157 164 4.3 6.4 1.1 0.7

CPI (1982–84 =

100) ................. 113.6 144.5 160.5 3.5 4.1 2.7 NA

NA—Not available.

Source: American Medical Association (1999).

A Medical Economics Continuing Survey addressed physician

gross income from health maintenance organizations (HMOs), preferred provider organizations (PPOs), and the amount in the form

of capitation payments. According to the survey, the number of

physicians participating in capitated plans increased to 44 percent

in 1998 from 40 percent in 1996.

Overall managed care participation by physicians has not increased since the last survey in 1996, however. In 1998, 76 percent

of physicians participated in HMOs and 81 percent in PPOs. The

median gross income from HMOs in 1998 for those physicians participating in HMOs was $66,200, up from $63,770 in 1995. For physicians in PPOs, the median gross income from PPOs for 1998 was

$61,600, an increase from $48,660 in 1995 (Terry, 1999b). The

share of gross income from payments from HMOs rose from 20 percent in 1995 to 25 percent in 1998. Over the same period the share

from PPOs rose from 15 percent to 24 percent while the share from

capitation rose from 15 percent to 20 percent (table C–17).

1054

TABLE C–15.—DISTRIBUTION OF PHYSICIAN NET INCOME AFTER EXPENSES BUT

BEFORE TAXES BY SPECIALTY AND CENSUS DIVISION, 1997

[In thousands of dollars]

Category Mean 25th percentile Median 75th percentile

Specialty:

General/family practice .................... $140.9 $100.0 $132.0 $160.0

Internal medicine ............................. 193.9 114.0 150.0 245.0

General .................................... 175.8 108.0 147.0 210.0

Cardiovascular diseases ......... 284.2 150.0 249.0 385.0

Gastroenterology ...................... 221.5 150.0 175.0 300.0

Other ........................................ 188.7 119.0 158.0 241.0

Surgery ............................................. 261.4 150.0 217.0 325.0

General .................................... 244.4 150.0 203.0 302.0

Otolaryngology ......................... 230.2 170.0 206.0 289.0

Orthopedic ............................... 331.0 205.0 275.0 420.0

Ophthalmology ......................... 222.1 121.0 175.0 300.0

Urological ................................ 237.6 160.0 207.0 298.0

Other ........................................ 326.5 186.0 270.0 396.0

Pediatrics ......................................... 143.5 100.0 120.0 178.0

Obstetrics/gynecology ....................... 228.7 150.0 200.0 280.0

Radiology .......................................... 273.4 190.0 260.0 350.0

Diagnostic ............................... 275.5 190.0 265.0 330.0

Other ........................................ 269.7 190.0 255.0 350.0

Psychiatry ......................................... 135.7 98.0 130.0 162.0

Anesthesiology .................................. 236.2 175.0 220.0 288.0

Pathology .......................................... 200.9 140.0 175.0 220.0

Other ................................................. 190.3 120.0 170.0 230.0

Emergency medicine ............... 197.0 145.0 195.0 230.0

Neurology ................................. 188.1 117.0 164.0 250.0

Dermatology ............................. 224.1 120.0 160.0 290.0

Other ........................................ 157.4 100.0 137.0 200.0

Geographic area:

New England .................................... 182.5 110.0 150.0 230.0

Middle Atlantic ................................. 193.0 120.0 160.0 240.0

East North Central ........................... 199.3 120.0 175.0 250.0

West North Central ........................... 215.9 130.0 170.0 264.0

South Atlantic .................................. 199.9 112.0 166.0 250.0

East South Central ........................... 234.7 130.0 190.0 321.0

West South Central .......................... 218.4 124.0 173.0 257.0

Mountain .......................................... 201.1 120.0 160.0 250.0

Pacific .............................................. 180.9 115.0 150.0 222.0

All physicians 1 ........................ 199.6 120.0 164.0 250.0

1 Includes physicians in specialties not listed separately.

Source: American Medical Association (1999).

1055

TABLE C–16.—AVERAGE PERCENT OF NON-FEDERAL PHYSICIAN REVENUE BY SOURCE

OF PAYMENT, 1998

Category Medicare Medicaid Private

insurance

Patient

out of

pocket

Specialty:

General/family practice ........................... 23.3 12.4 43.5 16.8

Internal medicine ..................................... 43.9 8.0 35.7 9.0

Surgery ..................................................... 35.4 7.6 42.8 12.1

Pediatrics ................................................. 1.1 25.5 55.5 12.6

Obstetrics/gynecology .............................. 11.0 20.3 54.1 13.0

Radiology ................................................. 34.3 10.4 42.0 10.7

Psychiatry ................................................. 16.0 17.0 36.5 21.6

Anesthesiology ......................................... 27.8 12.6 47.6 9.0

Pathology ................................................. 27.7 10.9 41.2 9.8

Other ........................................................ 27.7 9.7 43.0 11.6

Geographic area:

New England ............................................ 32.0 10.1 40.7 12.3

Middle Atlantic ........................................ 28.7 11.4 42.5 12.8

East North Central ................................... 29.6 10.3 43.5 11.5

West North Central .................................. 29.0 10.3 48.6 11.0

South Atlantic .......................................... 30.9 11.4 40.5 12.2

East South Central .................................. 26.7 15.6 43.3 11.3

West South Central .................................. 26.5 13.0 42.2 13.1

Mountain .................................................. 29.2 11.6 45.9 11.7

Pacific ...................................................... 24.9 14.3 43.2 12.3

All physicians 1 ............................... 28.6 12.0 42.8 12.2

1 Includes physicians in specialties not listed separately.

Source: American Medical Association (1999).

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 1997, the number of beds

dropped to 3.2 per 1,000 population. Among the 9 Census regions,

the East South Central experienced the largest increase from 1.7

per 1,000 population in 1940 to 4.7 in 1980. By 1997, this number

had declined to 4.2, the same number as the West North Central

region. In contrast, the New England, Mountain, and Pacific regions had fewer beds per 1,000 in 1997 than in 1940. In the period

between 1990 and 1997, the New England and Mountain regions

experienced the largest drops in average annual percent changes

(¥3.8 and ¥3.0, respectively). The East South Central region’s average annual percent change was the smallest at ¥0.3 (table C–

18).

SUPPLY OF PHYSICIANS

Physician shortages in the 1950s and 1960s led to Federal and

State initiatives to increase the supply of physicians. Since that

time, however, the number of physicians in the United States has

1056

grown rapidly from 334,028 in 1970 to 777,859 in 1998, a rate over

four times faster than that of the total population.

TABLE C–17.—PHYSICIAN GROSS INCOME FROM MANAGED CARE AND CAPITATION BY

SPECIALTY, 1998

Physician specialty

Median 1998 gross income 1 from: Percent of 1998 gross

income 1 from:

HMOs PPOs Capitation HMOs PPOs Capitation

Anesthesiologists ......... $82,800 $64,100 $41,240 38 28 24

Cardiologists ................ 69,100 65,600 45,000 19 19 14

Cardio/thoracic surgeons ....................... 89,700 48,600 49,990 24 14 14

Family practitioners ..... 66,800 52,700 49,950 26 24 22

Gastroenterologists ...... 70,500 76,100 30,000 22 23 12

General practitioners ... 46,400 28,900 34,990 24 18 23

General surgeons ......... 66,600 51,500 60,000 24 19 20

Internists ...................... 52,700 54,000 39,990 23 22 18

Obstetrics/gynecology

specialists ............... 109,500 96,600 37,490 36 32 15

Ophthalmologists ......... 89,400 86,900 49,990 22 20 15

Orthopedic surgeons .... 92,000 98,700 60,000 21 24 14

Pediatricians ................ 64,100 73,300 54,980 35 35 28

Plastic surgeons .......... (2) 87,500 80,000 18 19 21

Psychiatrists ................ 41,100 32,100 53,970 24 20 27

All surgical specialists ............ 85,400 79,800 49,990 28 24 18

All nonsurgeons .. 58,400 53,300 42,490 24 23 20

All fields ............. 66,200 61,600 44,980 25 24 20

1 Gross is the individual physician’s share of 1998 practice receipts before professional expenses and

income taxes. Figures exclude physicians with no HMO, PPO, or capitation contracts. 2 Insufficient sample. Neurosurgeons also yielded an insufficient sample.

