[Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Green Book)]
[Appendices]
[Appendix C. National and International Health Care Expenditures and Health Insurance Coverage]
[From the U.S. Government Printing Office, www.gpo.gov]


[1998 Green Book] APPENDIX C. NATIONAL AND INTERNATIONAL HEALTH CARE EXPENDITURES AND 
                       HEALTH INSURANCE COVERAGE

                                CONTENTS

National Health Expenditures
Expenditures for Hospital Care
Trends in Hospital Utilization
  Admissions
  Average Length of Stay
  Hospital Occupancy
  Hospital Employment
Expenditures for Physicians' Services
Supply of Hospital Beds
Supply of Physicians
Health Insurance Status in 1995
  Health Insurance Coverage and Selected Population 
            Characteristics
  Characteristics of the Uninsured Population Under Age 65
  Trends in Health Insurance Coverage
Uncompensated Care Costs in PPS Hospitals, 1980-95
International Health Spending
References

                      NATIONAL HEALTH EXPENDITURES

    In 1965, the year prior to the beginning of the Medicare 
and Medicaid Programs, national health expenditures were only 
$41.1 billion. After adjusting for inflation, this spending 
figure represented $199.1 billion, or $975.60 per capita in 
constant 1995 dollars. Health care expenditures increased 
substantially over the next 30 years. In 1995, the Nation's 
health care bill was $3,621.20 per capita, or $988.5 billion 
for the 273 million persons residing in the United States (see 
tables C-1 and C-2).
     The annual rate of increase in inflation-adjusted per 
capita expenditures was 4.8 percent from 1980 to 1985 and 5.0 
percent from 1985 to 1990 (table C-3). After increasing by 5.8 
percent between 1991 and 1992, however, health expenditure 
growth per capita decelerated to 2.8 percent for 1992 to 1993 
and 1.5 percent for 1993 to 1994. This figure increased 
slightly to 1.6 for 1994-95. Growth in spending between 1993 
and 1995, however, remains the slowest in more than three 
decades.

                                        TABLE C-1.--NATIONAL HEALTH EXPENDITURES, SELECTED CALENDAR YEARS 1960-95                                       
                                                              [Dollar amounts in billions]                                                              
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Spending category                 1960    1965    1970     1975     1980     1985     1990     1991     1992     1993     1994     1995  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Health services and supplies..................   $25.2   $37.7   $67.9   $122.3   $235.6   $411.8   $672.9   $736.3   $806.7   $863.1   $906.7    $957.8
    Personal health care......................    23.6    35.2    63.8    114.5    217.0    376.4    614.7    676.6    740.5    786.9    827.9     878.8
        Hospital care.........................     9.3    14.0    28.0     52.6    102.7    168.3    256.4    282.3    305.4    323.3    335.0     350.1
        Physicians' services..................     5.3     8.2    13.6     23.9     45.2     83.6    146.3    159.2    175.7    182.7    190.6     201.6
        Dentists' services....................     2.0     2.8     4.7      8.0     13.3     21.7     31.6     33.3     37.0     39.2     42.1      45.8
        Other professional services...........     0.6     0.9     1.4      2.7      6.4     16.6     34.7     38.3     42.1     46.3     49.1      52.6
        Home health care......................     0.1     0.1     0.2      0.6      2.4      5.6     13.1     16.1     19.6     23.0     26.3      28.6
        Drugs and other medical nondurables...     4.2     5.9     8.8     13.0     21.6     37.1     59.9     65.6     71.2     75.0     77.7      83.4
        Vision products and other medical                                                                                                               
         durables.............................     0.6     1.0     1.6      2.5      3.8      6.7     10.5     11.2     11.9     12.5     12.9      13.8
        Nursing home care.....................     0.8     1.5     4.2      8.7     17.6     30.7     50.9     57.2     62.3     67.0     72.4      77.9
        Other personal health care............     0.7     0.8     1.3      2.5      4.0      6.1     11.2     13.6     15.4     17.9     21.7      25.0
    Program administration and net cost of                                                                                                              
     private health insurance.................     1.2     1.9     2.7      4.9     11.8     23.8     38.6     38.8     42.7     50.9     50.6      47.7
    Government public health activities.......     0.4     0.6     1.3      2.9      6.7     11.6     19.6     21.4     23.4     25.3     28.2      31.4
Research and construction of medical                                                                                                                    
 facilities...................................     1.7     3.4     5.3      8.4     11.6     16.4     24.5     24.9     27.5     29.0     30.4      30.7
                                               ---------------------------------------------------------------------------------------------------------
      Total...................................    26.9    41.1    73.2    130.7    247.2    428.2    697.5    761.7    834.2    892.1    937.1     988.5
                                               =========================================================================================================
      Percent of GDP..........................     5.1     5.7     7.1      8.0      8.9     10.2     12.1     12.9     13.4     13.6     13.5     13.6 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Numbers may not add to totals due to rounding.                                                                                                   
                                                                                                                                                        
 Source: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics.                               


                           TABLE C-2.--NATIONAL HEALTH EXPENDITURES IN CONSTANT 1995 DOLLARS, SELECTED CALENDAR YEARS 1960-95                           
                                                              [Dollar amounts in billions]                                                              
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Spending category                 1960     1965     1970     1975     1980     1985     1990     1991     1992     1993     1994     1995 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Health services and supplies................   $129.6   $182.4   $266.7   $346.6   $435.8   $583.3   $784.7   $824.4   $876.3   $910.3   $932.4   $957.8
    Personal health care....................    121.7    170.1    250.7    324.4    401.4    533.2    716.7    757.0    804.4    829.9    851.4    878.8
        Hospital care.......................     47.8     67.9    110.0    148.9    189.9    238.4    299.0    315.8    331.7    340.9    344.5    350.1
        Physicians' services................     27.2     39.6     53.3     67.7     83.7    118.4    170.6    178.1    190.9    192.6    196.0    201.6
        Dentists' services..................     10.1     13.5     18.3     22.5     24.6     30.7     36.8     37.3     40.2     41.4     43.3     45.8
        Other professional services.........      3.1      4.2      5.5      7.7     11.7     23.6     40.4     42.8     45.7     48.9     50.5     52.6
        Home health care....................      0.3      0.4      0.9      1.8      4.4      8.0     15.3     18.0     21.3     24.2     27.0     28.6
        Drugs and other medical nondurables.     21.9     28.5     34.6     36.9     40.0     52.5     69.9     73.4     77.3     79.1     79.9     83.4
        Visions products and other medical                                                                                                              
         durables...........................      3.3      4.8      6.4      7.2      7.0      9.6     12.2     12.5     12.9     13.2     13.2     13.8
        Nursing home care...................      4.4      7.1     16.6     24.6     32.6     43.5     59.4     64.0     67.7     70.7     74.5     77.9
        Other personal health care..........      3.6      4.0      5.1      7.0      7.4      8.7     13.1     15.2     16.7     18.9     22.4     25.0
    Program administration and net cost of                                                                                                              
     private health insurance...............      6.0      9.3     10.7     13.9     21.9     33.7     45.1     43.4     46.4     53.7     52.0     47.7
    Government public health activities.....      1.9      3.0      5.3      8.3     12.5     16.5     22.9     24.0     25.4     26.7     29.0     31.4
Research and construction of medical                                                                                                                    
 facilities.................................      8.8     16.6     21.0     23.7     21.5     23.2     28.6     27.9     29.9     30.6     31.3     30.7
                                             -----------------------------------------------------------------------------------------------------------
      Total.................................    138.4    199.1    287.7    370.3    457.3    606.5    813.3    852.3    906.2    940.8    963.7   988.5 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Constant dollar expenditures are calculated using the Consumer Price Index for all Urban Consumers (CPI-U). Totals may not equal sum of rounded  
  components.                                                                                                                                           
                                                                                                                                                        
 Source: Health Care Financing Administration, Office of the Actuary. Data from the Office of National Health Statistics.                               


 TABLE C-3.--NATIONAL HEALTH EXPENDITURES: PER CAPITA AMOUNTS IN CONSTANT 1995 DOLLARS AND AVERAGE ANNUAL PERCENTAGE INCREASES, SELECTED CALENDAR YEARS 
                                                                         1960-95                                                                        
                                                               [Dollar amounts per capita]                                                              
--------------------------------------------------------------------------------------------------------------------------------------------------------
         Spending category            1960     1965     1970      1975      1980      1985      1990      1991      1992      1993      1994      1995  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Health services and supplies......   $682.1   $894.1   $1241.6   $1543.4   $1853.3   $2360.1   $3018.3   $3139.7   $3303.7   $3398.3   $3447.9   $3508.9
Personal health care..............    640.5    833.8    1167.2    1444.5    1707.2    2157.3    2757.0    2883.2    3032.8    3098.4    3148.2    3219.3
    Hospital care.................    251.5    332.9     512.1     663.2     807.8     964.4    1150.2    1202.9    1250.6    1272.9    1273.7    1282.6
    Physicians' services..........    143.3    194.2     248.3     301.6     355.8     479.2     656.4     678.3     719.6     719.2     724.9     738.6
    Dentists' services............     53.2     66.2      85.4     100.4     104.8     124.1     141.6     142.1     151.6     154.5     160.0     167.9
    Other professional services...     16.4     20.5      25.7      34.4      50.0      95.4     155.5     163.1     172.4     182.4     186.9     192.7
    Home health care..............      1.5      2.1       4.0       7.8      18.7      32.3      58.8      68.4      80.4      90.5     100.0     104.7
    Drugs and other medical                                                                                                                             
     nondurables..................    115.2    139.7     161.1     164.3     170.1     212.4     268.7     279.4     291.5     295.4     295.5     305.5
    Vision products and other                                                                                                                           
     medical durables.............     17.6     23.7      29.7      32.2      29.6      38.7      46.9      47.7      48.7      49.2      48.9      50.5
    Nursing home care.............     23.0     34.9      77.1     109.3     138.8     175.8     228.4     243.6     255.1     263.9     275.5     285.3
    Other personal health care....     18.8     19.5      23.7      31.3      31.6      35.1      50.4      57.8      62.9      70.4      82.7      91.5
Program administration and net                                                                                                                          
 cost of private health insurance.     31.6     45.7      49.8      61.9      93.1     136.2     173.3     165.2     175.0     200.3     192.4     174.6
Government public health                                                                                                                                
 activities.......................     10.0     14.6      24.6      36.9      53.0      66.6      88.0      91.3      95.9      99.5     107.2     115.0
Research and construction of                                                                                                                            
 medical facilities...............     46.1     81.5      97.8     105.8      91.5      93.8     110.0     106.2     112.8     114.2     115.7     112.3
                                   ---------------------------------------------------------------------------------------------------------------------
      Total.......................    728.1    975.6   1,339.5   1,649.1   1,944.8   2,454.0   3,128.3   3,246.0   3,416.5   3,512.5   3,563.6   3,621.2
                                   ---------------------------------------------------------------------------------------------------------------------
                                                                             Average annual percentage increase                                         
                                   ---------------------------------------------------------------------------------------------------------------------
                                      60-65    65-70     70-75     75-80     80-85     85-90     91-92     92-93     93-94     94-95                    
                                   ---------------------------------------------------------------------------------------------------------------------
Health services and supplies......      5.6      6.8       4.4       3.7       5.0       5.0       5.2       2.9       1.5       1.8                    
Personal health care..............      5.4      7.0       4.4       3.4       4.8       5.0       5.2       2.2       1.6       2.3                    
    Hospital care.................      5.8      9.0       5.3       4.0       3.6       3.6       4.0       1.8       0.1       0.7                    
    Physicians' services..........      6.3      5.0       4.0       3.4       6.1       6.5       6.1      -0.1       0.8       1.9                    
                                   ---------------------------------------------------------------------------------------------------------------------
      Total.......................      6.0      6.5       4.2       3.4       4.8       5.0       5.3       2.8       1.5      1.6                     
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Constant dollar expenditures are calculated using the Consumer Price Index for all Urban Consumers (CPI-U). Totals may not equal sum of rounded  
  components.                                                                                                                                           
                                                                                                                                                        
 Source: Health Care Financing Administration, Office of the Actuary. Data from the Office of National Health Statistics.                               

    The majority of health spending is for personal health care 
services that treat or prevent illness and disease in 
individuals. In 1995, 88.9 percent of all health spending 
($878.8 billion) was for personal health care. The remaining 
11.1 percent ($109.7 billion) was spent on health program 
administration; administrative costs and profits earned by 
private health insurers; public health activities; 
noncommercial health research; and new construction of health 
facilities.
    Hospital care ($350.1 billion) and physician services 
($201.6 billion) are the two largest categories of personal 
health care spending. They accounted for 35.4 percent and 20.4 
percent of total national health expenditures. Two other major 
service areas, prescription drugs and other medical 
nondurables, and nursing home care, each added approximately 8 
percent.
    The private sector, including private health insurance, 
out-of-pocket spending, and philanthropy, continues to finance 
the majority of personal health care expenditures (55.4 
percent) with combined expenditures of $486.7 billion. Public 
sources, however, are responsible for an increasing portion of 
spending. Government's share has grown from 20.6 percent in 
1965 to 44.6 percent in 1995 (see table C-4). The Federal 
Government is now the single largest contributor, accounting 
for 34.5 percent ($303.6 billion) of personal health spending 
in 1995. State and local governments funded another 10.1 
percent ($88.5 billion).
    The initial growth in Federal Government spending is 
attributed to the beginning of the Medicare and Medicaid 
Programs and the expansion of Medicare to cover the disabled 
population in 1973. In 1965, before the enactment of these 
programs, the Federal Government contribution represented 8.4 
percent of personal health spending. By 1970, the Federal 
Government's share had increased to 23 percent and to 27 
percent by 1975. Between 1980 and 1990 the portion remained 
steady at approximately 29 percent, but since 1990, this figure 
has gradually increased to 34.5 percent in 1995.
    In contrast, while the share paid by private sources also 
remained stable at about 60 percent from 1980 to 1990, this 
portion declined to 55.4 percent in 1995, reflecting the 
influence of increased enrollment in managed care plans (Levit, 
Lazenby & Braden, 1996).

                     EXPENDITURES FOR HOSPITAL CARE

    In 1995, hospitals accounted for 35 percent of total 
national health expenditures, down from 42 percent in 1980. 
Table C-5 shows several measures of costs incurred by community 
hospitals, which include all non-Federal short-term general 
hospitals. These hospitals' total expenses (including inpatient 
and outpatient acute and postacute care, as well as nonpatient 
care activities) reached $320.8 billion in 1996. This was up 
4.0 percent from the previous year, the smallest rise in 
hospital costs in at least 30 years. With the increases of 5.0 
percent in 1994 and 5.3 percent in 1995, hospital costs have 
been growing more slowly than in any previous 3-year period. 
That inpatient expenses increased more slowly than total 
expenses reflects the growing share of activity in the hospital 
outpatient setting.

