[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]




 
  APPENDIX C. NATIONAL AND INTERNATIONAL HEALTH CARE EXPENDITURES AND 
                       HEALTH INSURANCE COVERAGE

                                CONTENTS

National Health Expenditures
Expenditures for Hospital Care
Trends in Hospital Utilization
  Admissions
  Average Length of Stay
  Hospital Occupancy
  Hospital Employment
Expenditures for Physicians' Services
Supply of Hospital Beds
Supply of Physicians
Health Insurance Status in 1998
  Health Insurance Coverage and Selected Population 
            Characteristics
  Characteristics of the Uninsured Population Under Age 65
  Trends in Health Insurance Coverage
Uncompensated Care Costs in PPS Hospitals, 1980-98
International Health Spending
References

                      NATIONAL HEALTH EXPENDITURES

    In 1965, the year prior to the beginning of the Medicare 
and Medicaid Programs, national health expenditures were only 
$41.1 billion. After adjusting for inflation, this spending 
figure represented $212.9 billion, or $1,043 per capita in 
constant 1998 dollars. Health care expenditures increased 
substantially over the next 30 years and reached $1 trillion 
for the first time in 1996. In 1998, the Nation's health care 
bill was $4,094 per capita, or $1,149.1 billion for the 270 
million persons residing in the United States (tables C-1, C-2, 
and C-3).
     The annual rate of increase in inflation-adjusted per 
capita expenditures was 4.8 percent from 1980 to 1985 and 5.0 
percent from 1985 to 1990. The rate decelerated to 3.0 percent 
for 1990-95. Over the 1995-98 period, growth averaged 1.7 
percent per year. After growing only 0.7 percent from 1995 to 
1996, however, growth in health spending again increased by 1.4 
percent between 1996 and 1997. Between 1997 and 1998 the growth 
rate was 3.0 percent (table C-3). While growth in spending 
remains its slowest in more than three decades, this latest 
upswing may ``signal important changes taking place in the 
Nation's health care system'' (Levit et al., 2000).

                             TABLE C-1.--NATIONAL HEALTH EXPENDITURES, AGGREGATE AMOUNTS FOR SELECTED CALENDAR YEARS 1960-98
                                                                [In billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                 Spending category                   1960    1965    1970     1975     1980     1985     1990     1995      1996       1997       1998
--------------------------------------------------------------------------------------------------------------------------------------------------------
Health services and supplies......................   $25.2   $37.7   $67.9   $122.3   $235.6   $412.3   $674.8   $962.5   $1,007.5   $1,053.5   $1,113.7
    Personal health care..........................    23.6    35.2    63.8    114.5    217.0    376.4    614.7    879.1      924.0      968.6    1,019.3
        Hospital care.............................     9.3    14.0    28.0     52.6    102.7    168.3    256.4    347.0      359.4      370.2      382.8
        Physicians' services......................     5.3     8.2    13.6     23.9     45.2     83.6    146.3    201.9      208.5      217.8      229.5
        Dentists' services........................     2.0     2.8     4.7      8.0     13.3     21.7     31.6     45.0       47.5       51.1       53.8
        Other professional services...............     0.6     0.9     1.4      2.7      6.4     16.6     34.7     53.6       57.4       61.5       66.6
        Home health care..........................     0.1     0.1     0.2      0.6      2.4      5.6     13.1     29.1       31.2       30.5       29.3
        Drugs and other medical nondurables.......     4.2     5.9     8.8     13.0     21.6     37.1     59.9     88.6       98.0      108.6      121.9
        Vision products and other medical durables     0.6     1.0     1.6      2.5      3.8      6.7     10.5     13.3       14.1       15.1       15.5
        Nursing home care.........................     0.8     1.5     4.2      8.7     17.6     30.7     50.9     75.5       80.2       84.7       87.8
        Other personal health care................     0.7     0.8     1.3      2.5      4.0      6.1     11.2     25.1       27.6       29.2       32.1
    Program administration and net cost of private     1.2     1.9     2.7      4.9     11.9     24.3     40.5     53.6       52.1       50.3       57.7
     health insurance.............................
    Government public health activities...........     0.4     0.6     1.3      2.9      6.7     11.6     19.6     29.8       31.3       34.6       36.6
Research and construction of medical facilities...     1.7     3.4     5.3      8.4     11.6     16.4     24.5     30.8       32.0       34.8       35.3
                                                   -----------------------------------------------------------------------------------------------------
            Total.................................    26.9    41.1    73.2    130.7    247.3    428.7    699.4    993.3    1,039.4    1,088.2    1,149.1
                                                   =====================================================================================================
            Percent of gross domestic product.....     5.1     5.7     7.1      8.0      8.9     10.3     12.2     13.7       13.6       13.4      13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Numbers may not add to totals due to rounding.