Source: Terry (1999b).

Table C–19 also indicates that between 1970 and 1998, the number of all physicians per 100,000 civilians grew from 161 to 286, a

78 percent increase. Table C–20 shows variations in the supply of

non-Federal physicians relative to population by State. In 1998, the

District of Columbia had the highest ratio (783 physicians per

100,000 population) while Idaho had the lowest ratio (176 physicians per 100,000 population).

While concern continues about the possible oversupply of physicians and its effect on efforts to control health care spending, the

Council on Graduate Medical Education’s (1999; COGME) Fourteenth Report found that there has been progress toward meeting

the Nation’s physician work force goals. There has been a slight

moderation in the rate of growth in physician supply, the number

of physicians in training has leveled off, and the number of new entrants, particularly international medical graduates (IMGs), has

decreased moderately over the past 5 years. The American Medical

TABLE C–18.—COMMUNITY HOSPITAL BEDS PER 1,000 POPULATION AND AVERAGE ANNUAL PERCENT CHANGE BY REGION AND STATE, SELE

YEARS 1940–97

Region and State

Beds per 1,000 civilian population Average annual percent change

1940 1 1950 1 1960 2 1970 1980 1990 3 1997 3 1940–60 1 2 1960–70 2 1970–80 1980–90 3 1

New England ................. 4.4 4.2 3.9 4.1 4.1 3.4 2.6

¥0.6 0.5 0.0

¥1.9

Maine ........................ 3.0 3.2 3.4 4.7 4.7 3.7 3.0 0.6 3.3 0.0

¥2.1

New Hampshire ......... 4.2 4.2 4.4 4.0 3.9 3.1 2.5 0.2

¥0.9

¥0.3

¥2.3

Vermont ..................... 3.3 4.0 4.5 4.5 4.4 3.0 2.7 1.6 0.0

¥0.2

¥3.4

Massachusetts .......... 5.1 4.8 4.2 4.4 4.4 3.6 2.8

¥1.0 0.5 0.0

¥2.0

Rhode Island ............. 3.9 3.8 3.7 4.0 3.8 3.2 2.6

¥0.3 0.8

¥0.5

¥1.7

Connecticut ............... 3.7 3.6 3.4 3.4 3.5 2.9 2.2

¥0.4 0.0 0.3

¥1.9

Middle Atlantic .............. 3.9 3.8 4.0 4.4 4.6 4.1 3.8 0.1 1.0 0.4

¥0.9

New York ................... 4.3 4.1 4.3 4.6 4.5 4.1 3.9 0.0 0.7

¥0.2

¥0.7

New Jersey ................ 3.5 3.2 3.1 3.6 4.2 3.7 3.5

¥0.6 1.5 1.6

¥1.3

Pennsylvania ............. 3.5 3.8 4.1 4.7 4.8 4.4 3.8 0.8 1.4 0.2

¥0.9

East North Central ........ 3.2 3.2 3.6 4.4 4.7 3.9 3.2 0.6 2.0 0.7

¥1.8

Ohio ........................... 2.7 2.9 3.4 4.2 4.7 4.0 3.2 1.2 2.1 1.1

¥1.8

Indiana ...................... 2.3 2.6 3.1 4.0 4.5 3.9 3.3 1.5 2.6 1.2

¥1.4

Illinois ....................... 3.4 3.6 4.0 4.7 6.1 4.0 3.4 0.8 1.6 0.8

¥2.4

Michigan ................... 4.0 3.3 3.3 4.3 4.4 3.7 2.9

¥1.0 2.7 0.2

¥1.7

Wisconsin .................. 3.4 3.7 4.3 5.2 4.9 3.8 3.2 1.2 1.9

¥0.8

¥2.5

West North Central ........ 3.1 3.7 4.3 6.7 6.8 4.9 4.2 1.6 2.9 0.2

¥1.7

Minnesota ................. 3.9 4.4 4.8 6.1 5.7 4.4 3.6 1.0 2.4

¥0.7

¥2.6

Iowa .......................... 2.7 3.2 3.9 5.6 5.7 5.1 4.3 1.9 3.7 0.2

¥1.1

Missouri .................... 2.9 3.3 3.9 5.1 5.7 4.8 3.9 1.5 2.7 1.1

¥1.7

North Dakota ............. 3.5 4.3 5.2 6.8 7.4 7.0 6.1 2.0 2.7 0.8

¥0.6

South Dakota ............ 2.8 4.4 4.5 5.6 5.5 6.1 6.0 2.4 2.2

¥0.2 1.0

Nebraska ................... 3.4 4.2 4.4 6.2 6.0 5.5 4.7 1.3 3.5

¥0.3

¥1.0

Kansas ...................... 2.8 3.4 4.2 5.4 5.8 4.8 4.2 2.0 2.5 0.7

¥1.9

TABLE C–18.—COMMUNITY HOSPITAL BEDS PER 1,000 POPULATION AND AVERAGE ANNUAL PERCENT CHANGE BY REGION AND STATE, SELE

YEARS 1940–97—Continued

Region and State

Beds per 1,000 civilian population Average annual percent change

1940 1 1950 1 1960 2 1970 1980 1990 3 1997 3 1940–60 1 2 1960–70 2 1970–80 1980–90 3 1