              TABLE C-4.--PERSONAL HEALTH CARE EXPENDITURES: AGGREGATE AMOUNTS AND PERCENTAGE DISTRIBUTION, SELECTED CALENDAR YEARS 1960-95             
--------------------------------------------------------------------------------------------------------------------------------------------------------
            Spending source                1960     1965     1970     1975     1980      1985      1990     1991      1992     1993      1994     1995  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Amount in billions of dollars                                         
                                        ----------------------------------------------------------------------------------------------------------------
Private................................    $18.5    $27.9    $41.3    $69.2    $130.0    $228.4   $371.7    $400.0   $433.4    $453.0   $466.7    $486.7
    Private health insurance...........      5.0      8.7     14.8     28.4      62.0     113.8    201.8     221.6    243.2     255.4    264.5     276.8
    Out-of-pocket payments.............     13.1     18.5     24.9     38.1      60.3     100.6    148.4     155.0    165.8     171.6    176.0     182.6
    Other private sources of funds.....      0.4      0.7      1.6      2.7       7.8      14.1     21.5      23.4     24.4      26.1     26.2      27.3
Public.................................      5.1      7.3     22.5     45.3      87.3     148.0    243.0     276.6    307.1     333.9    361.2     392.1
    Federal............................      2.1      3.0     14.7     30.9      63.4     111.3    178.1     205.8    233.5     255.9    278.1     303.6
    State and local....................      3.0      4.3      7.8     14.4      23.6      36.7     64.9      70.8     73.6      78.0     83.1      88.5
                                        ----------------------------------------------------------------------------------------------------------------
        Total..........................     23.6     35.2     63.8    114.5     217.0     376.4    614.7     676.6    740.5     786.9    827.9     878.8
                                        ----------------------------------------------------------------------------------------------------------------
                                                                                      Percentage distribution                                           
                                        ----------------------------------------------------------------------------------------------------------------
Private................................     78.3     79.4     64.7     60.4      59.9      60.7     60.5      59.1     58.5      57.6     56.4      55.4
    Private health insurance...........     21.2     24.7     23.2     24.8      28.6      30.2     32.8      32.8     32.8      32.5     31.9      31.5
    Out-of-pocket payments.............     55.3     52.7     39.0     33.3      27.8      26.7     24.1      22.9     22.4      21.8     21.3      20.8
    Other private sources of funds.....      1.8      2.0      2.6      2.4       3.6       3.7      3.5       3.5      3.3       3.3      3.2       3.1
Public.................................     21.7     20.6     35.3     39.6      40.1      39.3     39.5      40.9     41.5      42.4     43.6      44.6
    Federal............................      9.0      8.4     23.0     27.0      29.2      29.6     29.0      30.4     31.5      32.5     33.6      34.5
    State and local....................     12.6     12.2     12.2     12.5      10.9       9.7     10.6      10.5      9.9       9.9     10.0     10.1 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Totals may not equal sum of rounded components. Percentage amounts are calculated on unrounded numbers.                                          
                                                                                                                                                        
 Source: Health Care Financing Administration, Office of the Actuary. Data from the Office of National Health Statistics.                               


                        TABLE C-5.--SELECTED DATA ON COMMUNITY HOSPITAL EXPENSES, 1965-96                       
----------------------------------------------------------------------------------------------------------------
                                        Total expenses      Expenses per      Expenses per    Inpatient expenses
                                     --------------------     adjusted          adjusted              \1\       
                                                            inpatient day       admission    -------------------
                Year                    Amount   Percent ------------------------------------   Amount          
                                         (in      change           Percent           Percent     (in     Percent
                                      billions)            Amount   change   Amount   change  billions)   change
----------------------------------------------------------------------------------------------------------------
1965................................     $9.220      8.6      $41      7.5     $315      8.1     $8.414      8.7
1966................................     10.497     13.8       46     11.4      356     13.1      9.611     14.2
1967................................     12.624     20.3       53     15.3      425     19.1     11.551     20.2
1968................................     14.720     16.6       59     11.5      482     13.4     13.372     15.8
1969................................     17.247     17.2       68     15.4      551     14.5     15.636     16.9
1970................................     20.261     17.5       78     13.8      608     10.3     18.329     17.2
1971................................     22.496     11.0       87     12.3      670     10.1     20.269     10.6
1972................................     25.223     12.1       96     10.3      729      8.8     22.622     11.6
1973................................     28.248     12.0      105      9.2      784      7.5     25.173     11.3
1974................................     32.759     16.0      118     12.3      873     11.4     29.077     15.5
1975................................     38.492     17.5      138     16.4    1,017     16.5     33.971     16.8
1976................................     45.842     19.1      158     15.0    1,168     14.8     40.321     18.7
1977................................     53.006     15.6      181     14.3    1,312     12.3     46.437     15.2
1978................................     59.802     12.8      203     12.1    1,466     11.8     52.131     12.3
1979................................     67.833     13.4      226     11.5    1,618     10.4     59.060     13.3
1980................................     79.340     17.0      256     12.9    1,836     13.5     68.962     16.8
1981................................     94.187     18.7      299     16.9    2,155     17.4     81.634     18.4
1982................................    109.091     15.8      348     16.2    2,489     15.5     94.346     15.6
1983................................    120.220     10.2      391     12.4    2,742     10.2    103.361      9.6
1984................................    126.028      4.8      443     13.3    2,947      7.5    107.005      3.5
1985................................    134.043      6.4      493     11.3    3,226      9.5    111.416      4.1
1986................................    146.032      8.9      535      8.6    3,527      9.3    119.286      7.1
1987................................    161.322     10.5      581      8.6    3,860      9.5    129.824      8.8
1988................................    177.770     10.2      632      8.8    4.194      8.7    140.482      8.2
1989................................    195.378      9.9      690      9.3    4,586      9.3    152.147      8.3
1990................................    217.113     11.1      765     10.7    5,021      9.5    165.792      9.0
1991................................    238.633      9.9      844     10.3    5,461      8.8    178.401      7.6
1992................................    260.994      9.4      927      9.9    5,905      8.1    191.401      7.3
1993................................    278.880      6.9    1,000      7.8    6,188      4.8    202.055      5.6
1994................................    292.801      5.0    1,060      6.0    6,312      2.0    207.918      2.9
1995................................    308.411      5.3    1,127      6.3    6,427      1.8    214.594      3.2
1996................................    320.789      4.0    1,188      5.4    6,553      2.0    218.013     1.6 
----------------------------------------------------------------------------------------------------------------
\1\ Inpatient expenses estimated from total expenses, based on the proportion of inpatient to total revenues.   
                                                                                                                
 Note.--Admissions and inpatient days are adjusted to reflect the volume of outpatient visits as well as        
  inpatient admissions and days.                                                                                
                                                                                                                
 Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association      
  National Hospital Panel Survey.                                                                               

    The average cost of a day of hospital care (adjusted to 
reflect outpatient services) rose by 5.4 percent to $1,188 in 
1996. The higher rate of growth in expenses per day reflects a 
decrease in the number of hospital days (see the discussion of 
average length of stay below). However, combined with the 6.0-
percent increase in 1994 and 6.3 percent in 1995, this also 
produced the smallest 3 year growth rate in more than 3 
decades.
    The average cost per case (also adjusted to reflect 
outpatient care) rose to $6,553 in 1996, an increase of only 
2.0 percent. From 1994 through 1996, the increase in costs per 
case averaged 1.9 percent per year, compared with 9.1 percent 
from 1985 through 1992 and 14.0 percent from 1975 through 1982.
    Chart C-1 presents the real annual growth in expenses per 
adjusted admission. This chart provides a clearer picture of 
the actual rate of increase in costs per case by removing the 
effects of general inflation. Even after taking inflation into 
account, the recent trend in hospital costs differs sharply 
from previous years. In 1994, hospital costs per case rose more 
slowly than inflation for the first time since 1979. In 1995 
and 1996, costs per case grew even more slowly relative to 
inflation.

   CHART C-1. REAL ANNUAL CHANGES IN HOSPITAL EXPENSES PER ADJUSTED 
                    ADMISSION (IN PERCENT), 1965-96





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


    A variety of factors other than general inflation 
contribute to aggregate changes in hospital costs, and the 
roles of these factors may vary widely over time. Chart C-2 
displays the contributions of five factors: general inflation, 
hospital input prices, population growth, utilization, and 
intensity. Between 1985 and 1992, total hospital expenses rose 
at an annual rate of 10 percent. The largest contributor to 
this increase was the intensity of hospital care; that is, the 
resources used per patient. During this period, general 
inflation also accounted for a large share of the increase in 
hospital expenses. Hospital input prices rose faster than the 
general price level, and hospital utilization per person 
actually fell (as the number of adjusted admissions grew more 
slowly than the population).

 CHART C-2. FACTORS CONTRIBUTING TO GROWTH OF TOTAL HOSPITAL EXPENSES, 
                          1985-92 AND 1992-96





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

    Source: Prospective Payment Assessment Commission.


    Between 1992 and 1996, the increase in total hospital 
expenses was only 5.3 percent per year. Because of this, 
although it slowed from 3.9 percent between 1985 and 1992 to 
2.8 percent between 1992 and 1996, general inflation accounted 
for more than half of the hospital cost increase in the latter 
period. Hospital utilization per person, which had fallen in 
the earlier period, rose substantially between 1992 and 1996, 
accounting for a large share of the growth in hospital 
expenses. Finally, intensity, which had been the major 
contributor to cost growth in the earlier period, was almost 
level between 1992 and 1996.
    Expenditures for hospital care are financed primarily by 
third parties, as shown in table C-6. In 1995, private health 
insurers paid 32.3 percent of the total, Medicare 32.2 percent, 
and Medicaid (including both the Federal and State shares) 14.8 
percent. The share financed by out-of-pocket payments from 
individuals was only 3.3 percent in 1995, down from 5.2 percent 
in 1980.

         TABLE C-6.--NATIONAL EXPENDITURES FOR HOSPITAL CARE BY SOURCE OF FUNDS, SELECTED YEARS 1980-95         
                                              [Amounts in billions]                                             
----------------------------------------------------------------------------------------------------------------
                                                1980              1985              1990              1995      
            Source of payment            -----------------------------------------------------------------------
                                           Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent
----------------------------------------------------------------------------------------------------------------
Out of pocket...........................     $5.3      5.2     $8.8      5.2     $9.8      3.8    $11.4      3.3
Third-party payments....................     97.4     94.8    159.4     94.8    246.8     96.2    338.7     96.7
  Private health insurance..............     38.7     37.7     61.0     36.3     95.7     37.3    113.1     32.3
  Other private funds...................      5.0      4.9      8.3      4.9     13.8      5.4     11.3      3.2
  Government............................     53.7     52.3     90.1     53.6    137.3     53.5    214.3     61.2
    Federal.............................     40.9     39.8     71.1     42.3    103.4     40.3    175.4     50.1
      Medicare..........................     26.3     25.6     48.9     29.1     68.5     26.7    112.6     32.2
      Medicaid\1\.......................      4.6      4.4      7.4      4.4     14.9      5.8     37.2     10.6
      Other Federal.....................      9.9      9.7     14.8      8.8     20.0      7.8     25.5      7.3
    State and local.....................     12.8     12.5     19.0     11.3     33.9     13.2     39.0     11.1
      Medicaid\2\.......................      3.9      3.8      6.3      3.7     11.6      4.5     14.8      4.2
      Other State and local.............      8.9      8.7     12.8      7.6     22.3      8.7     24.2      6.9
                                         -----------------------------------------------------------------------
        Total...........................   $102.7    100.0   $168.2    100.0   $256.5    100.0   $350.1   100.0 
----------------------------------------------------------------------------------------------------------------
\1\ Federal share only.                                                                                         
\2\ State and local share only.                                                                                 
                                                                                                                
 Source: Prospective Payment Assessment Commission analysis of data from the Health Care Financing              
  Administration, Office of the Actuary.                                                                        

                     TRENDS IN HOSPITAL UTILIZATION

                               Admissions

    From 1978 through 1983, total inpatient admissions 
increased at an annual rate of 1.0 percent, and admissions for 
persons 65 and over increased an average of 4.8 percent per 
year, as shown in table C-7.

 TABLE C-7.--ANNUAL CHANGE IN HOSPITAL ADMISSIONS BY AGE GROUP, 1978-96 
------------------------------------------------------------------------
                                           Percent change in admissions 
                                        --------------------------------
                  Year                                           65 and 
                                            All      Under 65     over  
------------------------------------------------------------------------
1978...................................        0.4       -1.0        4.9
1979...................................        2.7        1.7        5.3
1980...................................        2.9        1.5        6.7
1981...................................        0.9        0.0        3.0
1982...................................        0.0       -1.6        4.1
1983...................................       -0.5       -2.8        4.7
1984...................................       -3.7       -4.2       -2.6
1985...................................       -4.9       -4.7       -5.2
1986...................................       -2.1       -2.5       -1.0
1987...................................       -0.6       -1.0        0.4
1988...................................       -0.4       -1.6        2.0
1989...................................       -1.0       -2.0        1.2
1990...................................       -0.5       -1.6        1.7
1991...................................       -1.1       -2.9        2.5
1992...................................       -0.8       -2.2        1.7
1993...................................        0.7       -0.5        2.9
1994...................................        0.9        0.2        2.0
1995...................................        1.4        0.4        2.9
1996...................................       -0.4       -0.8        0.4
                                        --------------------------------
                                          Average annual percent change 
                                        --------------------------------
1978-83................................        1.0       -0.4        4.8
1984-86................................       -3.5       -3.8       -3.0
1987-92................................       -0.7       -1.9        1.6
1993-96................................        0.7       -0.2       2.1 
------------------------------------------------------------------------
Source: Prospective Payment Assessment Commission analysis of data from 
  the American Hospital Association National Hospital Panel Survey.     

    With the introduction of Medicare's prospective payment 
system (PPS) in 1983, the number of elderly patients declined 
sharply, contrary to most expectations. Admissions of patients 
under 65, however, fell even more during the first few years of 
PPS and had been decreasing for several years before that. From 
1987 through 1992, total admissions continued to decrease, but 
at a slower rate, due to an increase among the older 
population. In 1993, overall admissions increased for the first 
time in 12 years, due to a slower rate of decline in younger 
patients and a continuing increase in those 65 and over. This 
trend continued until 1995 when total admissions increased 1.4 
percent over the previous year, the largest increase in 15 
years. In 1996, however, total admissions decreased 0.4 percent 
from the previous year due to fewer admissions in the under 65 
population and only a small increase in the number of 
admissions among the elderly.

                         Average Length of Stay

    Before the implementation of PPS, the average length of 
stay for all patients was relatively constant between 7.0 and 
7.2 days, as shown in table C-8. With the introduction of PPS, 
however, there was a significant drop in length of stay. From 
1982 to 1984, the average stay fell from 7.2 days to 6.7 days 
for all patients and from 10.1 days to 8.9 days for patients 65 
and over. Average length of stay stabilized at these levels 
throughout the rest of the 1980s, but has declined again in the 
1990s. Hospital stays for elderly patients were 2.0 days 
shorter, on average, in 1996 than in 1990, and for patients 
under 65 the average stay was 0.6 days shorter. This decline 
was even steeper than in the first years of PPS.