 Source: Health Care Financing Administration, Office of the Actuary.


                           TABLE C-2.--NATIONAL HEALTH EXPENDITURES IN CONSTANT 1998 DOLLARS, SELECTED CALENDAR YEARS 1960-98
                                                                [In billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Spending category                  1960     1965     1970     1975     1980     1985     1990      1995       1996       1997       1998
--------------------------------------------------------------------------------------------------------------------------------------------------------
Health services and supplies.................   $138.7   $196.2   $285.2   $370.7   $466.1   $524.7   $841.6   $1,029.5   $1,045.6   $1,069.9   $1,113.7
    Personal health care.....................    130.2    182.0    268.1    346.9    429.3    570.3    766.6      940.3      959.9      983.7    1,019.3
        Hospital care........................     51.1     72.5    117.6    159.3    203.2    254.9    319.8      371.1      373.4      376.0      382.8
        Physicians' services.................     29.1     42.4     57.0     72.4     89.5    126.7    182.5      216.9      218.6      221.1      229.5
        Dentists' services...................     10.8     14.6     19.8     24.1     26.4     32.8     39.4       48.1       49.4       51.9       53.8
        Other professional services..........      3.3      4.6      6.9      8.3     12.6     25.2     43.2       57.4       59.7       62.4       66.6
        Home health care.....................      0.3      0.5      0.5      1.9      4.7      8.6     15.4       31.1       32.4       30.9       29.3
        Drugs and other medical nondurables..     23.4     30.6     37.0     39.5     42.8     55.1     74.7       94.8      101.3      110.3      121.9
        Visions products and other medical         3.6      5.2      6.8      7.7      7.6     10.2     13.0       14.3       14.7       15.3       15.5
         durables............................
        Nursing home care....................      4.7      7.6     17.7     26.3     34.9     48.5     63.6       80.7       83.4       86.0       87.8
        Other personal health care...........      3.8      4.3      5.5      7.6      7.9      9.3     14.0       26.9       28.7       29.7       32.1
    Program administration and net cost of         6.4     10.0     11.4     14.9     23.5     35.8     50.6       57.3       64.1       61.1       57.7
     private health insurance................
    Government public health activities......      2.0      3.2      5.7      8.9     13.3     17.6     24.5       31.9       32.6       35.1       36.6
Research and construction of medical               9.4     17.3     22.6     25.4     23.0     24.8     30.6       32.9       33.2       36.3       35.3
 facilities..................................
                                              ----------------------------------------------------------------------------------------------------------
            Total............................    148.0    212.9    307.7    396.1    489.1    649.5    872.2    1,062.4    1,079.8    1,105.2    1,149.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Constant dollar expenditures are calculated using the Consumer Price Index for All Urban Consumers.

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


 TABLE C-3.--NATIONAL HEALTH EXPENDITURES: PER CAPITA AMOUNTS IN CONSTANT 1998 DOLLARS AND AVERAGE ANNUAL PERCENTAGE INCREASES, SELECTED CALENDAR YEARS
                                                                         1960-98
                                                               [Dollar amounts per capita]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   Spending category                      1960    1965     1970     1975     1980     1985     1990     1995     1996     1997     1998
--------------------------------------------------------------------------------------------------------------------------------------------------------
Health services and supplies...........................    $729    $958   $1,328   $1,851   $1,952   $2,527   $3,235   $3,769   $3,798   $3,845   $3,988
    Personal health care...............................     685     892    1,248    1,545    1,828    2,307    2,947    3,442    3,483    3,537    3,832
        Hospital care..................................     269     356      548      709      884    1,031    1,229    1,359    1,365    1,352    1,384
        Physicians' services...........................     153     208      205      323      381      512      702      790      785      795      818
        Dentists' services.............................      57      71       91      107      112      133      151      176      179      187      192
        Other professional services....................      18      22       27       37       53      102      166      210      217      224      237
        Home health care...............................       2       2        4        8       20       35       63      114      117      111      104
        Drugs and other medical nondurables............     123     149      172      175      182      227      287      347      369      395      434
        Vision products and other medical durables.....      19      25       32       34       32       41       50       52       53       55       55
        Nursing home care..............................      25      37       82      117      148      155      244      296      302      308      313
        Other personal health care.....................      20      20       25       33       34       37       54       98      104      107      114
    Program administration and net cost of private           34      49       53       65      100      149      194      210      196      184      206
     health insurance..................................
    Government public health activities................      11      16       26       40       57       71       94      117      118      126      131
Research and construction of medical facilities........      49      87      105      113       98      100      118      120      120      127      128
                                                        ------------------------------------------------------------------------------------------------
            Total......................................     779   1,043    1,433    1,764    2,080    2,627    3,353    3,889    3,918    3,973    4,094
--------------------------------------------------------------------------------------------------------------------------------------------------------