South Atlantic ............... 2.5 2.8 3.3 4.0 4.5 3.7 3.2 1.4 1.9 1.2

¥1.9

Delaware ................... 4.4 3.9 3.7 3.7 3.6 3.0 2.6

¥0.9 0.0

¥0.3

¥1.8

Maryland ................... 3.9 3.6 3.3 3.1 3.6 2.8 2.5

¥0.8

¥0.6 1.5

¥2.1

District of Columbia 5.5 5.5 5.9 7.4 7.3 7.6 6.8 0.4 2.3

¥0.1 0.3

Virginia ..................... 2.2 2.5 3.0 3.7 4.1 3.3 2.7 1.6 2.1 1.0

¥2.1

West Virginia ............ 2.7 3.1 4.1 5.4 5.5 4.7 4.5 2.1 2.8 0.2

¥1.6

North Carolina .......... 2.2 2.6 3.4 3.8 4.2 3.3 3.1 2.2 1.1 1.0

¥2.1

South Carolina .......... 1.8 2.4 2.9 3.7 3.9 3.3 3.2 2.4 2.5 0.5

¥1.7

Georgia ...................... 1.7 2.0 2.8 3.8 4.6 4.0 3.4 2.5 3.1 1.9

¥1.4

Florida ....................... 2.8 2.9 3.1 4.4 5.1 3.9 3.4 0.5 3.6 1.5

¥2.4

East South Central ........ 1.7 2.1 3.0 4.4 4.7 4.3 4.2 3.9 1.5

¥0.6

¥2.2

Kentucky .................... 1.8 2.2 3.0 4.0 4.5 4.3 3.9 2.6 2.9 1.2

¥0.2

Tennessee ................. 1.9 2.3 3.4 4.7 5.5 4.8 3.9 3.0 3.3 1.6

¥1.1

Alabama .................... 1.5 2.0 2.8 4.3 5.1 4.6 4.3 3.2 4.4 1.7

¥1.0

Mississippi ................ 1.4 1.7 2.9 4.4 5.3 5.0 4.7 3.7 4.3 1.9 0.0

West South Central ....... 2.1 2.7 3.3 4.3 4.7 3.8 3.2 2.3 2.7 0.9

¥1.8

Arkansas ................... 1.4 1.6 2.9 4.2 5.0 4.6 4.0 3.7 3.6 1.8

¥0.6

Louisiana .................. 3.1 3.8 3.9 4.2 4.8 4.6 4.3 1.2 0.7 1.3

¥0.4

Oklahoma .................. 1.9 2.5 3.2 4.5 4.6 4.0 3.3 2.6 3.5 0.2

¥1.4

Texas ......................... 2.0 2.7 3.3 4.3 4.7 3.5 2.9 2.5 2.7 0.9

¥2.9

Mountain ....................... 3.6 3.8 3.5 4.3 3.8 3.1 2.5

¥0.1 2.1

¥1.2

¥2.0

Montana .................... 4.9 5.3 5.1 5.8 5.9 5.8 5.1 0.2 1.3 0.2

¥0.2

Idaho ......................... 2.6 3.4 3.2 4.0 3.7 3.2 2.9 1.0 2.3

¥0.8

¥1.4

Wyoming .................... 3.5 3.9 4.6 5.5 3.6 4.8 4.1 1.4 1.8

¥4.1 3.1

Colorado .................... 3.9 4.2 3.8 4.6 4.2 3.2 2.3

¥0.1 1.9

¥0.9

¥2.7

New Mexico ............... 2.7 2.2 2.9 3.5 3.1 2.8 2.1 0.4 1.9

¥1.2

¥0.7

Arizona ...................... 3.4 4.0 3.0 4.1 3.6 2.7 2.3

¥0.6 3.2 1.3

¥2.8

Utah .......................... 3.2 2.9 2.8 3.6 3.1 2.6 2.0

¥0.7 2.5

¥1.5

¥1.7

Nevada ...................... 5.0 4.4 3.9 4.2 4.2 2.8 2.1

¥1.2 0.7 0.0

¥3.6

Pacific ........................... 4.1 3.2 3.1 3.7 3.5 2.7 2.2

¥1.4 1.8

¥0.6

¥2.6

Washington ............... 3.4 3.6 3.3 3.5 3.1 2.5 1.9

¥0.1 0.6

¥1.2

¥2.1

Oregon ....................... 3.5 3.1 3.5 4.0 3.5 2.8 2.2 0.0 1.3

¥1.3

¥1.9

California .................. 4.4 3.3 3.0 3.8 3.6 2.7 2.3

¥1.9 2.4

¥0.5

¥2.8

Alaska ....................... .......... .......... 2.4 2.3 2.7 2.3 2.4 ..................

¥0.4 1.6

¥1.6 

Hawaii ....................... .......... .......... 3.7 3.4 3.1 2.7 2.3 ..................

¥0.8

¥0.9

¥1.0

United States ... 3.2 3.3 3.6 4.3 4.5 3.7 3.2 0.6 1.8 0.5

¥1.7

1 1940 and 1950 data are estimated based on published figures.2 1960 includes hospital units of institutions.3 Starting with 1990, excludes hospital units of institutions.

Note.—Data for 1990 has been revised.Source: U.S. Public Health Service (1997). The 1997 data is from Hospital Statistics, 1999 edition, American Hospital Association.

TABLE C–19.—PHYSICIAN SUPPLY BY MAJOR CATEGORIES, SELECTED YEARS 1970–98

Category

1970 1980 1990 1998

Number Percent Number Percent Number Percent Number 

Federal ................................................................................ 29,501 9 17,787 4 20,475 3 18,991 Non-Federal ........................................................................ 301,323 90 443,502 96 592,166 97 776,921 Patient care ........................................................................ 278,535 83 376,512 80 503,870 82 621,736 Nonpatient care .................................................................. 32,310 10 38,404 9 43,440 8 45,264 Primary care ....................................................................... 134,354 40 170,705 37 213,514 35 264,177 Primary care specialties .................................................... 3,161 1 16,642 4 30,911 5 45,740 Male .................................................................................... 308,627 92 413,395 88 511,227 83 600,829 Female ................................................................................ 25,401 8 54,284 12 104,194 17 177,030 U.S. graduates ................................................................... 270,637 81 362,307 77 475,394 77 582,315 International medical graduates ....................................... 57,217 17 97,726 21 131,764 21 185,246 Canadian graduates .......................................................... 6,174 2 7,646 2 8,263 1 10,298 

Total physicians 1 ............................................. 334,028 100 467,679 100 615,421 100 777,859 Total physician-population ratio (per 100,000

persons) ....................................................... 161 202 244 286

1 Address unknown excluded from all Federal/non-Federal categories, not-classified, inactive, and address unknown are excluded from patient care/nonpatient care catego

Note.—Totals may not equal sum of rounded components.Source: American Medical Association (2000).

1061

TABLE C–20.—NON-FEDERAL PHYSICIAN/POPULATION RATIOS 1 AND RANK BY STATE,

SELECTED YEARS 1970–98

State 1970 1975 1985 1990 1995 1998 1998

rank

Alabama ...................................... 90 103 152 170 202 213 42

Alaska ......................................... 74 95 137 155 164 177 50

Arizona ........................................ 144 185 220 233 239 236 32

Arkansas ..................................... 92 103 150 165 192 209 43

California .................................... 194 219 266 272 275 278 13

Colorado ...................................... 178 186 216 232 257 266 17

Connecticut ................................. 192 224 302 332 372 388 5

Delaware ..................................... 134 155 203 217 246 258 22

District of Columbia ................... 390 467 607 658 714 783 1

Florida ......................................... 155 185 236 251 269 283 11

Georgia ........................................ 108 126 172 187 214 228 35

Hawaii ......................................... 160 185 239 266 283 298 10

Idaho ........................................... 94 104 133 142 162 176 51

Illinois ......................................... 138 164 217 229 265 281 12

Indiana ........................................ 102 116 156 171 200 214 41

Iowa ............................................. 103 113 149 167 189 197 45

Kansas ........................................ 118 137 179 195 223 229 34

Kentucky ...................................... 102 122 162 181 211 226 37

Louisiana ..................................... 120 131 187 200 241 263 20

Maine .......................................... 111 133 193 208 235 257 24

Maryland ..................................... 183 217 334 360 384 404 4

Massachusetts ............................ 207 237 331 364 420 443 2

Michigan ..................................... 125 145 190 201 232 244 28

Minnesota .................................... 151 172 223 240 267 276 14

Mississippi .................................. 84 94 126 144 155 178 49

Missouri ....................................... 129 148 195 209 236 247 27

Montana ...................................... 104 116 155 181 214 222 39

Nebraska ..................................... 116 134 170 185 220 240 30

Nevada ........................................ 114 129 173 175 178 193 47

New Hampshire ........................... 140 162 207 227 248 270 15

New Jersey ................................... 146 174 243 267 302 318 8

New Mexico ................................. 113 130 184 206 229 238 31

New York ..................................... 236 258 318 339 391 414 3

North Carolina ............................. 111 132 185 209 239 256 25

North Dakota ............................... 96 106 168 184 224 242 29

Ohio ............................................. 133 147 199 213 242 257 23

Oklahoma .................................... 103 113 149 160 177 186 48

Oregon ......................................... 144 171 215 233 250 261 21

Pennsylvania ............................... 152 169 234 256 301 317 9

Rhode Island ............................... 160 194 248 277 328 365 6

South Carolina ............................ 93 114 161 177 212 227 36

South Dakota .............................. 81 90 143 154 187 203 44

Tennessee .................................... 119 139 189 210 247 265 19

Texas ........................................... 117 135 174 188 206 222 38

Utah ............................................ 138 155 185 200 216 221 40

Vermont ....................................... 187 207 268 288 316 349 7

Virginia ........................................ 125 149 214 233 253 265 18

Washington ................................. 149 168 223 241 259 268 16

West Virginia ............................... 104 124 171 183 216 235 33

1062

TABLE C–20.—NON-FEDERAL PHYSICIAN/POPULATION RATIOS 1 AND RANK BY STATE,

SELECTED YEARS 1970–98—Continued

State 1970 1975 1985 1990 1995 1998 1998

rank

Wisconsin .................................... 120 137 188 207 239 251 26

Wyoming ...................................... 101 108 140 156 176 196 46

United States 1 ................... 148 169 220 237 264 280 ........

1 The ratios are for non-Federal physicians per 100,000 civilian population. Excludes counts of physicians in U.S. possessions and with unknown addresses.

Source: American Medical Association (2000).

Association also reports that the number of applicants to medical

school declined for the second consecutive year, from 43,020 in

1997 to 41,004 in 1998. Developments that have a potential impact

on the supply, demand, and training of physicians in the coming

years include an increasingly competitive marketplace for health

services, provisions in the 1997 Balanced Budget Act; expanded

State graduate medical education financing activities, the growth

in the supply of nonphysician clinicians, and new graduate medical

education policies at the Department of Veterans Affairs.