                   TABLE C-8.--AVERAGE LENGTH OF STAY AND ANNUAL CHANGE BY AGE GROUP, 1978-96                   
----------------------------------------------------------------------------------------------------------------
                                                         All                Under 65             65 and over    
                                               -----------------------------------------------------------------
                                                  Average               Average               Average           
                     Year                        length of   Percent   length of   Percent   length of   Percent
                                                  stay (in    change    stay (in    change    stay (in    change
                                                   days)                 days)                 days)            
----------------------------------------------------------------------------------------------------------------
1978..........................................          7.2     -0.3          6.0     -0.9         10.6     -1.2
1979..........................................          7.1     -1.0          5.9     -1.2         10.4     -1.9
1980..........................................          7.2      0.5          5.9     -0.2         10.4     -0.1
1981..........................................          7.2      0.4          5.9      0.1         10.4     -0.1
1982..........................................          7.2     -0.6          5.9     -0.6         10.1     -2.3
1983..........................................          7.0     -2.0          5.8     -1.7          9.7     -4.4
1984..........................................          6.7     -5.1          5.6     -3.5          8.9     -7.5
1985..........................................          6.5     -1.7          5.5     -1.3          8.8     -2.1
1986..........................................          6.6      0.6          5.6      0.5          8.8      0.4
1987..........................................          6.6      0.8          5.6      0.4          8.9      1.0
1988..........................................          6.6     -0.1          5.6     -0.3          8.8     -0.7
1989..........................................          6.6      0.1          5.5     -0.7          8.8      0.2
1990..........................................          6.6     -1.1          5.4     -1.5          8.7     -1.5
1991..........................................          6.5     -1.4          5.3     -2.1          8.5     -2.0
1992..........................................          6.4     -1.6          5.2     -1.9          8.3     -2.2
1993..........................................          6.2     -2.8          5.1     -1.8          7.9     -4.7
1994..........................................          6.0     -3.8          4.9     -3.8          7.6     -4.2
1995..........................................          5.7     -4.2          4.8     -2.4          7.1     -6.6
1996..........................................          5.5     -3.3          4.8     -1.3          6.7     -5.6
                                               -----------------------------------------------------------------
                                                                  Average annual percent change                 
                                               -----------------------------------------------------------------
1978-83.......................................  ...........     -0.5  ...........     -0.8  ...........     -1.7
1984-86.......................................  ...........     -2.1  ...........     -1.4  ...........     -3.1
1987-92.......................................  ...........     -0.6  ...........     -1.0  ...........     -0.9
1993-96.......................................  ...........     -3.5  ...........     -2.3  ...........    -5.3 
----------------------------------------------------------------------------------------------------------------
Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association       
  National Hospital Panel Survey.                                                                               

                           Hospital Occupancy

    Table C-9 shows that, with slight increases in admissions 
and stable average length of stay, occupancy rates were over 70 
percent in the early 1980s. The number of hospital beds was 
increasing, exceeding 1 million by 1983. During the early years 
of PPS, however, occupancy rates decreased dramatically. From 
1983 to 1986, the aggregate occupancy rate fell from 72.2 
percent to 63.4 percent. There was a slight increase in 
occupancy rates in the late 1980s, but the sharp reduction in 
average length of stay lowered the occupancy rate below 60 
percent by 1995, despite almost 130,000 fewer beds than in 
1983. In 1996, occupancy rates decreased 1.3 percent from the 
previous year, to 58.9 percent.

                    TABLE C-9.--INPATIENT HOSPITAL OCCUPANCY RATE AND NUMBER OF BEDS, 1978-96                   
----------------------------------------------------------------------------------------------------------------
                                                                        Occupancy                               
                        Year                           Inpatient days    rate (in  Percent   Number of   Percent
                                                                         percent)   change      beds      change
----------------------------------------------------------------------------------------------------------------
1978................................................       256,708,259      73.7      -0.8      954,001      0.9
1979................................................       260,791,942      74.5       1.0      959,269      0.6
1980................................................       269,615,111      76.1       2.2      970,456      1.2
1981................................................       272,956,933      75.8      -0.4      986,917      1.7
1982................................................       271,422,385      74.5      -1.6      997,720      1.1
1983................................................       264,504,444      72.2      -3.1    1,003,658      0.6
1984................................................       241,779,724      66.7      -7.6      992,616     -1.1
1985................................................       226,128,547      63.6      -4.7      974,559     -1.8
1986................................................       222,903,834      63.4      -0.3      963,133     -1.2
1987................................................       223,441,342      64.1       1.2      954,458     -0.9
1988................................................       222,312,614      64.6       0.8      942,306     -1.3
1989................................................       220,360,991      64.8       0.3      930,994     -1.2
1990................................................       216,836,360      64.5      -0.6      921,447     -1.0
1991................................................       211,474,700      63.5      -1.4      911,781     -1.0
1992................................................       206,440,330      62.3      -1.9      907,661     -0.5
1993................................................       202,077,589      61.4      -1.5      901,669     -0.7
1994................................................       196,116,784      60.3      -1.7      890,575     -1.2
1995................................................       190,377,347      59.7      -1.1      874,250     -1.8
1996................................................       183,495,155      58.9      -1.3      853,561     -2.4
                                                     -----------------------------------------------------------
                                                                     Average annual percent change              
                                                     -----------------------------------------------------------
1978-83.............................................  ................  .........     -0.5  ...........      1.0
1984-86.............................................  ................  .........     -4.2  ...........     -1.4
1987-92.............................................  ................  .........     -0.3  ...........     -1.0
1993-96.............................................  ................  .........     -1.4  ...........    -1.5 
----------------------------------------------------------------------------------------------------------------
Source: Prospective Payment Assessment Commission analysis of data from American Hospital Association National  
  Hospital Panel Survey.                                                                                        

                          Hospital Employment

    Hospitals experienced a significant downturn in total 
employment levels at the time PPS was introduced, as shown in 
table C-10. During 1984 and 1985, full-time equivalent 
employees declined by 2.3 percent. From 1986 through 1993, 
however, hospital employment increased. During the late 1970s 
and through the 1980s, growth in the number of part-time 
personnel exceeded growth in the number of full-time personnel 
in every year. In 1992, however, the number of full-time 
personnel grew faster than the number of part-time personnel 
for the first time in more than 20 years. This trend continued 
in 1993, but the increase in both types of personnel slowed 
dramatically. In 1994 hospital employment declined for the 
first time since the early years of PPS. This was only the 
second such period in the past three decades. The number of 
hospital employees has continued to decrease; part-time 
employees decreased 1.1 percent in 1996 compared to the 
previous year, while full-time employees held constant.

   TABLE C-10.--ANNUAL PERCENT CHANGE IN HOSPITAL EMPLOYMENT, 1978-96   
------------------------------------------------------------------------
                                                    Personnel           
            Year                Total   --------------------------------
                                 FTEs      Total    Full time  Part time
------------------------------------------------------------------------
1978........................        3.7        4.1        3.3        6.8
1979........................        3.5        3.9        2.9        6.7
1980........................        4.7        5.2        4.0        9.1
1981........................        5.4        6.0        4.8        9.4
1982........................        3.7        3.7        3.6        4.1
1983........................        1.4        1.5        1.2        2.3
1984........................       -2.3       -2.1       -2.6       -0.8
1985........................       -2.3       -2.0       -2.7       -0.1
1986........................        0.3        0.4        0.2        0.9
1987........................        0.7        0.9        0.4        2.3
1988........................        1.1        1.4        0.7        3.3
1989........................        1.6        1.9        1.2        3.6
1990........................        2.1        2.3        1.8        3.6
1991........................        0.6        0.7        0.6        1.0
1992........................        1.6        1.5        1.7        0.9
1993........................        0.7        0.6        0.8        0.2
1994........................       -0.8       -0.8       -0.7       -0.9
1995........................       -1.4       -1.4       -1.5       -0.9
1996........................       -0.2       -0.3        0.0       -1.1
                             -------------------------------------------
                                     Average annual percent change      
                             -------------------------------------------
1978-83.....................        3.7        4.1        3.3        6.4
1984-86.....................       -1.4       -1.2       -1.7        0.0
1987-92.....................        1.3        1.5        1.1        2.4
1993-96.....................       -0.4       -0.5       -0.4      -0.7 
------------------------------------------------------------------------
Source: Prospective Payment Assessment Commission analysis of data from 
  the American Hospital Association National Hospital Panel Survey.     

                 EXPENDITURES FOR PHYSICIANS' SERVICES

    Health care expenditures for physicians' services were 
$201.6 billion in 1995, an increase of 5.8 percent from 1994. 
This amounted to 20.4 percent of national health expenditures.
    Third-party (public expenditures and private insurance) 
payments financed over 80 percent of physicians' services. In 
1995 private health insurance, the single largest payer, was 
responsible for 48.1 percent of these expenditures ($97 
billion). In 1980, this portion was only 37.9 percent. Public 
expenditures in this area have grown much more slowly, rising 
from 28.9 percent in 1980 to 31.7 percent ($64 billion) in 
1995. Of this last figure, $40 billion was for Federal Medicare 
payments. In contrast, out-of-pocket payments by individuals 
for physicians' services have decreased from 32.4 percent in 
1980 to 18.3 percent ($6.9 billion) in 1995 (see table C-11).
    Inflation in physicians' fees has outpaced that of the U.S. 
economy as a whole since 1981 as measured by the Consumer Price 
Index (CPI). The inflation rate of 3.6 for 1996, however, is 
the lowest since 1973 (see table C-12).
    The American Medical Association reports that, over the 10 
years from 1984 to 1994, physician income rose an average 5 
percent a year. In 1994, however, the average physician net 
income experienced the first decrease ever recorded by the AMA. 
After expenses but before taxes, average physician income was 
$182,400, a 3.6 percent decrease from $189,300 in 1993. In 
1995, average physician net income rebounded 7.2 percent to 
$195,500. The 2-year change in income, however, amounts to an 
average annual increase of only 1.6 percent from 1993 to 1995. 
When adjusted for inflation, this represents an average annual 
loss of 1.04 percent, with real incomes remaining below those 
for 1993.
    Changes in the health care market appear to be affecting 
the conditions of employment for many physicians (Physician 
Payment Review Commission). In 1995, the percentage of 
physicians who were self-employed declined from 58 to 55 
percent. These doctors, who were more likely to have additional 
years of experience and be board certified, earned an average 
income of $230,800. This was over 50 percent higher than 
employee-doctors whose average net income was only $152,500, 
but the difference would be less if noncash benefits received 
by employee physicians were included. The share of physicians 
who were employees increased from 36 to 39 percent in the same 
time period.
    Growth in average net income for physicians in the Middle 
Atlantic and Pacific areas was well above average in 1995. The 
West North Central, Mountain, and New England census regions 
saw the least increase in income from 1994 to 1995. Physicians 
in the New England States continue to report the lowest average 
net income of $161,000; the East South Central region remained 
the highest at $216,000 (see table C-13).

                             TABLE C-11.--EXPENDITURES FOR PHYSICIAN SERVICES \1\ BY SOURCE OF FUNDS, SELECTED YEARS 1980-95                            
                                                                  [Amounts in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    1980              1985              1990              1993              1994              1995      
              Source of payment              -----------------------------------------------------------------------------------------------------------
                                               Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Out-of-pocket payments......................    $14.8     32.4    $24.3     29.1    $35.4     24.2    $37.5     20.6    $37.3     19.6    $36.9     18.3
Third-party payments........................     30.6     67.6     59.3     70.9    110.9     75.8    145.1     79.4    153.3     80.4    164.8     81.7
Private health insurance....................     17.1     37.9     23.4     36.9     63.3     43.2     86.5     47.3     91.1     47.8     97.0     48.1
Other private funds.........................      0.4      0.8      1.4      1.6      2.7      1.8      3.1      1.7      3.1      1.6      3.7      1.9
Government..................................     13.1     28.9     24.5     29.3     45.0     30.7     55.6     30.4     59.1     31.0     64.0     31.7
    Federal.................................     10.0     22.1     19.5     23.4     35.9     24.5     43.5     23.8     46.7     24.5     50.9     25.3
      Medicare..............................      8.0     17.6     16.5     19.7     29.5     20.2     33.4     18.3     36.2     19.0     40.0     19.8
      Medicaid..............................      1.4      3.1      2.0      2.4      4.2      2.8      7.6      4.2      8.0      4.2      8.4      4.2
      Other Federal programs................      0.6      1.4      1.1      1.3      2.2      1.5      2.6      1.4      2.5      1.3      2.6      1.3
    State and local.........................      3.1      6.9      4.9      5.9      9.1      6.2     12.0      6.6     12.5      6.5     13.1      6.5
      Medicaid..............................      1.1      2.5      1.5      1.9      2.9      2.0      5.0      2.7      5.5      2.9      5.9      2.9
      Other State and local programs........      2.0      4.3      3.4      4.0      6.2      4.2      7.0      3.8      7.0      3.7      7.1      3.5
                                             -----------------------------------------------------------------------------------------------------------
        Total...............................     45.2    100.0     83.6    100.0    146.3    100.0    182.7    100.0    190.6    100.0    201.6   100.0 
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Encompasses the cost of all services and supplies provided in physicians' offices, the cost for services of privately billing physicians in         
  hospitals and other institutions, and the cost of diagnostic work performed in independent clinical laboratories. The salaries of staff physicians are
  counted with expenditures for the services of the employing institution.                                                                              
                                                                                                                                                        
 Note.--Totals may not equal sum of rounded components.                                                                                                 
                                                                                                                                                        
 Source: Health Care Financing Administration, Office of the Actuary. Data from the Office of National Health Statistics.                               


  TABLE C-12.--ANNUAL PERCENTAGE CHANGE IN SELECTED COMPONENTS OF THE CONSUMER PRICE INDEX (CPI-U), \1\ 1965-96 
----------------------------------------------------------------------------------------------------------------
                                                                              All items                         
                                                                                less       Medical   Physicians'
                              Year                                All items    medical   care total    services 
                                                                                care                            
----------------------------------------------------------------------------------------------------------------
1965...........................................................         1.6         1.6         2.4          3.6
1966...........................................................         2.9         3.1         4.4          5.6
1967...........................................................         3.1         2.1         7.2          7.2
1968...........................................................         4.2         4.2         6.0          5.6
1969...........................................................         5.5         5.4         6.7          7.0
1970...........................................................         5.7         5.9         6.6          7.5
1971...........................................................         4.4         4.1         6.2          7.0
1972...........................................................         3.2         3.2         3.3          3.0
1973...........................................................         6.2         6.4         4.0          3.4
1974...........................................................        11.0        11.2         9.3          9.2
1975...........................................................         9.1         9.0        12.0         12.1
1976...........................................................         5.8         5.3         9.5         11.4
1977...........................................................         6.5         6.3         9.6          9.1
1978...........................................................         7.6         7.6         8.4          8.4
1979...........................................................        11.3        11.5         9.2          9.1
1980...........................................................        13.5        13.6        11.0         10.5
1981...........................................................        10.3        10.4        10.7         11.0
1982...........................................................         6.2         5.9        11.6          9.4
1983...........................................................         3.2         2.9         8.8          7.8
1984...........................................................         4.3         4.1         6.2          6.9
1985...........................................................         3.6         3.4         6.3          5.9
1986...........................................................         1.9         1.5         7.5          7.2
1987...........................................................         3.6         3.5         6.6          7.3
1988...........................................................         4.1         3.9         6.5          7.2
1989...........................................................         4.8         4.6         7.7          7.4
1990...........................................................         5.4         5.2         9.0          7.1
1991...........................................................         4.2         3.9         8.7          6.0
1992...........................................................         3.0         2.8         7.4          6.3
1993...........................................................         3.0         2.7         5.9          5.6
1994...........................................................         2.6         2.5         4.8          4.4
1995...........................................................         2.8         2.7         4.5          4.5
1996...........................................................         3.0         2.8         3.5         3.6 
----------------------------------------------------------------------------------------------------------------
\1\ Consumer Price Index for all Urban Consumers (CPI-U), changes in annual averages.                           
                                                                                                                
 Source: U.S. Department of Labor, Bureau of Labor Statistics.                                                  

    Physician net income varies more by specialty than across 
geographic areas. Surgeons had the highest average net incomes 
in 1995 ($269,400) and general and family practitioners the 
lowest ($131,200). Incomes for general and family 
practitioners, however, continue to increase at a healthy rate, 
with gains from 1993 to 1994 of 3.9 percent and from 1994 to 
1995 of 8.1 percent. The largest gain from 1994 to 1995 was by 
obstetricians and gynecologists with an increase of 21.9 
percent to $244,300. This followed a 9.7 percent decrease in 
average net income for this specialty in 1994. Growth in income 
for surgeons was below the all-physician average, declining 2.9 
percent from 1993 to 1994 and increasing only 5.6 percent from 
1994 to 1995 (see table C-13).