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Average annual percentage increase
                                                      --------------------------------------------------------------------------------------------------
                                                       1960-65  1965-70  1970-75  1975-80  1980-85  1985-90  1990-95  1995-96  1996-97  1997-98  1995-98
--------------------------------------------------------------------------------------------------------------------------------------------------------
Health services and supplies.........................      5.6      6.8      4.4      3.7      5.0      6.1      3.1      0.8      1.3      3.2      1.7
    Personal health care.............................      5.4      7.0      4.4      3.4      4.8      5.0      3.2      1.2      1.6      2.7      1.8
        Hospital care................................      5.8      9.0      5.3      4.0      3.6      3.6      2.0      0.4     -1.0      0.9      0.1
        Physicians' services.........................      6.3      5.0      4.0      3.4      6.1      6.5      2.4     -0.5      1.1      2.9      1.2
                                                      --------------------------------------------------------------------------------------------------
            Total....................................      6.0      6.5      4.2      3.4      4.8      5.0      3.0      0.7      1.4      3.0      1.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Constant dollar expenditures are calculated using the Consumer Price Index for All Urban Consumers.

 Source: Health Care Financing Administration, Office of the Actuary.

    The majority of health spending is for personal health care 
services that treat or prevent illness and disease in 
individuals. In 1998, 88.7 percent of all health spending 
($1,019.3 billion) was for personal health care. The remaining 
11.3 percent ($129.8 billion) was spent on health program 
administration; administrative costs and profits earned by 
private health insurers; public health activities; 
noncommercial health research; and new construction of health 
facilities.
    Hospital care ($382.8 billion) and physician services 
($229.5 billion) are the two largest categories of personal 
health care spending. They accounted for 33.3 percent and 20 
percent of total national health expenditures. Another major 
service area, prescription drugs and other medical nondurables, 
grew from 8.6 percent of all national health expenditures in 
1990 to 10.6 percent in 1998 (table C-3).
    The private sector, including private health insurance, 
out-of-pocket spending, and philanthropy, continues to finance 
the majority of personal health care expenditures (56.4 
percent) with combined expenditures in 1998 of $574.5 billion 
(table C-4).
    The share paid by private sources remained stable at about 
60 percent from 1980 to 1990, and then declined to 55.2 percent 
in 1996 reflecting the influence of increased enrollment in 
managed care plans which had lower rates of increase than fee-
for-service. In 1997, however, private spending increased to 
55.5 percent and in 1998, to 56.4 percent of personal health 
expenditures. Acceleration in private spending comes primarily 
from private health insurance premiums, which jumped from a 
3.5-percent increase in 1997 to an 8.2-percent increase in 1998 
(Levit et al., 2000).
    With the private share increasing, public spending as a 
share of personal health care expenditures declined in 1997 for 
the first time in 10 years. Government's share had grown from 
20.6 percent in 1965 to 44.8 percent in 1996. In 1997, this 
decreased to 44.5 percent. In 1998, public sources (Federal, 
State, and local governments) were responsible for 43.6 percent 
of personal health expenditures or a total of $444.9 billion 
(table C-4).
    The initial growth in Federal Government spending is 
attributed to the beginning of the Medicare and Medicaid 
Programs and the expansion of Medicare to cover the disabled 
population in 1973. In 1965, before the enactment of these 
programs, the Federal Government contribution represented 8.4 
percent of personal health spending. By 1970, the Federal 
Government's share had increased to 23 percent and to 27 
percent by 1975. Between 1980 and 1990 the portion remained 
steady at approximately 29 percent, but since 1990, this figure 
gradually increased to 34.5 percent in 1996.
    The initial impact of the Balanced Budget Act of 1997 and 
successful efforts to combat fraud and abuse helped to reduce 
this share to 33.7 percent in 1998 (Levit et al., 2000). The 
Federal Government is still the single largest contributor, 
accounting for 33.7 percent ($343.6 billion) of personal health 
spending in 1998. State and local governments funded another 
9.9 percent ($101.3 billion; table C-4).