Questions also remain as to whether there are too many specialists and too few primary care physicians to meet the Nation’s future health care needs. Concerned that shortages of generalist physicians were limiting access to basic medical services in many areas

of the country, COGME, the Physician Payment Review Commission, the Macy Foundation, and the PEW Commission recommended in earlier reports that the proportion of generalist physicians should be significantly increased. Three of the four entities

recommend an increase to a 50 : 50 ratio of generalists to specialists

(Traxler, 2000). In March 1999, COGME’s Fourteenth Report indicated that ‘‘significant progress’’ had been made in increasing the

number of physicians entering generalist specialities. The percent

of U.S. medical school graduates in the National Residency Match

Program selecting generalist specialties increased from 44 percent

in 1991 to 56 percent in 1997. In 1998, about 40 percent of physicians were in primary care specialties and subspecialties, defined

as general and family practice, internal medicine, obstetrics/gynecology, and pediatrics (table C–21 for number of physicians by specialty).

The American Medical Association’s Annual Survey of Graduate

Medical Education Programs for 1998–99, however, reports a stop

in the growth of resident enrollment in primary care specialties for

the first time in several years (JAMA, 1999). Data from the 2000

National Resident Matching Program also indicate that for the

third straight year, fewer U.S. medical school seniors chose primary care residency positions in family practice, pediatrics, internal medicine and obstetrics and gynecology (Greene, 2000).

Though it remains to be seen whether the primary care specialties will resume their growth, according to Medical Economics

TABLE C–21.—PHYSICIANS: TOTAL AND BY SPECIALTY, PERCENT DISTRIBUTION, AND PERCENT GROWTH, 1970, 1980, 1990, AND 1998

Specialty

1970 1980 1990 1998 Percent change

Total

Percent

distribution Total

Percent

distribution Total

Percent

distribution Total

Percent

distribution 1970– 80 1980– 90 1990– 98 

Aerospace medicine ........................... 1,188 0.4 587 0.1 687 0.1 532 0.1

¥50.6 17.0

¥22.5

Allergy/immunology ............................ 1,719 0.5 1,518 0.3 3,388 0.6 3,833 0.5

¥11.7 123.2 13.1 

Anesthesiology .................................... 10,860 3.3 15,958 3.4 25,981 4.2 33,947 4.4 46.9 62.8 30.7 Cardiovascular diseases .................... 6,476 1.9 9,823 2.1 15,862 2.6 19,623 2.5 51.7 61.5 23.7 Child psychiatry ................................. 2,090 0.6 3,217 0.7 4,343 0.7 5,756 0.7 56.5 32.8 32.5 Colon/rectal surgery ........................... 667 0.2 719 0.2 882 0.1 1,049 0.1 7.8 22.7 18.9 Dermatology ........................................ 4,003 1.2 5,660 1.2 7,557 1.2 9,239 1.2 41.4 33.5 22.2 Diagnostic radiology ........................... 1,968 0.6 7,048 1.5 15,412 2.5 20,491 2.6 258.1 118.7 32.9 Emergency medicine 1 ........................ 0 (1) 5,699 1.2 14,243 2.3 21,233 2.7 (1) 149.9 49.1 

Family practice 2 ................................ 0 (2) 27,530 5.9 47,639 7.7 66,900 8.6 (2) 73.0 40.4 Forensic pathology ............................. 200 0.1 240 0.1 414 0.1 529 0.1 20.0 72.5 27.7 Gastroenterology ................................. 2,010 0.6 4,046 0.9 7,493 1.2 9,903 1.3 101.3 85.2 32.2 General practice ................................. 57,948 17.3 32,519 7.0 22,841 3.7 16,385 2.1

¥43.9

¥29.8

¥28.3

General preventive medicine ............. 804 0.2 810 0.2 1,036 0.2 1,688 0.2 0.7 27.9 62.9 General surgery .................................. 29,761 8.9 34,034 7.3 38,376 6.2 40,448 5.2 14.4 12.8 5.4 Internal medicine ............................... 41,872 12.5 71,531 15.3 98,349 16.0 127,574 16.4 70.8 37.5 29.7 Medical genetics 3 .............................. 0 (3) 0(3) 0(3) 290 0.1 (3) (3) 62.0 

Neurology ............................................ 3,074 0.9 5,685 1.2 9,237 1.5 12,061 1.6 84.9 62.5 30.6 Neurological surgery ........................... 2,578 0.8 3,341 0.7 4,358 0.7 4,964 0.6 29.6 30.4 13.9 Nuclear medicine 1 ............................. 0 (1) 0(1) 1,340 0.2 1,415 0.2 (1) (1) 5.6 

Obstetrics/gynecology ......................... 18,876 5.7 26,305 5.6 33,697 5.5 39,512 5.1 39.4 28.1 17.2 Occupational medicine ....................... 2,713 0.8 2,358 0.5 2,744 0.4 3,017 0.4

¥13.1 16.4 9.9 

Ophthalmology .................................... 9,927 3.0 12,974 2.8 16,073 2.6 18,035 2.3 30.7 20.8 12.2 Orthopedic surgery ............................. 9,620 2.9 13,996 3.0 19,138 3.1 23,178 3.4 45.5 36.7 21.1 Otolaryngology .................................... 5,409 1.6 6,553 1.4 8,138 1.3 9,255 1.2 21.1 24.2 13.7 Pathology-anatomic/clin ..................... 10,283 3.1 13,402 2.9 16,170 2.6 18,046 2.3 30.3 20.7 11.6 Pediatrics ........................................... 18,332 5.5 28,803 6.2 40,893 6.6 57,038 7.3 57.1 42.0 39.5 Pediatric cardiology ............................ 487 0.1 659 0.1 1,006 0.2 1,371 0.2 35.3 52.7 36.3 

TABLE C–21.—PHYSICIANS: TOTAL AND BY SPECIALTY, PERCENT DISTRIBUTION, AND PERCENT GROWTH, 1970, 1980, 1990, AND 1998—Con

Specialty

1970 1980 1990 1998 Percent change

Total

Percent

distribution Total

Percent

distribution Total

Percent

distribution Total

Percent

distribution 1970– 80 1980– 90 1990– 98 

Physical medicine/rehabilitation ........ 1,479 0.4 2,146 0.5 4,105 0.7 6,027 0.8 45.1 91.3 46.8 Plastic surgery ................................... 1,600 0.5 2,980 0.6 4,590 0.7 6,095 0.8 86.3 54.0 32.8 Psychiatry ........................................... 21,146 6.3 27,481 5.9 35,163 5.7 39,494 5.0 30.0 28.0 12.3 Public health ...................................... 3,029 0.9 2,316 0.5 2,015 0.3 1,641 0.2

¥23.5

¥13.0

¥18.6

Pulmonary diseases ........................... 2,315 0.7 3,715 0.8 6,080 1.0 7,810 1.0 60.5 63.7 28.4 Radiology ............................................ 10,524 3.2 11,653 2.5 8,492 1.4 8,272 1.1 10.7

¥27.1

¥2.6

Radiation oncology ............................. 868 0.3 1,581 0.3 2,821 0.5 3,676 0.5 82.1 78.4 30.3 Thoracic surgery ................................. 1,809 0.5 2,133 0.5 2,063 0.3 443 0.1 17.9

¥3.3

¥78.5

Urological surgery .............................. 5,795 1.7 7,743 1.7 9,372 1.5 10,168 1.3 33.6 21.0 8.5 Other specialty ................................... 6,929 2.1 5,810 1.2 7,254 1.2 6,068 0.8

¥16.1 24.9

¥16.3

Unspecified ......................................... 12,486 3.7 12,289 2.6 8,058 1.3 9,994 1.3

¥1.6

¥34.4

¥24.0

Inactive ............................................... 19,621 5.9 25,744 5.5 52,653 8.6 69,889 9.0 31.2 104.5 32.7 Not classified 4 ................................... 0 (4) 20,629 4.4 12,678 2.1 40,032 5.1 (4) ¥38.5 215.8 

Address unknown ............................... 3,204 1.0 6,390 1.4 2,780 0.5 938 0.1 99.4

¥56.5

¥66.2

Total physicians ........................ 334,028 100.0 467,679 100.0 615,421 100.0 777,859 100.0 40.0 31.6 26.4 

1 Data were not available for emergency medicine prior to 1980 and nuclear medicine prior to 1985.2 Data on family practice were not available prior to 1975.3 Data on medical genetics were not available prior to 1994.4 Not classified was established in 1970 but complete data were not available until 1972.