                                  TABLE C-13.--PHYSICIANS' AVERAGE NET INCOME AFTER EXPENSES BUT BEFORE TAXES, 1983-95                                  
                                                    [Average net income \1\ in thousands of dollars]                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                 Percent
               Category                  1983    1984    1985    1986    1987    1988    1989    1990    1991    1992    1993    1994    1995    change 
                                                                                                                                                 1994-95
--------------------------------------------------------------------------------------------------------------------------------------------------------
Specialty:                                                                                                                                              
    General/family practice...........    68.5    71.1    77.9    80.3    91.5    94.6    95.9   102.7   111.5   114.4   116.8   121.4   131.2       8.1
    Internal medicine.................    93.3   103.2   101.0   109.4   121.8   130.9   146.5   152.5   149.6   162.1   180.8   174.9   185.7       6.2
    Surgery...........................   145.5   151.8   155.4   162.4   187.9   207.5   220.5   236.4   233.8   250.5   262.7   255.2   269.4       5.6
    Pediatrics........................    70.7    74.5    77.1    81.8    85.3    94.9   104.7   106.5   119.3   123.9   135.4   126.2   140.5      11.3
    Obstetrics/gynecology.............   119.9   116.2   122.7   135.9   163.2   180.7   194.3   207.3   221.8   220.7   221.9   200.4   244.3      21.9
    Radiology.........................   148.0   139.8   150.8   168.8   180.7   188.5   210.5   219.4   229.8   257.3   259.8   237.4   244.4       2.9
    Psychiatry........................    80.0    85.5    88.6    91.5   102.7   111.4   111.7   116.5   127.6   132.1   131.3   128.5   137.2       6.8
    Anesthesiology....................   144.7   145.4   140.2   150.2   163.1   194.5   185.8   207.4   221.1   231.1   224.1   218.1   215.1      -1.4
Census division:                                                                                                                                        
    New England.......................    84.5    87.3   108.3   107.1   110.6   132.9   128.3   142.5   143.8   171.2   171.5   156.1   161.0       3.1
    Middle Atlantic...................    98.6    98.4   107.9   114.6   126.1   135.0   152.5   156.1   171.0   172.4   185.3   177.8   207.0      16.4
    East North Central................   114.3   109.4   118.9   126.6   137.6   147.0   155.6   172.4   174.1   187.1   199.2   191.9   198.8       3.6
    West North Central................   110.5   110.7   113.7   120.7   133.9   138.0   159.2   151.4   164.2   187.5   198.2   183.8   184.6       0.4
    South Atlantic....................   106.7   114.5   112.6   119.6   133.8   156.0   165.6   169.0   168.8   186.4   192.5   189.3   198.8       5.0
    East South Central................   114.9   122.2   115.0   122.6   141.2   164.8   173.0   169.0   179.4   180.0   195.0   199.2   216.0       8.4
    West South Central................   124.4   119.1   123.3   129.0   140.4   160.7   170.5   178.8   193.3   193.8   189.1   195.5   205.9       5.3
    Mountain..........................    91.4   102.3    97.5   108.5   125.5   132.1   142.6   170.9   155.0   175.7   193.2   175.4   178.8       1.9
    Pacific...........................   103.1   109.4   113.6   119.0   135.4   136.0   148.1   162.5   172.4   178.1   181.2   171.8   189.9      10.5
Location:                                                                                                                                               
    Nonmetropolitan...................    87.2    90.9    94.2   107.7   117.9   120.9   129.4   130.5   150.4   159.2   160.0   171.4   157.5      -8.1
    Metropolitan:                                                                                                                                       
        Less than 1,000,000...........   111.0   115.1   118.1   124.5   140.4   154.1   164.1   172.7   174.8   185.6   195.2   193.0   204.1       5.8
        1,000,000 and over............   106.3   106.4   112.8   117.5   127.9   140.7   153.4   163.3   170.4   181.5   188.5   175.1   193.5      10.5
Employment status:                                                                                                                                      
    Self-employed.....................   115.9   118.6   124.5   131.1   146.2   160.0   175.3   185.6   191.0   202.3   218.0   210.2   230.8       9.8
    Employee..........................    77.6    80.4    83.8    91.7    99.6   113.0   119.2   119.8   134.0   136.1   150.7   148.2   152.5       2.9
                                       -----------------------------------------------------------------------------------------------------------------
        All physicians \2\............   104.1   108.4   112.2   119.5   132.3   144.7   155.8   164.3   170.6   181.7   189.3   182.4   195.5      7.2 
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Average net income after expenses but before taxes. These figures include contributions made into pension, profit-sharing, and deferred compensation
  plans.                                                                                                                                                
\2\ Includes physicians in specialties not reported separately.                                                                                         
                                                                                                                                                        
                                                                                                                                                        
 Source: American Medical Association (1997a and b).                                                                                                    

    Table C-14 shows median net income for physicians, the 
level below and above which lie half of all earnings. In the 
decade from 1985 to 1995, the median income for all physicians 
increased each year by an average 5.5 percent. After adjusting 
for inflation, this represents a real growth of 1.9 percent 
yearly. Pediatrics had the largest yearly increase of 6.3 
percent (nominal) or 2.7 percent (real or constant dollars). 
Anesthesiology grew only 4.3 percent (nominal) or 0.8 percent 
(real or constant dollars) over this same time.

             TABLE C-14.--MEDIAN PHYSICIAN NET INCOME AFTER EXPENSES BUT BEFORE TAXES, 1985 AND 1995            
                                            [In thousands of dollars]                                           
----------------------------------------------------------------------------------------------------------------
                                                                      Median net income         Average annual  
                                                               ------------------------------   percent change  
                           Category                                         1995      1995   -------------------
                                                                  1985     nominal  real \1\   Nominal  Real \1\
----------------------------------------------------------------------------------------------------------------
Specialty:                                                                                                      
    General/family practice...................................       $70      $124       $88       5.9       2.3
    Internal medicine.........................................        90       150       106       5.2       1.6
    Surgery...................................................       129       225       159       5.7       2.1
    Pediatrics................................................        70       129        91       6.3       2.7
    Obstetrics/gynecology.....................................       120       200       141       5.2       1.6
    Radiology.................................................       135       230       162       5.5       1.9
    Psychiatry................................................        80       124        88       4.5       0.9
    Anesthesiology............................................       133       203       143       4.3       0.8
    Pathology.................................................       115       185       131       4.9       1.3
Census division:                                                                                                
    New England...............................................        94       140        99       4.1       0.5
    Middle Atlantic...........................................        90       173       122       6.8       3.1
    East North Central........................................       100       164       116       5.1       1.5
    West North Central........................................        85       160       113       6.5       2.9
    South Atlantic............................................        94       164       116       5.7       2.1
    East South Central........................................        92       175       124       6.6       3.0
    West South Central........................................       100       173       122       5.6       2.0
    Mountain..................................................        85       151       107       5.9       2.3
    Pacific...................................................        97       165       116       5.5       1.8
                                                               -------------------------------------------------
        All physicians \2\....................................        94       160       113       5.5      1.9 
----------------------------------------------------------------------------------------------------------------
\1\ In 1985 dollars.                                                                                            
\2\ Includes physicians in specialties not listed separately.                                                   
                                                                                                                
 Source: American Medical Association (1997b).                                                                  

    Table C-15 shows average physician net income in nominal 
and real (or constant) dollars. Physicians' average net income 
increased 74 percent between 1985 and 1995, but real income, 
expressed in 1995 dollars, increased only 23 percent (from 
$158,900 to $195,500) over the 10 year period.

   TABLE C-15.--AVERAGE PHYSICIAN NET INCOME AFTER EXPENSES BUT BEFORE  
                             TAXES, 1977-95                             
                         [Dollars in thousands]                         
------------------------------------------------------------------------
                       Year                          Nominal      Real  
------------------------------------------------------------------------
1977..............................................      $60.4     $151.9
1978..............................................       64.6      151.0
1979..............................................       77.4      162.5
1980..............................................         NA         NA
1981..............................................       89.9      150.7
1982..............................................       97.7      154.3
1983..............................................      104.1      159.3
1984..............................................      108.4      159.0
1985..............................................      112.2      158.9
1986..............................................      119.5      166.2
1987..............................................      132.3      177.5
1988..............................................      144.7      186.4
1989..............................................      155.8      191.5
1990..............................................      164.3      191.6
1991..............................................      170.6      190.9
1992..............................................      181.7      197.4
1993..............................................      189.3      199.6
1994..............................................      182.4      187.6
1995..............................................      195.5     195.5 
------------------------------------------------------------------------
NA--Not available.                                                      
                                                                        
 Note.--Real (1995 dollars) incomes are calculated using the Consumer   
  Price Index for all Urban Consumers.                                  
                                                                        
 Source: CRS analysis of data from American Medical Association (1997a  
  and b).                                                               

    Table C-16 shows the distribution of physicians' net 
incomes in 1995 for all physicians and selected specialties. 
While the average net income of all physicians was $195,500, 
the median income may be more representative of the typical 
physician's earnings. Half of all physicians earned $160,000 or 
less. One-fourth of all physicians earned $115,000 or less, 
while one-fourth earned $238,000 or more. Median incomes across 
all physician specialties remain far apart, with the median 
income for gastroenterology at $244,000 in 1995, followed by 
surgery at $225,000. On the lower side, general and family 
practice and psychiatry reported median incomes of $124,000.

  TABLE C-16.--DISTRIBUTION OF PHYSICIAN NET INCOME AFTER EXPENSES BUT  
           BEFORE TAXES BY SPECIALTY AND CENSUS DIVISION, 1995          
                        [In thousands of dollars]                       
------------------------------------------------------------------------
                                           25th                  75th   
          Category              Mean    percentile   Median   percentile
------------------------------------------------------------------------
Specialty:                                                              
    General/family practice.    $131.2      $90.0     $124.0     $159.0 
    Internal medicine.......     185.7      110.0      150.0      214.0 
        General internal                                                
         medicine...........     159.5      101.0      138.0      190.0 
        Cardiovascular                                                  
         diseases...........     292.3      150.0      210.0      388.0 
        Gastroenterology....     256.5      145.0      244.0      315.0 
    Surgery.................     269.4      160.0      225.0      316.0 
        General surgery.....     244.4      150.0      203.0      302.0 
        Otolaryngology......     232.3      148.0      206.0      282.0 
        Orthopedic surgery..     323.2      200.0      250.0      350.0 
        Ophthalmology.......     240.8      125.0      194.0      260.0 
        Urological surgery..     243.4      175.0      220.0      293.0 
    Pediatrics..............     140.5       95.0      129.0      175.0 
    Obstetrics/gynecology...     244.3      150.0      200.0      296.0 
    Radiology...............     244.4      160.0      230.0      310.0 
    Psychiatry..............     137.2       95.0      124.0      160.0 
    Anesthesiology..........     215.1      150.0      203.0      262.0 
    Pathology...............     209.4      130.0      185.0      230.0 
    Other specialty.........     188.5      127.0      170.0      222.0 
        Emergency medicine..     184.4      145.0      170.0      225.0 
        Neurology...........     197.8      130.0      160.0      225.0 
        Dermatology.........     214.9      125.0      190.0      238.0 
Geographic area:                                                        
    New England.............     161.0      100.0      140.0      200.0 
    Middle Atlantic.........     207.0      119.0      173.0      250.0 
    East North Central......     198.8      119.0      164.0      250.0 
    West North Central......     184.6      108.0      160.0      221.0 
    South Atlantic..........     198.8      113.0      164.0      240.0 
    East South Central......     216.0      120.0      175.0      282.0 
    West South Central......     205.9      124.0      173.0      240.0 
    Mountain................     178.8      108.0      151.0      220.0 
    Pacific.................     189.9      120.0      165.0      220.0 
                             -------------------------------------------
        All physicians \1\..     195.5      115.0      160.0     238.0  
------------------------------------------------------------------------
\1\ Includes physicians in specialties not listed separately.           
                                                                        
 Source: American Medical Association (1997a).                          

     The AMA's Physician Marketplace Statistics 1996 reported 
that, on average, nonfederal patient care physicians received 
42.9 percent of their incomes from private insurers. Medicare 
payments were 27.4 percent; Medicaid was a source of another 
11.8 percent of doctor revenue. Patient out-of-pocket payments 
accounted for 17.9 percent (see table C-17). The importance of 
each source varied by specialty, with physicians specializing 
in internal medicine receiving the highest percentage of 
revenue from Medicare. Pediatricians, on average, received only 
1.3 percent of their income from Medicare, but received the 
highest percentage of income from Medicaid (23.6 percent).

                 TABLE C-17.--PERCENT OF NONFEDERAL PHYSICIAN REVENUE BY SOURCE OF PAYMENT, 1996                
----------------------------------------------------------------------------------------------------------------
                                                                                          Private    Patient out
                          Category                              Medicare     Medicaid    insurance    of pocket 
----------------------------------------------------------------------------------------------------------------
Specialty:                                                                                                      
    General/family practice.................................         23.6         12.9         40.8         22.7
    Internal medicine.......................................         40.2          8.8         37.9         13.2
    Surgery.................................................         34.9          8.1         43.2         13.8
    Pediatrics..............................................          1.3         23.6         48.8         26.3
    Obstetrics/gynecology...................................          8.7         17.9         58.2         15.1
    Radiology...............................................         34.9         10.5         39.9         14.8
    Psychiatry..............................................         13.7         11.8         35.9         38.6
    Anesthesiology..........................................         27.4         13.0         46.4         13.3
    Pathology...............................................         30.4         10.7         42.2         16.6
Census:                                                                                                         
    New England.............................................         26.6         11.7         44.6         17.1
    Middle Atlantic.........................................         30.2          8.8         43.9         17.1
    East North Central......................................         28.1         11.9         42.3         17.7
    West North Central......................................         28.5         10.2         43.8         17.4
    South Atlantic..........................................         27.9         11.8         42.1         18.2
    East South Central......................................         29.0         15.2         38.5         17.3
    West South Central......................................         27.8         12.0         40.8         19.4
    Mountain................................................         23.9         11.8         46.2         18.1
    Pacific.................................................         23.9         13.8         43.8         18.5
                                                             ---------------------------------------------------
        All physicians \1\..................................         27.4         11.8         42.9        17.9 
----------------------------------------------------------------------------------------------------------------
Source: American Medical Association (1997a).                                                                   

    A Medical Economics Continuing Survey addressed physician 
gross income from HMOs, PPOs, and the amount in the form of 
capitation payments (see table C-18). According to the survey, 
there was a small increase between 1994 and 1995 in the portion 
of physicians participating in capitated plans from 36 to 38 
percent. Physicians with prepaid contracts earned a median 
$40,000 in capitation payments in 1995, only 5 percent more 
than in 1994.
    The rise in the number of doctors who take HMO patients, 
however, jumped from a median 69 percent of survey respondents 
in 1994 to 77 percent in 1995. The median gross income in 1995 
for these physicians was $63,770, an increase of 17 percent 
from 1994. PPO participation by physicians also rose from 69 to 
75 percent, with earnings increasing 13 percent to $48,660 
(Terry, 1996).

             TABLE C-18.--PHYSICIAN GROSS INCOME FROM MANAGED CARE AND CAPITATION BY SPECIALTY, 1995            
----------------------------------------------------------------------------------------------------------------
                                                        Median 1995 gross income \1\      Percent of 1995 gross 
                                                                    from:                   income \1\ from:    
                 Physician specialty                 -----------------------------------------------------------
                                                         HMOs       PPOs    Capitation   HMOs   PPOs  Capitation
----------------------------------------------------------------------------------------------------------------
Anesthesiologists...................................    $58,680    $39,720     $32,500     20     15         10 
Cardiologists.......................................     50,880     44,600      47,500     12     10         10 
Cardio/thoracic surgeons............................     87,670     50,000      50,000     20     10         10 
Emergency physicians................................     49,750     46,790      45,000     20     20         20 
Family practitioners................................     69,080     63,600      27,500     20     15         10 
Gastroenterologists.................................     52,210     23,730      32,000     25     10         15 
General practitioners...............................     62,660     54,410      53,200     20     15         15 
General surgeons....................................     57,610     33,200      45,000     25     15         20 
Internist...........................................    115,860     64,640      60,000     20     10         10 
Neurosurgeons.......................................    114,230     79,060      40,000     30     20         15 
OBG specialists.....................................     51,710     42,320      22,500     10      9         10 
Orthopedic surgeons.................................     74,790     70,000      50,000     15     15         10 
Pediatricians.......................................     68,820     63,870      42,500     30     25         17 
Plastic surgeons....................................     73,980     55,580      42,500     15     15         10 
Psychiatrists.......................................     46,120     37,880      24,000     20     20         10 
Radiologists........................................      (\2\)      (\2\)      36,000     20  (\2\)         10 
                                                     -----------------------------------------------------------
    All surgical specialists........................     78,200     58,960      40,000     20     15         10 
    All nonsurgeons \2\.............................     56,780     43,630      40,000     20     15         15 
    All fields......................................     63,770     48,660      40,000     20     15        15  
----------------------------------------------------------------------------------------------------------------
\1\ Gross is the individual physician's share of 1994 practice receipts before professional expenses and income 
  taxes.                                                                                                        
\2\ Insufficient sample. Figures exclude physicians with no HMO, preferred provider organizations, or capitation
  contracts.                                                                                                    
                                                                                                                
 Source: Terry (1996).                                                                                          

                        SUPPLY OF HOSPITAL BEDS

    The national supply of community hospital beds per 1,000 
population steadily increased from the 1940s, reaching a peak 
of 4.6 beds per 1,000 population in 1975. By 1994, the number 
of beds dropped to 3.5 per 1,000 population. Among the 9 Census 
regions, the East South Central experienced the largest 
increase from 1.7 per 1,000 population in 1940 to 4.7 in 1980. 
By 1994, this number had declined to 4.3, but was still more 
than twice that of the 1940 figure. In contrast, the New 
England, Mountain, and Pacific regions had fewer beds per 1,000 
in 1994 than in 1940 (see table C-19).

                            TABLE C-19.--COMMUNITY HOSPITAL BEDS PER 1,000 POPULATION AND AVERAGE ANNUAL PERCENT CHANGE BY REGION AND STATE, SELECTED YEARS 1940-1994                           
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Beds per 1,000 civilian population                                   Average annual percent change                 
                      Region and State                       -----------------------------------------------------------------------------------------------------------------------------------
                                                              1940 \1\  1950 \1\  1960 \2\   1970    1980   1990 \3\  1994 \3\  1940-60 \1\ \2\  1960-70 \2\   1970-80  1980-90 \3\  1990-94 \3\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
New England.................................................      4.4       4.2       3.9      4.1     4.1      3.4       3.1            -0.6           0.5        0.0        -1.9         -2.3 
  Maine.....................................................      3.0       3.2       3.4      4.7     4.7      3.7       3.4             0.6           3.3        0.0        -2.1         -2.1 
  New Hampshire.............................................      4.2       4.2       4.4      4.0     3.9      3.1       2.9             0.2          -0.9       -0.3        -2.3         -1.7 
  Vermont...................................................      3.3       4.0       4.5      4.5     4.4      3.0       3.3             1.6           0.0       -0.2        -3.4          2.4 
  Massachusetts.............................................      5.1       4.8       4.2      4.4     4.4      3.6       3.3            -1.0           0.5        0.0        -2.0         -2.2 
  Rhode Island..............................................      3.9       3.8       3.7      4.0     3.8      3.2       2.8            -0.3           0.8       -0.5        -1.7         -3.3 
  Connecticut...............................................      3.7       3.6       3.4      3.4     3.5      2.9       2.8            -0.4           0.0        0.3        -1.9         -0.9 
Middle Atlantic.............................................      3.9       3.8       4.0      4.4     4.6      4.1       4.1             0.1           1.0        0.4        -0.9          0.0 
  New York..................................................      4.3       4.1       4.3      4.6     4.5      4.1       4.2             0.0           0.7       -0.2        -0.7          0.6 
  New Jersey................................................      3.5       3.2       3.1      3.6     4.2      3.7       3.9            -0.6           1.5        1.6        -1.3          1.3 
  Pennsylvania..............................................      3.5       3.8       4.1      4.7     4.8      4.4       4.2             0.8           1.4        0.2        -0.9         -1.2 
East North Central..........................................      3.2       3.2       3.6      4.4     4.7      3.9       3.5             0.6           2.0        0.7        -1.8         -2.7 
  Ohio......................................................      2.7       2.9       3.4      4.2     4.7      4.0       3.6             1.2           2.1        1.1        -1.8         -2.6 
  Indiana...................................................      2.3       2.6       3.1      4.0     4.5      3.9       3.5             1.5           2.6        1.2        -1.4         -2.7 
  Illinois..................................................      3.4       3.6       4.0      4.7     6.1      4.0       3.7             0.8           1.6        0.8        -2.4         -1.9 
  Michigan..................................................      4.0       3.3       3.3      4.3     4.4      3.7       3.3            -1.0           2.7        0.2        -1.7         -2.8 
  Wisconsin.................................................      3.4       3.7       4.3      5.2     4.9      3.8       3.4             1.2           1.9       -0.8        -2.5         -2.7 
West North Central..........................................      3.1       3.7       4.3      6.7     6.8      4.9       4.5             1.6           2.9        0.2        -1.7         -2.1 
  Minnesota.................................................      3.9       4.4       4.8      6.1     5.7      4.4       4.0             1.0           2.4       -0.7        -2.6         -2.4 
  Iowa......................................................      2.7       3.2       3.9      5.6     5.7      5.1       4.6             1.9           3.7        0.2        -1.1         -2.5 
  Missouri..................................................      2.9       3.3       3.9      5.1     5.7      4.8       4.4             1.5           2.7        1.1        -1.7         -2.2 
  North Dakota..............................................      3.5       4.3       5.2      6.8     7.4      7.0       7.0             2.0           2.7        0.8        -0.6          0.0 
  South Dakota..............................................      2.8       4.4       4.5      5.6     5.5      6.1       6.1             2.4           2.2       -0.2         1.0          0.0 
  Nebraska..................................................      3.4       4.2       4.4      6.2     6.0      5.5       5.2             1.3           3.5       -0.3        -1.0         -1.4 
  Kansas....................................................      2.8       3.4       4.2      5.4     5.8      4.8       4.4             2.0           2.5        0.7        -1.9         -2.2 
South Atlantic..............................................      2.5       2.8       3.3      4.0     4.5      3.7       3.5             1.4           1.9        1.2        -1.9         -1.4 
  Delaware..................................................      4.4       3.9       3.7      3.7     3.6      3.0       2.6            -0.9           0.0       -0.3        -1.8         -3.5 
  Maryland..................................................      3.9       3.6       3.3      3.1     3.6      2.8       2.6            -0.8          -0.6        1.5        -2.1         -1.8 
  District of Columbia......................................      5.5       5.5       5.9      7.4     7.3      7.6       7.2             0.4           2.3       -0.1         0.3         -1.3 
  Virginia..................................................      2.2       2.5       3.0      3.7     4.1      3.3       3.0             1.6           2.1        1.0        -2.1         -2.4 
  West Virginia.............................................      2.7       3.1       4.1      5.4     5.5      4.7       4.5             2.1           2.8        0.2        -1.6         -1.1 
  North Carolina............................................      2.2       2.6       3.4      3.8     4.2      3.3       3.3             2.2           1.1        1.0        -2.1          0.0 
  South Carolina............................................      1.8       2.4       2.9      3.7     3.9      3.3       3.2             2.4           2.5        0.5        -1.7         -0.8 
  Georgia...................................................      1.7       2.0       2.8      3.8     4.6      4.0       3.8             2.5           3.1        1.9        -1.4         -1.3 
  Florida...................................................      2.8       2.9       3.1      4.4     5.1      3.9       3.7             0.5           3.6        1.5        -2.4         -1.3 
East South Central..........................................      1.7       2.1       3.0      4.4     4.7      4.3       4.3             3.9           1.5       -0.6        -2.2         -2.4 
  Kentucky..................................................      1.8       2.2       3.0      4.0     4.5      4.3       4.1             2.6           2.9        1.2        -0.2         -1.2 
  Tennessee.................................................      1.9       2.3       3.4      4.7     5.5      4.8       4.3             3.0           3.3        1.6        -1.1         -2.7 
  Alabama...................................................      1.5       2.0       2.8      4.3     5.1      4.6       4.3             3.2           4.4        1.7        -1.0         -1.7 
  Mississippi...............................................      1.4       1.7       2.9      4.4     5.3      5.0       4.7             3.7           4.3        1.9         0.0         -1.5 
West South Central..........................................      2.1       2.7       3.3      4.3     4.7      3.8       3.5             2.3           2.7        0.9        -1.8         -2.0 
  Arkansas..................................................      1.4       1.6       2.9      4.2     5.0      4.6       4.2             3.7           3.6        1.8        -0.6         -2.2 
  Louisiana.................................................      3.1       3.8       3.9      4.2     4.8      4.6       4.4             1.2           0.7        1.3        -0.4         -1.1 
  Oklahoma..................................................      1.9       2.5       3.2      4.5     4.6      4.0       3.6             2.6           3.5        0.2        -1.4         -2.6 
  Texas.....................................................      2.0       2.7       3.3      4.3     4.7      3.5       3.2             2.5           2.7        0.9        -2.9         -2.2 
Mountain....................................................      3.6       3.8       3.5      4.3     3.8      3.1       2.7            -0.1           2.1       -1.2        -2.0         -3.4 
  Montana...................................................      4.9       5.3       5.1      5.8     5.9      5.8       5.0             0.2           1.3        0.2        -0.2         -3.6 
  Idaho.....................................................      2.6       3.4       3.2      4.0     3.7      3.2       3.0             1.0           2.3       -0.8        -1.4         -1.6 
  Wyoming...................................................      3.5       3.9       4.6      5.5     3.6      4.8       4.6             1.4           1.8       -4.1         3.1         -1.1 
  Colorado..................................................      3.9       4.2       3.8      4.6     4.2      3.2       2.7            -0.1           1.9       -0.9        -2.7         -4.2 
  New Mexico................................................      2.7       2.2       2.9      3.5     3.1      2.8       2.5             0.4           1.9       -1.2        -0.7         -2.8 
  Arizona...................................................      3.4       4.0       3.0      4.1     3.6      2.7       2.4            -0.6           3.2        1.3        -2.8         -2.9 
  Utah......................................................      3.2       2.9       2.8      3.6     3.1      2.6       2.3            -0.7           2.5       -1.5        -1.7         -3.0 
  Nevada....................................................      5.0       4.4       3.9      4.2     4.2      2.8       2.5            -1.2           0.7        0.0        -3.6         -2.8 
Pacific.....................................................      4.1       3.2       3.1      3.7     3.5      2.7       2.4            -1.4           1.8       -0.6        -2.6         -2.9 
  Washington................................................      3.4       3.6       3.3      3.5     3.1      2.5       2.2            -0.1           0.6       -1.2        -2.1         -3.1 
  Oregon....................................................      3.5       3.1       3.5      4.0     3.5      2.8       2.3             0.0           1.3       -1.3        -1.9         -4.8 
  California................................................      4.4       3.3       3.0      3.8     3.6      2.7       2.5            -1.9           2.4       -0.5        -2.8         -1.9 
  Alaska....................................................  ........  ........      2.4      2.3     2.7      2.3       2.2   ...............        -0.4        1.6        -1.6         -1.1 
  Hawaii....................................................  ........  ........      3.7      3.4     3.1      2.7       2.6   ...............        -0.8       -0.9        -1.0         -0.9 
                                                             -----------------------------------------------------------------------------------------------------------------------------------
      United States.........................................      3.2       3.3       3.6      4.3     4.5      3.7       3.5             0.6           1.8        0.5        -1.7        -1.4  
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ 1940 and 1950 data are estimated based on published figures.                                                                                                                                
\2\ 1960 includes hospital units of institutions.                                                                                                                                               
\3\ Starting with 1990, excludes hospital units of institutions.                                                                                                                                
                                                                                                                                                                                                
 Note.--Data for 1990 has been revised.                                                                                                                                                         
                                                                                                                                                                                                
 Source: U.S. Public Health Service (1997).                                                                                                                                                     

                          SUPPLY OF PHYSICIANS

    Physician shortages in the 1950s and 1960s led to Federal 
and State initiatives to increase the supply of physicians. 
Since that time, however, the number of physicians in the 
United States has grown rapidly from 334,028 in 1970 to 720,325 
in 1995, a rate over four times faster than that of the total 
population. Today, the concern is now focused on a possible 
oversupply of physicians and its effect on efforts to control 
health care spending.
    Table C-20 indicates that between 1970 and 1995, the number 
of all physicians per 100,000 civilians grew from 161 to 274, a 
70 percent increase. Table C-21 shows variations in the supply 
of non-Federal physicians relative to population by State. In 
1996, the District of Columbia had the highest ratio (714 
physicians per 100,000 population) while Mississippi had the 
lowest ratio (155 physicians per 100,000 population).
    There are also questions as to whether there are too many 
specialists and too few primary care physicians to meet the 
Nation's future health care needs and whether a competitive 
health care market alone will be able to resolve the imbalance. 
In 1995, about 39 percent of physicians were in primary care 
specialties, defined as general and family practice, internal 
medicine, obstetrics/gynecology, and pediatrics (see table C-22 
for number of physicians by specialty). The Physician Payment 
Review Commission's 1997 Annual Report to Congress indicates a 
moderate trend toward generalism. The National Resident 
Matching Program also announced in March 1997 that 56 percent 
of U.S. medical school seniors plan to spend at least their 
first year of residency training in general practice. This rate 
has been on the rise since 1991, when only 44.3 percent of 
graduates pursued generalist training (Association of American 
Medical Colleges).