Note.—Data for 1990 are as of January 1. Data for all other years are as of December 31. The total for 1970 includes 358 not classified physicians.

Source: American Medical Association (2000).

1065

(Terry, 1999a), some U.S. health care markets are becoming saturated with primary care doctors. The demand for specialist services

under managed care is also increasing due to the growth of pointof-service plans and the expansion of patient rights as consumers

push for greater access.

In 1998, there were 97,383 residents in training. This figure,

which had leveled off over the last several years, decreased in 1998

by 760 from the previous year. The number of U.S. medical school

graduates, which rose rapidly in the late 1960s and early 1970s,

has been relatively stable since 1980 (table C–22).

TABLE C–22.—MEDICAL SCHOOL GRADUATES, FIRST-YEAR RESIDENTS AND TOTAL

RESIDENTS, 1965–98

Year

Medical

school graduates

First-year

residents

Total

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 ....................................................................... NA 14,258 56,872

1977 ....................................................................... 13,607 15,900 59,000

1978 ....................................................................... 14,393 16,800 63,163

1979 ....................................................................... 14,966 17,600 64,615

1980 ....................................................................... 15,135 18,702 61,465

1981 ....................................................................... 15,667 18,389 69,738

1982 ....................................................................... 15,985 18,976 69,142

1983 ....................................................................... 15,824 18,794 73,000

1984 ....................................................................... 16,327 19,539 75,125

1985 ....................................................................... 16,319 19,168 75,514

1986 ....................................................................... 16,125 18,183 76,815

1987 ....................................................................... 15,836 18,067 81,410

1988 ....................................................................... 15,887 17,941 81,093

1989 ....................................................................... 15,620 18,131 82,000

1990 ....................................................................... 15,336 18,322 82,902

1991 ....................................................................... 15,481 19,497 86,217

1992 ....................................................................... 15,386 19,794 88,620

1993 ....................................................................... 15,512 21,616 96,469

1994 ....................................................................... 15,579 19,293 97,832

1995 ....................................................................... 15,911 21,372 98,035

1996 ....................................................................... 15,902 21,394 98,076

1997 ....................................................................... 15,953 21,808 98,143

1998 ....................................................................... 16,143 21,732 97,383

NA—Not available.

Source: American Medical Association (various years).

1066

International medical graduates (IMGs) comprised 17 percent of

total physicians in 1970. By 1998, this had risen to 24 percent of

the total physician population (table C–19). The number of residency positions occupied by IMGs fluctuated over the period 1971–

95. Due to stricter immigration laws and more rigorous competency

requirements, IMGs dropped from 41 percent of all residents in

1971 to about 17 percent in 1985. Since then the number of IMGs

in training in the United States has more than doubled, from

12,509 in 1985 to 25,531 in 1997 (26 percent of all residents in

training). In 1998, however, the total number of IMG residents decreased slightly (table C–23). Also, according to the American Medical Association, the number of IMGs entering graduate medical

education has dropped 13.2 percent since 1993. COGME predicts

that a new examination effective July 1998, which tests IMGs for

both clinical and spoken English language proficiency, may further

reduce the number of IMGs applying for and entering residency

training.

TABLE C–23.—INTERNATIONAL MEDICAL GRADUATE RESIDENTS 1 BY CITIZENSHIP,

SELECTED YEARS 1971–98

Total Percent of

all residents U.S. citizens Foreignnationals

1971 .................................................. 17,515 41 1,063 16,452

1976 .................................................. 16,634 29 1,783 14,851

1981 .................................................. 11,596 17 2,908 8,688

1983 .................................................. 14,084 19 4,961 9,123

1985 .................................................. 12,509 17 6,868 5,609

1991 .................................................. 17,017 20 5,107 11,910

1992 .................................................. 19,084 22 5,015 2 14,069

1993 .................................................. 22,706 24 5,056 17,650

1994 .................................................. 23,499 24 4,285 19,214

1995 .................................................. 24,982 25 4,030 20,952

1996 .................................................. 24,703 25 3,817 20,886

1997 .................................................. 25,531 26 3,979 21,552

1998 .................................................. 25,415 26 4,350 21,065

1 International medical graduates are defined by location of education.

2 Includes 6,192 permanent resident aliens.

Source: American Medical Association (various years).

HEALTH INSURANCE STATUS IN 1998

Most people have some form of health insurance. In 1998, an estimated 83.7 percent of the total noninstitutionalized population

had public or private coverage during at least part of the year.

However, an estimated 44.3 million Americans, or 16.3 percent of

the population, were without coverage in 1998. Almost all of the

uninsured were under age 65; consequently, 18.4 percent of the

nonelderly population were uninsured. This section examines characteristics of both the insured and the uninsured populations in

1998, and reviews trends in health insurance coverage over the

1979–98 period (Smith, 1999).

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1Some analysts have suggested that respondents may actually be reporting their coverage status at the time of the survey, rather than for the previous year.

Estimates of health insurance coverage in 1998 are based on

analysis of the March 1999 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 1999 CPS reflects respondents’ recollections of coverage during all of 1998. 1

HEALTH INSURANCE COVERAGE AND SELECTED POPULATION

CHARACTERISTICS

Age

Table C–24 provides a breakdown of health insurance coverage

by type of insurance and age. In 1998, young adults ages 19 to 24

were the least likely to have health insurance. While 56 percent of

this group were covered under an employment-based plan, almost

one-third (32 percent) had no health insurance. These young adults

comprised 8 percent of the U.S. population, but 16 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 older, 96 percent were covered by

Medicare and/or Medicaid, and 1 percent were uninsured. The remainder of this section focuses on the population under age 65.

TABLE C–24.—HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND AGE, 1998

Age

Population (in

millions)

Type of insurance 1

(in percent)

Employment

based 2

Medicare

and/or

Medicaid

Private

nongroup

Military 3Other

public 4

Uninsured

Under 5 ............. 19.6 60.5 23.9 4.5 3.1 1.3 15.4

5–18 .................. 56.4 65.8 17.1 5.3 3.1 1.0 15.7

19–24 ................ 22.0 55.6 9.3 5.9 3.0 0.6 31.7

25–34 ................ 38.5 66.0 6.6 5.3 2.6 0.4 23.7

35–54 ................ 80.0 73.6 6.5 7.2 3.1 0.4 15.7

55–61 ................ 16.9 68.8 10.4 11.0 4.7 0.4 14.9

62–64 ................ 6.0 61.4 18.0 13.9 4.8 0.5 15.2

65 and older ..... 32.4 34.9 96.0 31.8 3.7 1.2 1.1

Total ..... 271.7 63.3 21.4 9.6 3.2 0.7 16.3

1 People may have more than one source of health insurance; percentages may total to more than

100. 2 Group health insurance through employer or union.

3Military health care or veterans coverage.

4 State programs for low-income individuals.

Source: Congressional Research Service analysis of data from the March 1999 Current Population Survey.

1068

Other demographic characteristics

Table C–25 shows the rate of health insurance coverage by type

of insurance and selected demographic characteristics—race, family

type, region, poverty level, and citizenship—for people under age

65. In 1998 whites were most likely to have health insurance (86

percent) while Hispanics were least likely (63 percent). Hispanics

TABLE C–25.—HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND

DEMOGRAPHIC CHARACTERISTICS FOR PEOPLE UNDER AGE 65, 1998

Population

(in millions)

Type of insurance (percent) 1

Employment

based 2

Medicaid or

Medicare Other 3 Uninsured

Race/ethnicity:

White ................................ 166.0 74.5 7.6 11.2 13.7

Black ................................ 31.5 52.5 24.1 8.2 23.8

Hispanic ........................... 30.0 44.2 17.8 5.0 37.0

Other ................................ 11.9 62.1 12.3 11.1 22.0

Family type:

Female-headed with children ............................. 29.7 42.8 36.2 6.6 22.5

Male- or two-parentheaded with children .. 116.1 74.0 8.0 9.9 14.9

No children ...................... 93.5 66.4 7.4 11.3 21.4

Region:

Northeast ......................... 45.3 69.2 12.5 8.3 15.8

Midwest ............................ 55.8 73.8 10.0 8.8 13.7

South ................................ 82.9 64.8 11.1 11.2 20.6

West ................................. 55.4 62.4 11.8 11.1 21.7

Poverty level: 4

<1.0 of poverty ................ 31.8 20.7 42.7 7.5 35.8

1.0–1.49 of poverty ......... 19.5 38.4 24.6 9.9 34.9

1.5–1.99 of poverty ......... 20.7 55.3 13.6 11.2 27.5

2.0+ of poverty ................ 167.3 80.8 3.4 10.4 12.0

Citizenship:

Native ............................... 215.9 69.1 11.5 10.2 16.2

Naturalized ....................... 7.9 63.0 7.8 11.3 23.5

Noncitizens ....................... 15.6 42.3 9.4 6.8 45.1

Total ............................ 239.3 67.2 11.3 10.0 18.4

1 People may have more than one source of health insurance; percentages may total to more than

100. 2 Group health insurance through employer or union.

3 Private nongroup health insurance, veterans coverage, military health care or other government coverage. 4 In 1998, the weighted average poverty threshold for a family of four was $16,660.

Source: Congressional Research Service analysis of data from the March 1999 Current Population Survey.

comprised 13 percent of the under 65 population, but were 25 percent of the uninsured population; comparable numbers for blacks

were 13 percent and 17 percent, respectively. The rate of

employment-based health coverage was highest among whites (75

1069

2Medicaid covered 10 percent of the nonelderly population and Medicare covered less than 2

percent. About 22 percent of blacks had Medicaid coverage.

percent) and the rate of Medicaid/Medicare coverage was highest

for blacks (24 percent). 2

People in male-headed or two-parent families with children were

most likely to be insured (85 percent), followed by those in families

with no children (79 percent) and those in female-headed families

with children (78 percent). While the rates of coverage were similar

for male-present (one- or two-parent) and female-headed (singleparent) families with children, the sources of coverage were quite

different: coverage was employment based for 74 percent of malepresent families compared to 43 percent of female-headed families,

while coverage came from Medicaid/Medicare for 8 percent of malepresent families compared to 36 percent of female-headed families.

People living in the Midwest were more likely to have insurance

(86 percent) than people in the Northeast (84 percent), West (78

percent), and South (79 percent). About 70 percent of those living

in the Northeast and Midwest had employment-based health insurance compared to about 63 percent in the South and West.

Among individuals with incomes at least two times the poverty

level, 88 percent had health insurance compared to 64 percent of

the poor (i.e., those with incomes less than the poverty level). The

poor accounted for 13 percent of the under 65 population, but were

26 percent of the uninsured. Only 21 percent of the poor received

health coverage through employment, while 43 percent had either

Medicaid or Medicare coverage. Over 80 percent of people with incomes at least two times the poverty level were covered through an

employer, and 3 percent had Medicaid or Medicare coverage.

Among people born with U.S. citizenship (i.e., natives), 84 percent had health insurance compared to 55 percent of noncitizens.

Noncitizens accounted for 7 percent of the population under 65, but

were 16 percent of the uninsured. About 42 percent of noncitizens

were covered through employment, compared to about two-thirds of

citizens.

Employment characteristics

Table C–26 shows the rate of health insurance coverage by employment characteristics for people under age 65 who were workers

or their dependents. In 1998, the rate of employment-based health

insurance coverage generally increased as firm size increased.

Among workers and dependents of workers in large firms (1,000 or

more employees), 90 percent were insured compared to 70 percent

in small firms (under 10 employees). People in small firms accounted for 16 percent of the under 65 population but 27 percent

of the uninsured. Insurance coverage varied according to industry

as well. Agriculture and personal services had the highest proportion of uninsured workers and dependents—over 30 percent. Employment-based coverage was most likely for workers and dependents in public administration, finance/insurance, mining, and manufacturing of durable goods. Among workers, 85 percent of those

employed full time, full year had health insurance and it was most

often obtained through their own employment (68 percent); their

dependents had comparable levels of coverage. Workers with partVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 01069 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.018 WAYS3 PsN: WAYS3
1070

TABLE C–26.—HEALTH INSURANCE COVERAGE BY EMPLOYMENT CHARACTERISTICS 1

FOR PEOPLE UNDER AGE 65, 1998

Population

(in millions)

Type of insurance (percent) 2

From own

job 3

From other’s

job 3 Other 4 Uninsured

Firm size: 5

Under 10 .............................. 39.3 17.2 31.6 26.4 30.2

10–24 ................................... 18.2 27.8 33.6 19.2 24.9

25–99 ................................... 27.5 34.7 36.7 14.8 18.9

100–499 ............................... 30.6 40.7 36.2 14.3 14.5

500–999 ............................... 12.2 44.3 38.2 13.0 11.2

1,000+ ................................. 85.9 42.9 39.9 14.1 10.0

Industry: 5

Agriculture ............................ 5.6 15.2 26.5 30.0 33.1

Mining .................................. 1.3 38.3 45.5 8.6 12.9

Construction ......................... 16.5 24.2 34.6 16.5 29.1

Durable goods ...................... 23.9 41.2 44.3 10.7 9.8

Nondurable goods ................ 14.2 39.3 40.0 11.0 14.6

Transportation ...................... 17.0 39.8 41.6 11.5 13.0

Wholesale trade .................... 9.1 36.1 42.7 12.5 14.1

Retail trade .......................... 31.0 27.1 29.9 21.2 26.8

Finance/insurance ................ 13.5 42.1 40.6 12.3 10.2

Business services ................ 14.7 28.8 33.2 21.1 22.3

Personal services ................. 5.8 21.9 25.3 27.5 30.9

Entertainment ....................... 3.3 34.0 30.8 20.6 21.3

Professional services ........... 45.5 42.3 36.8 16.3 11.3

Public administration ........... 12.2 43.1 39.0 26.7 5.3

Labor force attachment of

workers:

Full time, full year ............... 94.2 67.8 12.0 10.3 14.9

Part time, full year .............. 7.3 38.4 16.2 23.4 27.8

Full time, part year .............. 15.6 50.0 8.5 19.2 28.8

Part time, part year ............. 6.4 25.1 16.2 31.6 34.0

Labor force attachment of

workers’ dependents: 1

Full time, full year ............... 76.2 0.0 76.3 17.3 13.3

Part time, full year .............. 3.2 0.0 41.9 40.4 24.7

Full time, part year .............. 8.6 0.0 43.6 42.9 22.1

Part time, part year ............. 2.2 0.0 24.0 63.6 21.3

Not in labor force ..................... 25.7 6 13.1 6 10.8 51.2 30.9

Total ............................ 239.3 33.2 34.0 20.5 18.4

1 For dependents, employment characteristics are for the person providing dependent coverage under

employment-based or private insurance. If other coverage, characteristics are from the head of household

or spouse if head is not employed. 2 People may have more than one source of health insurance.

3 Group health insurance through employer or union.

4Medicare, Medicaid, private nongroup health insurance, veterans coverage, and other government coverage. 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 1999 Current Population Survey.

1071

time, part-year employment had an insured rate of 66 percent.

Workers who worked less than full time, full year and their dependents represented 18 percent of the population, but 27 percent

of the uninsured, while nonworkers were 11 percent of the population and 18 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–2 illustrates

selected characteristics of the uninsured population under age 65

in 1998—age, race, poverty level, citizenship, firm size, and labor

force ties. Over one-fourth (27 percent) of the uninsured were

under age 19, and 52 percent were white. A large proportion (46

percent) had incomes two or more times the poverty level, while 26

percent were poor. Almost 80 percent were native citizens and 27

percent worked or were dependents of workers in small firms (one

to nine employees). Over half (55 percent) were full-time, full-year

workers or their dependents, 27 percent had less than full time attachment to the labor force, and 18 percent had no labor force ties.

CHART C–2. CHARACTERISTICS OF THE UNINSURED POPULATION UNDER AGE 65, 1998

Note.—Totals may not equal sum of rounded components.