                    TABLE C-20.--PHYSICIAN SUPPLY BY MAJOR CATEGORIES, SELECTED YEARS 1970-95                   
----------------------------------------------------------------------------------------------------------------
                                         1970                1980                1990                1995       
            Category             -------------------------------------------------------------------------------
                                   Number    Percent   Number    Percent   Number    Percent   Number    Percent
----------------------------------------------------------------------------------------------------------------
Federal.........................    29,501        9     17,787        4     20,475         3    21,079        3 
Non-Federal.....................   301,323       91    443,502       96    592,166        97   697,269       97 
    Metropolitan (non-Federal                                                                                   
     only)......................   258,265       86    385,365       87    521,668        88   616,436       86 
    Nonmetropolitan (non-Federal                                                                                
     only)......................    43,058       14     58,137       13     70,498        12    80,833       11 
Patient care....................   278,535       83    376,512       80    503,870        82   582,131       81 
Nonpatient care.................    32,310       10     38,404        9     43,440         8    43,312        6 
Male............................   308,627       92    413,395       88    511,227        83   570,921       79 
Female..........................    25,401        8     54,284       12    104,194        17   149,404       21 
International medical graduates.    57,217       17     97,726       21    131,764        21   165,498       23 
                                 -------------------------------------------------------------------------------
        Total physicians \1\....   334,028      100    467,679      100    615,421       100   720,325      100 
                                 ===============================================================================
        Total physician-                                                                                        
         population ratio (per                                                                                  
         100,000 persons).......       161                 202                 240                 274          
----------------------------------------------------------------------------------------------------------------
\1\ Address unknown excluded from all Federal/non-Federal categories, not-classified, inactive, and address     
  unknown are excluded from patient care/nonpatient care categories.                                            
                                                                                                                
 Note.--Totals may not equal sum of rounded components.                                                         
                                                                                                                
 Source: American Medical Association (1997c).                                                                  


  TABLE C-21.--NON-FEDERAL PHYSICIAN/POPULATION RATIOS \1\ AND RANK BY  
                      STATE, SELECTED YEARS 1970-95                     
------------------------------------------------------------------------
                                                                    1995
             State               1970   1975   1985   1990   1995   rank
------------------------------------------------------------------------
Alabama.......................     90    103    152    170    202     41
Alaska........................     74     95    137    155    164     49
Arizona.......................    144    185    220    233    239     25
Arkansas......................     92    103    150    165    192     43
California....................    194    219    266    272    275     11
Colorado......................    178    186    216    232    257     16
Connecticut...................    192    224    302    332    372      5
Delaware......................    134    155    203    217    246     21
District of Columbia..........    390    467    607    658    714      1
Florida.......................    155    185    236    251    269     12
Georgia.......................    108    126    172    187    214     36
Hawaii........................    160    185    239    266    283     10
Idaho.........................     94    104    133    142    162     50
Illinois......................    138    164    217    229    265     14
Indiana.......................    102    116    156    171    200     42
Iowa..........................    103    113    149    167    189     44
Kansas........................    118    137    179    195    223     32
Kentucky......................    102    122    162    181    211     39
Louisiana.....................    120    131    187    200    241     23
Maine.........................    111    133    193    208    235     28
Maryland......................    183    217    334    360    384      4
Massachusetts.................    207    237    331    364    420      2
Michigan......................    125    145    190    201    232     29
Minnesota.....................    151    172    223    240    267     13
Mississippi...................     84     94    126    144    155     51
Missouri......................    129    148    195    209    236     27
Montana.......................    104    116    155    181    214     37
Nebraska......................    116    134    170    185    220     33
Nevada........................    114    129    173    175    178     46
New Hampshire.................    140    162    207    227    248     19
New Jersey....................    146    174    243    267    302      8
New Mexico....................    113    130    184    206    229     30
New York......................    236    258    318    339    391      3
North Carolina................    111    132    185    209    239     24
North Dakota..................     96    106    168    184    224     31
Ohio..........................    133    147    199    213    242     22
Oklahoma......................    103    113    149    160    177     47
Oregon........................    144    171    215    233    250     18
Pennsylvania..................    152    169    234    256    301      9
Rhode Island..................    160    194    248    277    328      6
South Carolina................     93    114    161    177    212     38
South Dakota..................     81     90    143    154    187     45
Tennessee.....................    119    139    189    210    247     20
Texas.........................    117    135    174    188    206     40
Utah..........................    138    155    185    200    216     35
Vermont.......................    187    207    268    288    316      7
Virginia......................    125    149    214    233    253     17
Washington....................    149    168    223    241    259     15
West Virginia.................    104    124    171    183    216     34
Wisconsin.....................    120    137    188    207    239     26
Wyoming.......................    101    108    140    156    176     48
                               -----------------------------------------
    United States \1\.........    148    169    220    237    264  .....
------------------------------------------------------------------------
\1\ The ratios are for nonfederal physicians per 100,000 civilian       
  population.                                                           
\2\ Excludes counts of physicians in U.S. possessions and with unknown  
  addresses.                                                            
                                                                        
 Source: American Medical Association (1997c).                          


 TABLE C-22.--FEDERAL AND NON-FEDERAL PHYSICIANS: TOTAL AND OFFICE-BASED ACTIVITY BY SPECIALTY, 1980, 1990, AND 
                                                      1995                                                      
----------------------------------------------------------------------------------------------------------------
                                                                  Federal and non-Federal physicians            
                                                     -----------------------------------------------------------
                                                             1980                1990                1995       
                      Specialty                      -----------------------------------------------------------
                                                                 Office              Office              Office 
                                                        Total     based     Total     based     Total     based 
----------------------------------------------------------------------------------------------------------------
Allergy immunology..................................     1,518     1,371     3,388     2,453     3,775     2,843
Anesthesiology......................................    15,958    11,338    25,981    17,803    32,853    23,770
Cardiovascular diseases.............................     9,823     6,729    15,862    10,680    18,998    13,739
Child psychiatry....................................     3,217     1,961     4,343     2,615     5,542     3,673
Dermatology.........................................     5,660     4,378     7,557     6,006     8,563     6,959
Diagnostic radiology................................     7,048     4,191    15,412     9,815    19,808    12,751
Emergency medicine..................................     5,699     3,362    14,243     8,420    19,112    11,700
Family practice.....................................    27,530    18,378    47,639    37,476    59,345    45,272
Gastroenterology....................................     4,046     2,737     7,493     5,200     9,551     7,300
General practice....................................    32,519    29,642    22,841    20,517    16,867    14,660
General surgery.....................................    34,034    22,426    38,376    24,520    37,569    24,086
Internal medicine...................................    71,531    40,617    98,349    57,950   115,168    72,612
Neurology...........................................     5,685     3,253     9,237     5,595    11,397     7,623
Neurological surgery................................     3,341     2,468     4,358     3,092     4,888     3,567
Obstetrics/gynecology...............................    26,305    19,513    33,697    25,485    37,652    29,111
Ophthalmology.......................................    12,974    10,603    16,073    13,068    17,464    14,596
Orthopedic surgery..................................    13,996    10,728    19,138    14,199    22,037    17,136
Otolaryngology......................................     6,553     5,266     8,138     6,367     9,086     7,139
Pathology \1\.......................................    13,642     6,081    16,584     7,494    18,320     9,306
Pediatrics \2\......................................    29,462    18,210    41,899    27,073    51,956    34,656
Physical medicine/rehabilitation....................     2,146     1,014     4,105     2,183     5,565     3,400
Plastic surgery.....................................     2,980     2,438     4,590     3,835     5,493     4,612
Psychiatry..........................................    27,481    16,004    35,163    20,146    38,098    23,334
Pulmonary diseases..................................     3,715     2,048     6,080     3,662     7,453     4,964
Radiology...........................................    11,653     7,802     8,492     6,060     8,038     5,994
Radiation oncology..................................     1,581     1,027     2,821     1,968     3,630     2,633
Urological surgery..................................     7,743     6,228     9,372     7,398     9,886     7,991
Other specialty.....................................     5,810     2,418     7,254     2,656     7,307     3,014
Other surgical specialties \3\......................     2,852     2,261     2,945     2,389     3,300     2,529
Other remaining specialties \4\.....................     6,071     2,549     7,822     3,316     8,249     3,693
Unspecified.........................................    12,289     4,959     8,058     1,554     8,473     2,612
Not classified......................................    20,629  ........    12,678  ........    20,579  ........
Other categories \5\................................    32,134  ........    55,433  ........    74,303  ........
                                                     -----------------------------------------------------------
    Total physicians................................   467,679   272,000   615,421   360,995   720,325  427,275 
----------------------------------------------------------------------------------------------------------------
\1\ Includes pathology and forensic pathology.                                                                  
\2\ Includes pediatrics, pediatric cardiology, and pediatric allergy.                                           
\3\ Includes colon and rectal surgery and thoracic surgery.                                                     
\4\ Includes aerospace medicine, general preventive medicine, nuclear medicine, occupational medicine, medical  
  genetics, and public health.                                                                                  
\5\ Includes inactive and address unknown; these categories are included in total physicians only, not in office-
  based practice.                                                                                               
                                                                                                                
 Note.--Data for 1990 and 1995 are as of January 1. Data for 1980 are as of December 31.                        
                                                                                                                
 Source: American Medical Association (1997c).                                                                  

    In 1995, there were 98,035 residents in training. The 
number of U.S. medical school graduates, which rose rapidly in 
the late 1960s and early 1970s, has been relatively stable 
since 1980 (see table C-23).

  TABLE C-23.--MEDICAL SCHOOL GRADUATES, FIRST-YEAR RESIDENTS AND TOTAL 
                           RESIDENTS, 1965-95                           
------------------------------------------------------------------------
                                          Medical     First-            
                  Year                     school      year      Total  
                                         graduates  residents  residents
------------------------------------------------------------------------
1965...................................      7,409      9,670     31,898
1966...................................      7,574     10,316     31,898
1967...................................      7,743     10,419     33,743
1968...................................      7,973     10,464     35,047
1969...................................      8,059     10,808     37,139
1970...................................      8,367     11,552     39,463
1971...................................      8,974     12,066     42,512
1972...................................      9,551     11,500     45,081
1973...................................     10,391     11,031     49,082
1974...................................     11,613     11,628     52,685
1975...................................     12,714     13,200     54,500
1976...................................      (\1\)     14,258     56,872
1977...................................     13,607     15,900     59,000
1978...................................     14,393     16,800     63,163
1979...................................     14,966     17,600     64,615
1980...................................     15,135     18,702     61,465
1981...................................     15,667     18,389     69,738
1982...................................     15,985     18,976     69,142
1983...................................     15,824     18,794     73,000
1984...................................     16,327     19,539     75,125
1985...................................     16,319     19,168     75,514
1986...................................     16,125     18,183     76,815
1987...................................     15,836     18,067     81,410
1988...................................     15,887     17,941     81,093
1989...................................     15,620     18,131     82,000
1990...................................     15,336     18,322     82,902
1991...................................     15,481     19,497     86,217
1992...................................     15,386     19,794     88,620
1993...................................     15,512     21,616     96,469
1994...................................     15,579     19,293     97,832
1995...................................     15,911     21,372    98,035 
------------------------------------------------------------------------
\1\ Not available.                                                      
                                                                        
 Source: American Medical Association (various years).                  

    The number of residency positions occupied by international 
medical graduates (IMGs) has fluctuated over the period 1971-
95. Due to stricter immigration laws and more rigorous 
competency requirements, IMGs dropped from over 40 percent of 
all residents in 1971 to about 17 percent in 1985. Since then, 
however, the percentage of IMGs in training in the United 
States has almost doubled, from 12,509 in 1985 to 24,983 in 
1995 and is now at 25 percent of all residents in training (see 
table C-24).

      TABLE C-24.--INTERNATIONAL MEDICAL GRADUATE RESIDENTS \1\ BY      
                   CITIZENSHIP, SELECTED YEARS 1971-95                  
------------------------------------------------------------------------
                                          Percent                       
                                Total      of all      U.S.     Foreign 
                                         residents   citizens  nationals
------------------------------------------------------------------------
1971........................     17,515         41      1,063     16,452
1976........................     16,634         29      1,783     14,851
1981........................     11,596         17      2,908      8,688
1983........................     14,084         19      4,961      9,123
1985........................     12,509         17      6,868      5,609
1991........................     17,017         20      5,107     11,910
1992........................     19,084         22      5,015  \2\ 14,06
                                                                       9
1993........................     22,706         24      5,056     17,650
1994........................     23,499         24      4,285     19,214
1995........................     24,982         25      4,030    20,952 
------------------------------------------------------------------------
\1\ IMGs are defined by location of education.                          
\2\ Includes 6,192 permanent resident aliens.                           
                                                                        
 Source: American Medical Association (various years).                  

                    HEALTH INSURANCE STATUS IN 1995

    Most people have some form of health insurance. In 1995, an 
estimated 84.6 percent of the total noninstitutionalized 
population had public or private coverage during at least part 
of the year. However, an estimated 40.6 million Americans, or 
15.4 percent of the population, were without coverage in 1995. 
Almost all of the uninsured were under age 65; consequently, 
17.3 percent of the nonelderly population were uninsured. This 
section examines characteristics of both the insured and the 
uninsured populations in 1995, and reviews trends in health 
insurance coverage over the 1979-95 period (see Smith 1996).
    Estimates of health insurance coverage in 1995 are based on 
analysis of the March 1996 Current Population Survey (CPS), a 
household survey by the Department of Commerce's Census Bureau. 
Each year's March CPS asks whether individuals had coverage 
from selected sources of health insurance at any time during 
the preceding calendar year. Thus, the March 1996 CPS reflects 
respondents' recollections of coverage during all of 1995. \1\
---------------------------------------------------------------------------
    \1\ Some analysts have suggested that respondents may actually be 
reporting their coverage status at the time of the survey, rather than 
for the previous year.
---------------------------------------------------------------------------

   Health Insurance Coverage and Selected Population Characteristics

Age
    Table C-25 provides a breakdown of health insurance 
coverage by type of insurance and age. In 1995, young adults 
ages 18 to 24 were the least likely to have health insurance. 
While 51 percent of this group were covered under an 
employment-based plan, over one-fourth (28 percent) had no 
health insurance. These young adults comprised 9 percent of the 
U.S. population, but 17 percent of the uninsured population. 
These individuals are often too old to be covered as dependents 
on their parents' policies, and as entry-level workers they do 
not have strong ties to the work force; some may choose to 
remain uninsured and spend their money on other items. After 
age 25, the percentage of people with health insurance 
increases. Of those age 65 and over, 96 percent were covered by 
Medicare and/or Medicaid, and 1 percent were uninsured. The 
remainder of this section focuses on the population under age 
65.