Source: Congressional Research Service analysis of data from the March 1999 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–27.

Data for 1980 are not available because the CPS omitted some

1072

3 Beginning with the 1987 data, the survey asked about employment-based coverage for all

persons over 14, when before only workers were asked about such coverage. Moreover, the

newer surveys included additional questions regarding coverage of children. As a result, the

number of people with employment-based coverage increased, especially among retirees, and the

number of children with coverage also increased.

Beginning with the 1994 data, the survey asked additional questions about private health insurance, and changed the order of questions such that questions about private coverage preceded questions about other forms of health insurance. As a result, the number of people estimated to have private coverage increased, and the distribution of coverage between group and

nongroup shifted toward more group coverage. Care must be exercised when considering these

numbers. Also note that individuals may have had more than one source of coverage.

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 1994–98.3

Between 1979 and 1986, the percent covered by all forms of

health insurance decreased, with a decrease of 3 percentage points

between 1979 and 1984 and a slight increase between 1984 and

1986, but not to levels shown previously. Between 1979 and 1986,

the percent of the population insured by government programs remained roughly stable, and the percents with employment-based

and other coverage steadily declined. Between 1987 and 1993, the

percent covered also declined by about 3 percentage points, from

about 86 percent to 83 percent. During this period, the percent

with employment-based coverage continued to decline steadily, the

percent with Medicare or Medicaid increased, the percent with

other types of coverage declined and then rose to about where it

was in 1987, and the percent uninsured continued to steadily increase. Since 1993 the percent covered has declined from 83 percent to 82 percent. The large changes between 1993 and 1994 in

employment-based and other coverage, which includes private

nongroup coverage, appear to be a function of changes in the CPS

questionnaire.

Differences in coverage between 1986 and 1987, and between

1993 and 1994, are a function both of changes in the CPS questionnaire and actual changes in coverage. Assuming that all differences

between 1986 and 1987, and between 1993 and 1994, are due to

questionnaire changes and no changes in coverage patterns occurred during these transition periods, we can estimate trends

from 1979 to 1998. Over this period, the percent with employmentbased coverage decreased by about 7 percentage points. From 1979

through 1986, the percent with employment-based coverage declined by 2.6 percent points, from 68.6 to 66.0 percent. From 1987

through 1993, the decline was 6.2 percentage points. If we assume

no change in insurance coverages from 1986 to 1987, and from

1993 to 1994, the total decline from 1979 to 1994 was 8.8 percentage points (i.e., 2.6 percentage points plus 6.2 percentage points).

The percent with employment-based coverage increased by 1.9 percentage points between 1994 and 1998, from 65.3 to 67.2 percent

for a total decrease of about 7 percentage points (i.e., ¥8.8 + 1.9)

from 1979 to 1998. 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 1979–98 period,

TABLE C–27.—HEALTH INSURANCE COVERAGE FOR THE NONINSTITUTIONALIZED U.S. POPULATION UNDER 65, SELECTED YEARS 1979–98 

[Numbers in thousands]

Year

Employment based 2 Government 3 Other 4 Uninsured Total

Number Percent Number Percent Number Percent Number Percent Number 

1979 .................................... 133,074 68.6 17,031 8.8 32,631 16.8 28,451 14.7 197,104 1981 .................................... 137,158 67.9 18,520 9.2 32,392 16.0 30,487 15.1 201,926 1983 .................................... 134,908 65.7 18,501 9.0 30,505 14.9 34,796 17.0 205,322 1985 .................................... 137,461 65.7 18,711 8.9 29,924 14.3 36,741 17.6 209,272 1987 1 ................................. 143,497 67.5 19,919 9.4 25,957 12.2 30,673 14.4 212,495 

1989 .................................... 144,716 66.9 20,762 9.6 25,603 11.8 33,039 15.3 216,426 1990 .................................... 142,520 65.2 23,821 10.9 25,723 11.8 34,352 15.7 218,551 1991 .................................... 142,359 64.5 26,170 11.9 25,034 11.4 35,069 15.9 220,589 1992 5 ................................. 141,262 62.5 28,924 12.8 26,017 11.5 38,222 16.9 226,119 1993 1 ................................. 140,439 61.3 31,398 13.7 27,706 12.1 39,349 17.2 228,973 1994 1 ................................. 150,663 65.3 31,177 13.5 20,665 8.9 39,428 17.1 230,838 1995 .................................... 152,075 65.4 31,606 13.6 19,051 8.2 40,281 17.3 232,656 1996 .................................... 153,924 65.5 31,143 13.3 18,636 7.9 41,379 17.6 234,915 1997 .................................... 157,079 66.3 27,822 11.7 24,516 10.3 43,115 18.2 237,011 1998 .................................... 160,773 67.2 26,945 11.3 24,035 10.0 43,923 18.4 239,348 

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

workers, about employment-based health coverage, and included additional questions regarding coverage of children. Beginning with 1994 data, the survey included questions about private coverage and the order of questions was altered, such that questions about private coverage preceded questions about other forms of health insu

2 Group health insurance through employer or union.3Medicare or Medicaid.4 Private nongroup health insurance, veterans coverage, or military health care.5 Based on revised weights from the 1990 Census.

Note.—Persons may have more than one type of coverage; percents may total to more than 100. Data for 1980 not available because some health-related questions w

ted from the Current Population Survey that year.

Source: Congressional Research Service analysis of data from the March Current Population Surveys, various years.

1074

the percent with Medicaid or Medicare increased by about 3 percentage points, the percent with other types of coverage declined by

about 2 percentage points, and the percent uninsured increased by

approximately 7 percentage points.

UNCOMPENSATED CARE COSTS IN PROSPECTIVE

PAYMENT SYSTEM (PPS) HOSPITALS, 1980–98

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–28. 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. Between 1986 and 1992, uncompensated care

costs had grown at an annual rate of 8.9 percent, to $14.9 billion.

Since 1992, the growth trend has declined; uncompensated care

rose at 5.4 percent per year until 1995 and then at 2.9 percent

from 1995 to 1998. By 1998, uncompensated care costs (before government subsidies) in community hospitals equaled $19 billion.

Over this same time period, government operating subsidies for uncompensated care grew at a much slower rate. Since 1995, the

amount of operating subsidies has declined absolutely, from 3.1 billion to 2.5 billion in 1998. 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 1993 subsidies to community hospitals

equaled only 19.5 percent. Subsidies fell sharply since then, covering 18.0 percent of uncompensated care costs in 1995 and only 13.2

percent of those costs in 1998. In that year, uncompensated care

losses—that is, costs net of government subsidies—totaled $16.5

billion.

These trends are reflected in chart C–3, which compares uncompensated care costs to total hospital expenses in each year. In 1980,

5.5 percent of the resources expended by community hospitals were

for patients who could not or would not pay for their care. After

accounting for government subsidies, the uncompensated care burden was 3.9 percent. By 1986, uncompensated care costs hit their

peak of 6.4 percent of total expenses, and uncompensated care

losses rose to 4.9 percent. Throughout the 1990s, uncompensated

care costs were just over 6 percent of total expenses, while uncompensated care losses increased to just over 5 percent of total expenses.

TABLE C–28.—COMMUNITY HOSPITAL UNCOMPENSATED CARE COSTS AND GOVERNMENT OPERATING SUBSIDIES, SELECTED YEARS 1980–

Amount (billions) Average annual percent cha

1980 1986 1992 1993 1995 1996 1997 1998 1980– 86 1986– 92 1992– 95 

Uncompensated care costs before government subsidies .............................. $3.9 $8.9 $14.9 $15.9 $17.5 $18.0 $18.5 $19.0 14.7 8.9 5.4 Government operating subsidies 1 .......... 1.1 2.0 2.8 3.1 3.1 3.1 2.6 2.5 10.5 6.0 3.7

Uncompensated care costs net of government subsidies .............................. 2.8 6.9 12.1 12.8 14.3 14.9 15.8 16.5 16.1 9.7 5.8 Proportion of uncompensated care costs

covered by government subsidies (inpercent) ............................................... 27.8 22.3 18.9 19.5 18.0 17.3 14.2 13.2

1 Government operating subsidies include all subsidies from State and local government, up to total uncompensated care costs at each hospital.