                    TABLE C-25.--HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND AGE, 1995                   
----------------------------------------------------------------------------------------------------------------
                                                                        Type of insurance \1\                   
                                                   -------------------------------------------------------------
                                        Population              Medicare and/                                   
                  Age                       (in     Employment   or Medicaid   Private   Military \3\  Uninsured
                                         millions)   based \2\       \3\       nongroup    (percent)   (percent)
                                                     (percent)    (percent)   (percent)                         
----------------------------------------------------------------------------------------------------------------
Under 5...............................       20.1        57.7         30.2         3.2          1.7         13.5
5-17..................................       51.1        64.5         20.8         5.0          2.0         13.9
18-24.................................       24.8        51.2         12.3         9.9          2.8         28.2
25-34.................................       40.9        64.7          8.9         4.7          1.2         22.9
35-54.................................       74.7        72.7          7.5         5.6          2.6         15.2
55-59.................................       11.3        70.3         10.5         7.7          4.7         13.2
60-64.................................        9.8        62.9         15.2        11.8          7.1         13.6
65+...................................       31.7        35.2         96.4        33.5          3.6          1.0
                                       -------------------------------------------------------------------------
      Total...........................      264.3        61.8         23.5         9.2          2.6        15.4 
----------------------------------------------------------------------------------------------------------------
\1\ People may have more than one source of health insurance; percentages may total to more than 100.           
\2\ Group health insurance through employer or union.                                                           
\3\ Military health care or veterans coverage.                                                                  
                                                                                                                
 Source: Congressional Research Service analysis of data from the March 1996 Current Population Survey.         

Other demographic characteristics
    Table C-26 shows the rate of health insurance coverage by 
type of insurance and selected demographic characteristics--
race, family type, region, and poverty level--for people under 
age 65. In 1995 whites were most likely to have health 
insurance (87 percent) while Hispanics were least likely (65 
percent). Hispanics comprised 12 percent of the under 65 
population, but were 23 percent of the uninsured population; 
comparable numbers for blacks were 13 percent and 17 percent, 
respectively. The rate of employment-based health coverage was 
highest among whites (73 percent) and the rate of Medicaid/
Medicare coverage was highest for blacks (29 percent). \2\
---------------------------------------------------------------------------
    \2\ Medicaid covered 12 percent of the nonelderly population and 
Medicare covered less than 2 percent. About 27 percent of blacks had 
Medicaid coverage.
---------------------------------------------------------------------------
    People in male-headed or two-parent families with children 
were most likely to be insured (86 percent), followed by those 
in female-headed families with children (81 percent) and in 
families with no children (80 percent). While the rates of 
coverage were similar for male-present (one- or two-parent) and 
female-headed (single-parent) families with children, the 
sources of coverage were quite different: coverage was 
employment based for 73 percent of male-present families 
compared to 37 percent of female-headed families, while 
coverage came from Medicaid/Medicare for 10 percent of male-
present families compared to 43 percent of female-headed 
families.
    People living in the Midwest were more likely to have 
insurance (88 percent) than people in the Northeast (86 
percent), West (80 percent), and South (80 percent). About 70 
percent of those living in the Northeast and Midwest had 
employment-based health insurance compared to about 60 percent 
in the South and West.

TABLE C-26.--HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND DEMOGRAPHIC CHARACTERISTICS FOR PEOPLE UNDER AGE
                                                    65, 1995                                                    
----------------------------------------------------------------------------------------------------------------
                                                                           Type of insurance (percent) \1\      
                                                        Population ---------------------------------------------
                                                            (in                  Medicaid                       
                                                         millions)  Employment      or      Other \3\  Uninsured
                                                                     based \2\   Medicare                       
----------------------------------------------------------------------------------------------------------------
Race/ethnicity:                                                                                                 
    White.............................................       164.2        72.9         8.8       9.4        13.3
    Black.............................................        30.6        48.8        29.2       5.6        22.3
    Hispanic..........................................        27.0        41.3        23.1       3.6        34.9
    Other.............................................        10.8        58.5        17.9       9.0        20.3
Family type:                                                                                                    
    Female-headed with children.......................        30.0        36.8        43.0       6.6        19.3
    Male- or two-parent-headed with children..........       114.6        73.4        10.3       6.5        14.4
    No children.......................................        88.0        64.7         7.9      10.9        20.4
Region:                                                                                                         
    Northeast.........................................        44.7        69.2        13.1       6.4        14.5
    Midwest...........................................        54.4        72.1        12.1       8.0        12.3
    South.............................................        81.0        61.7        13.8       9.0        20.5
    West..............................................        52.6        60.8        15.3       8.7        20.1
Poverty level:                                                                                                  
    <1.0 of poverty...................................        33.7        15.3        49.1       7.4        32.9
    1.0-1.49 of poverty...............................        20.9        37.2        26.3      10.5        32.4
    1.5-1.99 of poverty...............................        22.1        56.0        14.3       9.1        27.2
    2.0+ of poverty...................................       156.0        81.3         4.1       7.9        10.5
                                                       ---------------------------------------------------------
      Total...........................................       232.7        65.4        13.6       8.2       17.3 
----------------------------------------------------------------------------------------------------------------
\1\ People may have more than one source of health insurance; percentages may total to more than 100.           
\2\ Group health insurance through employer or union.                                                           
\3\ Private nongroup health insurance, veterans coverage, or military health care.                              
\4\ In 1995, the weighted average poverty threshold for a family of four was $15,569.                           
                                                                                                                
 Source: Congressional Research Service analysis of data from the March 1996 Current Population Survey.         

    Among individuals with incomes at least two times the 
poverty level, 90 percent had health insurance compared to 67 
percent of the poor (i.e., those with incomes less than the 
poverty level). The poor accounted for 14 percent of the under 
65 population, but were 28 percent of the uninsured. Only 15 
percent of the poor received health coverage through 
employment, while 49 percent had either Medicaid or Medicare 
coverage. Over 80 percent of people with incomes at least two 
times the poverty level were covered through an employer, and 4 
percent had Medicaid or Medicare coverage.
Employment characteristics
    Table C-27 shows the rate of health insurance coverage by 
employment characteristics for people under age 65 who were 
workers or their dependents. In 1995, the rate of employment-
based health insurance coverage increased as firm size 
increased. Among workers and dependents of workers in large 
firms (1,000 or more employees), 91 percent were insured 
compared to 69 percent in small firms (under 10 employees). 
People in small firms accounted for 17 percent of the under 65 
population but 30 percent of the uninsured. Insurance coverage 
varied according to industry as well. Agriculture and personal 
services had the highest proportion of uninsured workers and 
dependents--over 30 percent. Employment-based coverage was most 
likely for workers and dependents in public administration, 
finance/insurance, mining, and manufacturing of durable goods. 
Among workers, 86 percent of those employed full time, full 
year had health insurance and it was most often obtained 
through their own employment (69 percent); their dependents had 
comparable levels of coverage. Workers with part-time, part-
year employment had an insured rate of 68 percent. Workers who 
worked less than full time, full year and their dependents 
represented 20 percent of the population, but 31 percent of the 
uninsured, while nonworkers were 12 percent of the population 
and 17 percent of the uninsured.

        Characteristics of the Uninsured Population Under Age 65

    As reported above, people who lack health insurance differ 
from the population as a whole: they are more likely to be 
poor, young adults, Hispanic, and work for small firms. Chart 
C-3 illustrates selected characteristics of the uninsured 
population under age 65 in 1995--age, race, poverty level, 
region, firm size, and labor force ties. Almost one-fourth (24 
percent) of the uninsured were under age 18, and 54 percent 
were white. A large proportion (41 percent) had incomes two or 
more times the poverty level, while 28 percent were poor. 
Forty-one percent of the uninsured lived in the South, and 30 
percent worked or were dependents of workers in small firms 
(one to nine employees). Over half (52 percent) were full-time, 
full-year workers or their dependents, 31 percent had less than 
full time attachment to the labor force, and 17 percent had no 
labor force ties.

     TABLE C-27.--HEALTH INSURANCE COVERAGE BY EMPLOYMENT CHARACTERISTICS \1\ FOR PEOPLE UNDER AGE 65, 1995     
----------------------------------------------------------------------------------------------------------------
                                                                            Type of insurance (percent) \2\     
                                                          Population -------------------------------------------
                                                              (in                   From                        
                                                           millions)   From own   other's   Other \4\  Uninsured
                                                                       job \3\    job \3\                       
----------------------------------------------------------------------------------------------------------------
Firm size: \5\                                                                                                  
  Under 10..............................................        38.8       16.5       27.5       27.8       30.7
  10-24.................................................        18.5       27.4       31.8       18.9       24.7
  25-99.................................................        26.3       35.5       34.2       15.3       18.9
  100-499...............................................        28.8       41.1       37.6       11.6       13.4
  500-999...............................................        12.1       42.8       38.5       11.9       11.0
  1,000+................................................        80.4       44.1       40.0       12.0        8.5
Industry: \5\                                                                                                   
  Agriculture...........................................         6.0       14.8       23.9       31.6       32.9
  Mining................................................         1.4       34.8       47.9       10.7       10.3
  Construction..........................................        15.3       24.2       32.7       16.9       29.2
  Durable goods.........................................        23.7       39.9       44.1        9.9       10.2
  Nondurable goods......................................        15.0       40.3       37.4       12.1       13.8
  Transportation........................................        16.1       39.0       42.7       10.8       11.7
  Wholesale trade.......................................         8.7       36.1       40.7       12.6       14.0
  Retail trade..........................................        29.6       27.9       28.2       22.5       25.1
  Finance/insurance.....................................        12.1       44.7       37.7       11.7        9.0
  Business services.....................................        12.8       27.2       30.5       21.0       24.9
  Personal services.....................................         6.0       21.6       21.7       28.6       30.9
  Entertainment.........................................         2.9       34.2       29.6       21.0       18.4
  Professional services.................................        43.0       42.5       35.1       15.3       10.8
  Public administration.................................        12.3       45.6       45.3       11.5        4.3
Labor force attachment of                                                                                       
    workers:                                                                                                    
  Full time, full year..................................        87.4       69.4       10.9        8.5       13.7
  Part time, full year..................................         6.9       40.3       10.1       25.6       26.8
  Full time, part year..................................        16.5       47.9        6.3       19.7       29.7
  Part time, part year..................................         7.3       26.4       10.0       35.0       32.0
Labor force attachment of workers' dependents: \1\                                                              
  Full time, full year..................................        72.1        0.0       76.9       15.1       12.7
  Part time, full year..................................         3.2        0.0       40.7       38.7       25.6
  Full time, part year..................................         8.8        0.0       43.2       44.4       21.6
  Part time, part year..................................         2.7        0.0       23.9       64.6       19.5
Not in labor force......................................        27.8       12.2        8.6       59.1       24.7
                                                         -------------------------------------------------------
      Total.............................................       232.7       33.0       32.5       21.1      17.3 
----------------------------------------------------------------------------------------------------------------
\1\ For dependents, employment characteristics are for the person providing dependent coverage under employment-
  based or private insurance. If other coverage, characteristics are from the head of household or spouse if    
  head is not employed.                                                                                         
\2\ People may have more than one source of health insurance.                                                   
\3\ Group health insurance through employer or union.                                                           
\4\ Medicare, Medicaid, private nongroup health insurance, veterans coverage, and military health.              
\5\ For persons who worked and their dependents.                                                                
\6\ Person was retired, disabled, or answered questions inconsistently.                                         
                                                                                                                
 Source: Congressional Research Service analysis of data from the March 1996 Current Population Survey.         

 CHART C-3. CHARACTERISTICS OF THE UNINSURED POPULATION UNDER AGE 65, 
                                 1995 





    Note._Totals may not equal sum of rounded components.

    Source: Congressional Research Service analysis of data 
from the March 1996 Current Population Survey.

                  Trends in Health Insurance Coverage

    Trends in coverage by type of insurance for the 
noninstitutionalized U.S. population under age 65 are shown in 
table C-28. Data for 1980 are not available because the CPS 
omitted some health insurance questions for that year. Changes 
in the CPS questionnaire, on which these rates are based, 
preclude direct comparisons between three time periods: 1979-
86, 1987-93, and 1994-95.\3\
---------------------------------------------------------------------------
    \3\ Beginning with the 1987 data, the survey asked about 
employment-based coverage for all persons over 14, when before only 
workers were asked about such coverage. Moreover, the newer surveys 
included additional questions regarding coverage of children. As a 
result, the number of people with employment-based coverage increased, 
especially among retirees, and the number of children with coverage 
also increased.
    Beginning with the 1994 data, the survey asked additional questions 
about private health insurance, and changed the order of questions such 
that questions about private coverage preceded questions about other 
forms of health insurance. As a result, the number of people estimated 
to have private coverage increased, and the distribution of coverage 
between group and nongroup shifted toward more group coverage. Care 
must be exercised when considering these numbers. Also note that 
individuals may have had more than one source of coverage.