Note.—Totals may not equal sum of rounded components.Source: Medicare Payment Advisory Commission analysis of data from the American Hospital Association Annual Survey of Hospitals.

1076

CHART C–3. UNCOMPENSATED CARE AS A PERCENTAGE OF TOTAL COMMUNITY

HOSPITAL EXPENSES, 1980–98

Note.—Government operating subsidies include all subsidies from State and local government, up to total

uncompensated care costs for each hospital.

Source: Medicare Payment Advisory Commission analysis of data from the American Hospital Association

Annual Survey of Hospitals.

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 (table C–29). Hospitals in

urban areas had uncompensated care costs equal to 6.3 percent of

their total expenses in 1998, compared with 5.2 percent for rural

hospitals. However, urban hospitals also receive the bulk of subsidies from State and local governments. Urban hospitals’ uncompensated care losses are 5.4 percent which is still higher than those

in rural hospitals at 4.8 percent, but the differential has narrowed.

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 1998 devoted 18.8 percent of their resources to patients

who could not or would not pay, and sustained losses on these patients equal to 12 percent of their total costs. This compares to private major teaching hospitals which devoted 5.1 percent of their resources to uncompensated care and sustained losses equal to 5 percent of their total costs. Public teaching hospitals with fewer residents per bed devoted 10.7 percent of their resources to patients

who could not or would not pay and sustained losses equal to 8 percent of their total costs.

Uncompensated care costs and losses are highly concentrated

among a relatively small group of hospitals, particularly in urban

areas: Urban government hospitals devoted 14.6 percent of their resources to uncompensated care and sustained losses on nonpaying

patients equal to 9.8 percent of their total costs. Urban proprietary

hospitals provide the least care to nonpaying patients, only 4 percent of their total costs.

1077

TABLE C–29.—COMMUNITY HOSPITAL UNCOMPENSATED CARE COSTS AS A PROPORTION

OF TOTAL COSTS, BY HOSPITAL GROUP, 1998

[In percent]

Hospital group

Uncompensated care

costs, before government subsidies

Uncompensated care

costs, net of government subsidies

Urban .............................................................. 6.3 5.4

Rural ............................................................... 5.2 4.8

Major teaching, public ................................... 18.8 12.0

Major teaching, private .................................. 5.1 5.0

Other teaching, public .................................... 10.7 8.0

Other teaching, private .................................. 4.2 4.2

Nonteaching, public ........................................ 6.3 5.1

Nonteaching, private ...................................... 4.6 4.5

Urban voluntary .............................................. 4.6 4.5

Urban proprietary ............................................ 4.1 4.0

Urban government .......................................... 14.6 9.8

Rural voluntary ............................................... 4.9 4.8

Rural proprietary ............................................. 5.2 5.2

Rural government ........................................... 5.8 4.7

All hospitals ........................................... 6.0 5.2

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 the 29

Organization for Economic Cooperation and Development (OECD)

countries from 1970 to 1997. Table C–30 illustrates total health expenditures as a percentage of gross domestic product (GDP). In

1970, the mean percent of GDP spent on health care by 25 reporting OECD countries was 5.0 percent with the United States being

46 percent higher than the average with 7.3 percent. By 1995, the

overall mean percent of GDP devoted to health expenditures had

increased to 7.9 percent while U.S. health spending as a share of

GDP had increased to 14.1 percent. Over the next 2 years, the

OECD average remained at 7.8 percent while the U.S. figure was

14.1 percent in 1996 and 13.9 percent in 1997.

The second to the last column in table C–30 presents per capita

health expenditures denominated in U.S. dollars. In 1997, the

United States spent $4,095 per capita on health compared to an

OECD average of $1,615, calculated on a purchasing power parity

basis. The last column illustrates public health expenditures as a

percent of total health spending. This public percentage ranged

from 45.5 in Korea and 46.4 in the United States to 91.8 in Luxembourg. The OECD average was 74.1 percent.

TABLE C–30.—TOTAL HEALTH EXPENDITURES AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT, PER CAPITA HEALTH SPENDING, AND PERCE

OF MEDICAL EXPENDITURES COVERED BY PUBLIC OECD COUNTRIES FOR SELECTED CALENDAR YEARS 1970–97

Country 1960 1965 1970 1975 1980 1985 1990 1995 1996 1997 Per capita 1997 

Australia .............................................. 4.9 5.1 5.7 7.5 7.3 7.7 8.2 8.4 8.6 8.4 $1,909 Austria ................................................. 4.3 4.6 5.3 7.2 7.7 6.7 7.2 8.0 8.0 8.3 1,905 Belgium ............................................... 3.4 3.9 4.1 5.9 6.5 7.3 7.5 7.9 7.8 7.6 1,768 Canada ................................................ 5.4 5.9 7.0 7.2 7.2 8.3 9.2 9.4 9.3 9.2 2,175 Czech Republic .................................... .......... .......... .......... .......... 3.8 4.5 5.4 7.5 7.2 7.2 943 Denmark .............................................. 3.6 .......... 5.9 6.3 9.3 8.7 8.3 8.1 8.1 8.0 2,042 Finland ................................................. 3.9 4.9 5.7 6.4 6.5 7.3 8.0 7.7 7.8 7.4 1,525 France .................................................. 4.2 5.2 5.8 7.0 7.6 8.5 8.9 9.8 9.8 9.6 2,047 Germany .............................................. 4.8 5.1 6.3 8.8 8.8 9.3 8.7 10.4 10.8 10.7 2,364 Greece .................................................. 3.1 .......... 5.7 .......... 6.6 .......... 7.6 8.4 8.4 8.6 1,196 Hungary ............................................... .......... .......... .......... .......... .......... .......... 6.1 7.0 6.6 6.5 642 Iceland ................................................. 3.3 3.9 5.0 5.3 6.2 7.3 7.9 8.2 8.2 7.9 1,981 Ireland ................................................. 3.8 4.2 5.3 7.7 8.7 7.9 6.7 7.0 6.4 6.3 1,293 Italy ...................................................... 3.6 4.3 5.2 6.2 7.0 7.1 8.1 7.7 7.8 7.6 1,613 Japan ................................................... 3.0 4.5 4.6 5.6 6.5 6.7 6.1 7.2 7.1 7.2 1,760 Korea ................................................... .......... .......... 2.3 2.3 3.7 4.3 5.2 5.4 5.9 6.0 870 Luxembourg ......................................... .......... .......... 3.7 5.1 6.2 6.1 6.6 6.7 6.8 7.0 2,303 Mexico .................................................. .......... .......... .......... .......... .......... .......... 3.6 4.9 4.6 4.7 363 Netherlands ......................................... 3.8 4.3 5.9 7.5 7.9 7.9 8.3 8.8 8.7 8.5 1,933 New Zealand ....................................... 4.3 .......... 5.2 6.7 6.0 5.3 7.0 7.3 7.3 7.6 1,357 Norway ................................................. 2.9 3.5 4.5 6.0 7.0 6.7 7.8 8.0 7.8 7.5 2,017 Poland .................................................. .......... .......... .......... .......... .......... .......... 4.4 4.5 4.9 5.2 386 Portugal ............................................... .......... .......... 2.8 5.6 5.8 6.3 6.4 7.8 7.9 7.9 1,148 Spain ................................................... 1.5 2.6 3.7 4.9 5.6 5.7 6.9 7.3 7.4 7.4 1,183 Sweden ................................................ 4.7 5.5 7.1 7.9 9.4 9.0 8.8 8.5 8.6 8.6 1,762 Switzerland .......................................... 3.1 3.6 4.9 6.6 6.9 7.7 8.3 9.6 10.1 10.0 2,611 

Turkey .................................................. .......... .......... 2.4 2.7 3.3 2.2 3.6 3.3 3.8 4.0 259 United Kingdom ................................... 3.9 4.1 4.5 5.5 5.6 5.9 6.0 6.9 6.9 6.8 1,391 United States ...................................... 5.2 5.9 7.3 8.2 9.1 10.6 12.6 14.1 14.1 13.9 4,095 

OECD average ............................ .......... .......... 5.0 .......... 6.8 .......... 7.2 7.9 7.8 7.8 1,615 

Source: OECD Health Data 1999.

1080

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