                TABLE C-28.--HEALTH INSURANCE COVERAGE FOR THE NONINSTITUTIONALIZED U.S. POPULATION UNDER 65, SELECTED YEARS 1979-95 \1\                
                                                                 [Numbers in thousands]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Employment based      Government \3\         Other \4\            Uninsured              Total       
                                                         \2\         -----------------------------------------------------------------------------------
                      Year                      ---------------------                                                                                   
                                                   Number    Percent    Number    Percent    Number    Percent    Number    Percent    Number    Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
1979...........................................     133,074     68.6      17,031      8.8      32,631     16.8      28,451     14.7     197,104    100.0
1981...........................................     137,158     67.9      18,520      9.2      32,392     16.0      30,487     15.1     201,926    100.0
1982...........................................     135,991     66.8      18,326      9.0      31,699     15.6      32,496     16.0     203,674    100.0
1983...........................................     134,908     65.7      18,501      9.0      30,505     14.9      34,796     17.0     205,322    100.0
1984...........................................     134,936     65.2      18,701      9.0      30,653     14.8      36,544     17.7     206,998    100.0
1985...........................................     137,461     65.7      18,711      8.9      29,924     14.3      36,741     17.6     209,272    100.0
1986 \1\.......................................     138,919     66.0      19,095      9.1      29,014     13.8      36,818     17.5     210,579    100.0
1987 \1\.......................................     143,497     67.5      19,919      9.4      25,957     12.2      30,673     14.4     212,495    100.0
1988...........................................     144,136     67.2      20,437      9.5      25,009     11.7      32,368     15.1     214,508    100.0
1989...........................................     144,716     66.9      20,762      9.6      25,603     11.8      33,039     15.3     216,426    100.0
1990...........................................     142,520     65.2      23,821     10.9      25,723     11.8      34,352     15.7     218,551    100.0
1991...........................................     142,359     64.5      26,170     11.9      25,034     11.4      35,069     15.9     220,589    100.0
1992 \5\.......................................     141,262     62.5      28,924     12.8      26,017     11.5      38,222     16.9     226,119    100.0
1993...........................................     140,439     61.3      31,398     13.7      27,706     12.1      39,349     17.2     228,973    100.0
1994...........................................     150,663     65.3      31,177     13.5      20,665      8.9      39,428     17.1     230,838    100.0
1995...........................................     152,075     65.4      31,606     13.6      19,051      8.2      40,281     17.3     232,656   100.0 
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Questionnaire changes effective in 1987 and 1994 make numbers not strictly comparable over time. Beginning with 1987 data, the survey asked all     
  persons over 14, not just workers, about employment-based health coverage, and included additional questions regarding coverage of children. Beginning
  with 1994 data, the survey included additional questions about private coverage and the order of questions was altered, such that questions about     
  private coverage preceded questions about other forms of health insurance.                                                                            
\2\ Group health insurance through employer or union.                                                                                                   
\3\ Medicare or Medicaid.                                                                                                                               
\4\ Private nongroup health insurance, veterans coverage, or military health care.                                                                      
\5\ Based on revised weights from the 1990 Census.                                                                                                      
                                                                                                                                                        
 Note.--Persons may have more than one type of coverage; percents may total to more than 100. Data for 1980 not available because some health-related   
  questions were omitted from the Current Population Survey that year.                                                                                  
                                                                                                                                                        
 Source: Congressional Research Service analysis of data from the March Current Population Surveys, various years.                                      

    Between 1979 and 1986, the percent covered by all forms of 
health insurance decreased, with a decrease of 3 percentage 
points between 1979 and 1984 and a slight increase between 1984 
and 1986, but not to levels shown previously. Between 1979 and 
1986, the percent of the population insured by government 
programs remained roughly stable, and the percents with 
employment-based and other coverage steadily declined. Between 
1987 and 1993, the percent covered also declined by about 3 
percentage points, from about 86 percent to 83 percent. During 
this period, the percent with employment-based coverage 
continued to decline steadily, the percent with Medicare or 
Medicaid increased, the percent with other types of coverage 
declined and then rose to about where it was in 1987, and the 
percent uninsured continued to steadily increase. Since 1993 
the percent covered has been about the same (83 percent). The 
large changes between 1993 and 1994 in employment-based and 
other coverage, which includes private nongroup coverage, 
appear to be a function of changes in the CPS questionnaire.
    Differences in coverage between 1986 and 1987, and between 
1993 and 1994, are a function both of changes in the CPS 
questionnaire and actual changes in coverage. Assuming that all 
differences between 1986 and 1987, and between 1993 and 1994, 
are due to questionnaire changes and no changes in coverage 
patterns occurred during these transition periods, we can 
estimate trends from 1979 to 1995. Over this period, the 
percent with employment-based coverage decreased by about 9 
percentage points. From 1979 through 1986, the percent with 
employment-based coverage declined by 2.6 percent points, from 
68.6 to 66.0 percent. From 1987 through 1993, the decline was 
6.2 percentage points. If we assume no change in insurance 
coverages from 1986 to 1987, and from 1993 to 1994, the total 
decline from 1979 to 1994 was 8.8 percentage points (i.e., 2.6 
percentage points plus 6.2 percentage points). The percent with 
employment-based coverage increased slightly between 1994 and 
1995, from 65.3 to 65.4 percent. Note that the decreases in 
coverage do not equal the increases in uninsured because some 
individuals had more than one type of coverage. Similarly, over 
the 1979-95 period, the percent with Medicaid or Medicare 
increased by about 4 percentage points, the percent with other 
types of coverage declined by about 4 percentage points, and 
the percent uninsured increased by approximately 6 percentage 
points.

           UNCOMPENSATED CARE COSTS IN PPS HOSPITALS, 1980-95

    Uncompensated care is a term used to describe services 
provided to patients who are unable or unwilling to pay. It 
includes charity care and bad debts. Charity care is care for 
which no payment is expected. Bad debts are charges not paid by 
uninsured individuals, including copayments not paid by insured 
individuals. For this analysis, hospital charges have been 
adjusted to reflect the cost of care that was provided but not 
paid for.
    Public hospitals and some private institutions receive 
government operating subsidies that at least partially offset 
their uncompensated care costs. These subsidies are not always 
directed specifically toward charity care, but they nonetheless 
serve to lessen the burden of a high charity care load. This 
analysis examines uncompensated care both before and net of 
government subsidies.
    The financial burden of uncompensated care increased 
substantially in the first half of the 1980s, as shown in table 
C-29. Between 1980 and 1986, uncompensated care costs before 
government subsidies grew at an annual rate of 14.7 percent, 
rising from $3.9 billion to $8.9 billion. By 1992, 
uncompensated care costs had grown to $14.9 billion. Since 
1992, this trend leveled off, with uncompensated care rising at 
5.4 percent per year. While uncompensated care was rising 
rapidly during the 1980s, government subsidies were increasing 
at a much slower rate. In 1980, the proportion of uncompensated 
care costs offset by State and local government operating 
subsidies was 27.8 percent. By 1986, that proportion had fallen 
to 22.3 percent, and by 1992, subsidies to all community 
hospitals equalled only 18.9 percent of uncompensated care 
costs. In the early 1990s, subsidies grew somewhat more 
rapidly, but they have fallen sharply since 1993, covering only 
18.0 percent of uncompensated care costs in 1995. In that year, 
uncompensated care losses--that is, costs net of government 
subsidies--totaled $14.3 billion.
    These trends are reflected in chart C-4, which compares 
uncompensated care costs to total hospital expenses in each 
year. In 1980, 5.5 percent of the resources expended by 
community hospitals were for patients who could not or would 
not pay for their care. After accounting for government 
subsidies, the uncompensated care burden was 3.9 percent. By 
1986, uncompensated care costs hit their peak of 6.4 percent of 
total expenses, and uncompensated care losses rose to 4.9 
percent. In the early 1990s, uncompensated care costs have 
fallen to just over 6 percent of total expenses, while 
uncompensated care losses have stayed at 5 percent of total 
expenses.
    The burden of uncompensated care is borne by hospitals in 
every group, but some types of hospitals devote a higher 
percentage of their resources than others to this care (see 
table C-30). Hospitals in urban areas had uncompensated care 
costs equal to 6.3 percent of their total expenses in 1995, 
compared with 5.0 percent for rural hospitals. However, 
hospitals in the major cities also receive the bulk of 
subsidies from State and local governments, so their 
uncompensated care losses are lower than their uncompensated 
care costs.
    Among major teaching hospitals (those with at least 0.25 
residents per bed), there is a sharp difference between those 
that are public and those that are privately owned: Public 
major teaching hospitals in 1995 devoted 18.4 percent of their 
resources to patients who could not or would not pay, and 
sustained losses on these patients equal to 9.8 percent of 
their total costs. Public teaching hospitals with fewer 
residents per bed sustained even greater losses on 
uncompensated care, because they receive fewer subsidies than 
their larger counterparts.

                   TABLE C-29.--COMMUNITY HOSPITAL UNCOMPENSATED CARE COSTS AND GOVERNMENT OPERATING SUBSIDIES, SELECTED YEARS 1980-95                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Amount (billions)                    Average annual percent change 
                                                                  --------------------------------------------------------------------------------------
                                                                     1980     1986     1992     1993     1994     1995    1980-86    1986-92    1992-95 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Uncompensated care costs before government subsidies.............     $3.9     $8.9    $14.9    $15.9    $16.8    $17.5       14.7        8.9        5.4
Government operating subsidies \1\...............................      1.1      2.0      2.8      3.1      3.2      3.1       10.5        6.0        3.7
Uncompensated care costs net of government subsidies.............      2.8      6.9     12.1     12.8     13.5     14.3       16.1        9.7        5.8
Proportion of uncompensated care costs covered by government                                                                                            
 subsidies (in percent)..........................................     27.8     22.3     18.9     19.5     19.3    18.0                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Government operating subsidies include all subsidies from State and local government, up to total uncompensated care costs at each hospital.        
                                                                                                                                                        
 Note.--Totals may not equal sum of rounded components.                                                                                                 
                                                                                                                                                        
 Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association Annual Survey of Hospitals.                  

   CHART C-4. UNCOMPENSATED CARE AS A PERCENTAGE OF TOTAL COMMUNITY 
                      HOSPITAL EXPENSES, 1980-95 





    Note._Government operating subsidies include all subsidies 
from State and local government, up to total uncompensated care 
costs for each hospital.

    Source: Prospective Payment Assessment Commission analysis 
of data from the American Hospital Association Annual Survey of 
Hospitals.


    Uncompensated care costs and losses are highly concentrated 
among a relatively small group of hospitals, particularly in 
urban areas: Urban hospitals that devote at least 45 percent of 
their total resources to poor patients (including uncompensated 
care, Medicaid, other indigent care patients, and poor Medicare 
patients) have a very high share of uncompensated care costs, 
and sustain losses on nonpaying patients equal to 12.7 percent 
of their total costs.
    The burden of uncompensated care also falls 
disproportionately on public and voluntary hospitals. 
Proprietary hospitals provide the least care to nonpaying 
patients, only 4.1 percent of their total costs.

TABLE C-30.--COMMUNITY HOSPITAL UNCOMPENSATED CARE COSTS AS A PROPORTION
                 OF TOTAL COSTS, BY HOSPITAL GROUP, 1995                
                              [In percent]                              
------------------------------------------------------------------------
                                      Uncompensated      Uncompensated  
                                       care costs,      care costs, net 
          Hospital group            before government    of government  
                                        subsidies          subsidies    
------------------------------------------------------------------------
Urban.............................            6.3                5.3    
Rural.............................            5.0                4.6    
Major teaching, public............           18.4                9.8    
Major teaching, private...........            5.6                5.4    
Other teaching, public............           12.5               10.4    
Other teaching, private...........            4.3                4.3    
Nonteaching, public...............            6.3                5.0    
Nonteaching, private..............            4.5                4.4    
Low-income patient cost share:                                          
    Urban                                                               
        Less than 25 percent......            3.9                3.9    
        25 percent-45 percent.....            6.5                5.9    
        45 percent+...............           20.2               12.7    
    Rural                                                               
        Less than 25 percent......            4.0                3.8    
        25 percent-45 percent.....            6.6                5.9    
        45 percent+...............            8.0                6.6    
Voluntary.........................            4.6                4.5    
Proprietary.......................            4.1                4.1    
Urban government..................           14.6                8.7    
Rural government..................            5.8               4.6     
------------------------------------------------------------------------
Note.--Government operating subsidies include all subsidies from State  
  and local government, up to total uncompensated care costs at each    
  hospital.                                                             
                                                                        
 Source: Prospective Payment Assessment Commission analysis of data from
  the American Hospital Association Annual Survey of Hospitals.         

                     INTERNATIONAL HEALTH SPENDING

    This section analyzes trends in health expenditures for 24 
Organization for Economic Cooperation and Development (OECD) 
countries from 1970 to 1995. Table C-31 illustrates total 
health expenditures as a percentage of gross domestic product 
(GDP). In 1970, the mean percent of GDP spent on health care by 
OECD countries was 5.1 percent with the United States being 45 
percent higher than the average with 7.4 percent. By 1995, the 
overall mean percent of GDP devoted to health expenditures had 
increased to 8.1 percent while U.S. health spending as a share 
of GDP had increased to 14.1 percent, 74 percent greater than 
the OECD average.
    The second to the last column in table C-31 presents per 
capita health expenditures denominated in U.S. dollars. The 
last column illustrates public health expenditures as a percent 
of total health spending. This public percentage ranged from 
44.8 in the United States to 91.8 in Luxembourg. The OECD 
average was 75.5 percent.

      TABLE C-31.--TOTAL HEALTH EXPENDITURES AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT [GDP], PER CAPITA HEALTH SPENDING, AND PERCENTAGE OF MEDICAL     
                                    EXPENDITURES COVERED BY PUBLIC OECD COUNTRIES FOR SELECTED CALENDAR YEARS 1970-95                                   
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                       Per              
            Country                 1970       1980       1985       1990       1991       1992       1993       1994       1995      capita    Percent 
                                                                                                                                       1995      public 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Australia......................        5.7        7.3        7.7        8.2        8.5        8.8        8.5        8.6        8.4     $1,609       68.5
Austria........................        5.4        7.9        8.1        8.4        8.6        8.8        9.3        7.9        7.8      1,573       76.0
Belgium........................        4.1        6.6        7.4        7.6        8.1        8.2        8.3        8.0        8.1      1,653       87.9
Canada.........................        7.1        7.4        8.5        9.4       10.0       10.3       10.2        9.7        9.9      2,005       71.8
Denmark........................        6.1        6.8        6.3        6.3        6.6        6.5        6.7        6.4        6.6      1,344       83.4
Finland........................        5.7        6.5        7.3        8.0        9.1        9.4        8.8        7.7        7.9      1,289       74.8
France.........................        5.8        7.6        8.5        8.9        9.1        9.4        9.8        9.9        9.7      1,868       78.4
Germany........................        5.9        8.4        8.7        8.3        8.4        8.7        8.6       10.4       10.3      2,020       78.4
Greece.........................        4.0        4.3        4.9        5.3        5.3        5.4        5.7        5.8        5.5        634       76.2
Iceland........................        5.2        6.4        7.0        8.2        8.4        8.5        8.3        8.2        8.1      1,571       84.0
Ireland........................        5.6        9.2        8.2        7.0        7.4        7.1        6.7        6.4        7.6      1,201       80.7
Italy..........................        5.2        6.9        7.0        8.1        8.4        8.5        8.5        7.7        8.4      1,559       70.6
Japan..........................        4.6        6.6        6.5        6.6        6.7        6.9        7.3        7.2        6.9      1,454       76.8
Luxembourg.....................        4.1        6.8        6.8        7.2        7.3        7.4        6.9        7.0        6.5      1,962       91.8
Netherlands....................        6.0        8.0        8.0        8.2        8.4        8.6        8.7        8.8        8.8      1,643       77.7
Norway.........................        5.0        6.6        6.4        7.5        8.0        8.3        8.2        8.0        8.0      1,754       83.0
New Zealand....................        5.2        7.2        6.5        7.3        7.7        7.7        7.7        7.1        7.1      1,151       76.8
Portugal.......................        3.1        5.9        7.0        5.4        5.9        6.0        7.3        8.2        7.8        939       63.4
Spain..........................        3.7        5.6        5.7        6.6        6.5        7.0        7.3        7.6        7.3        992       78.6
Sweden.........................        7.2        9.4        8.9        8.6        8.5        7.9        7.5        7.2        7.6      1,339       83.0
Switzerland....................        5.2        7.3        8.1        8.4        9.0        9.3        9.9        9.8        9.5      2,280       71.9
Turkey.........................         NA        4.0        2.8        4.0        4.7        4.1         NA         NA        5.2        272       50.0
United Kingdom.................        4.5        5.8        6.0        6.2        6.6        7.1        7.1        6.9        6.9      1,213       84.1
United States..................        7.4        9.2       10.8       12.6       13.2       13.6       14.1       14.2       14.1      3,462       44.8
                                ------------------------------------------------------------------------------------------------------------------------
    OECD average...............        5.1        7.0        7.2        7.6        7.9        8.1        8.3        8.2        8.1      1,533      75.5 
--------------------------------------------------------------------------------------------------------------------------------------------------------
NA--Not available.                                                                                                                                      
                                                                                                                                                        
 Source: Schieber, Poullier, & Greenwald (1994) and Health Care Financing Administration (preliminary unpublished data).                                

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