              TABLE C-4.--PERSONAL HEALTH CARE EXPENDITURES: AGGREGATE AMOUNTS AND PERCENTAGE DISTRIBUTION, SELECTED CALENDAR YEARS 1960-98
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Spending source                   1960     1965     1970     1975     1980      1985      1990      1995      1996      1997       1998
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Amount in billions of dollars
                                              ----------------------------------------------------------------------------------------------------------
Private......................................    $18.5    $27.9    $41.3    $69.2    $130.1    $228.8    $373.5    $487.9    $510.0    $537.7     $574.5
    Private health insurance.................      5.0      8.7     14.8     28.4      62.0     114.1     207.7     286.3     298.1     312.4      337.0
    Out-of-pocket payments...................     13.1     18.5     24.9     38.1      60.3     100.7     145.0     170.5     178.1     189.1      199.5
    Other private sources of funds...........      0.4      0.7      1.6      2.7       7.8      14.0      20.8      31.1      33.8      36.3       37.9
Public.......................................      5.1      7.3     22.5     45.3      87.0     147.7     241.1     391.2     414.0     430.9      444.9
    Federal..................................      2.1      3.0     14.7     30.9      63.4     111.1     177.0     299.0     319.1     333.4      343.6
    State and local..........................      3.0      4.3      7.8     14.4      23.6      36.6      64.2      92.2      94.9      97.5      101.3
                                              ----------------------------------------------------------------------------------------------------------
        Total................................     23.6     35.2     63.8    114.5     217.0     376.4     614.7     879.1     924.0     968.6    1,019.3
                                              ----------------------------------------------------------------------------------------------------------
                                                                                         Percentage distribution
                                              ----------------------------------------------------------------------------------------------------------
Private......................................     78.3     79.4     64.7     60.4      59.9      60.8      60.8      55.5      55.2      55.5       56.4
    Private health insurance.................     21.2     24.7     23.2     24.8      28.6      30.3      33.8      32.6      32.3      32.3       33.1
    Out-of-pocket payments...................     55.3     52.7     39.0     33.3      27.8      26.7      23.6      19.4      19.3      19.5       19.6
    Other private sources of funds...........      1.8      2.0      2.6      2.4       3.6       3.7       3.4       3.5       3.7       3.7        3.7
Public.......................................     21.7     20.6     35.3     39.6      40.1      39.2      39.2      44.5      44.8      44.5       43.6
    Federal..................................      9.0      8.4     23.0     27.0      29.2      29.5      28.8      34.0      34.5      34.4       33.7
    State and local..........................     12.6     12.2     12.2     12.5      10.9       9.7      10.4      10.5      10.3      10.1        9.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Totals may not equal sum of rounded components. Percentage amounts are calculated on unrounded numbers.

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

                     EXPENDITURES FOR HOSPITAL CARE

    In 1998, hospitals accounted for 33 percent of total 
national health expenditures, down from 42 percent in 1980. 
Table C-5 shows several measures of costs incurred by community 
hospitals, which include all non-Federal short-term general 
hospitals. These hospitals' total expenses (including inpatient 
and outpatient acute and postacute care, as well as nonpatient 
care activities) reached $331.5 billion in 1997. This was up 
3.3 percent from the previous year, the smallest rise in 
hospital costs in over 30 years. Inpatient expenses actually 
decreased in 1997, reflecting the growing share of activity in 
the hospital outpatient setting.
    The average cost of a day of hospital care (adjusted to 
reflect outpatient services) rose by 1.1 percent to $1,202 in 
1997. The 1997 data continues the trend of declining growth 
rates which began in the early 1990s.
    The average cost per case (also adjusted to reflect 
outpatient care) fell to $6,526, a decrease of 0.4 percent. 
From 1992 through 1997, the increase in costs per case averaged 
2.0 percent per year, compared with 9 percent from 1985 through 
1992 and 14 percent from 1975 through 1982. Even after taking 
inflation into account, the recent trend in hospital costs 
differs sharply from previous years. In 1994, hospital costs 
per case rose more slowly than inflation for the first time 
since 1979. Costs per case grew even more slowly relative to 
inflation in 1995 and 1996; in 1997, the inflation rate was 2.3 
while the percent change in average cost per case fell 0.4 
percent.
    A variety of factors other than general inflation 
contribute to aggregate changes in hospital costs, and the 
roles of these factors may vary widely over time. Using data 
compiled in periodic studies by the Prospective Payment 
Assessment Commission, chart C-1 displays the contributions of 
five factors: general inflation, hospital input prices, 
population growth, utilization, and intensity. Between 1985 and 
1992, total hospital expenses rose at an annual rate of 10 
percent. The largest contributor to this increase was the 
intensity of hospital care; that is, the resources used per 
patient. During this period, general inflation also accounted 
for a large share of the increase in hospital expenses. 
Hospital input prices rose faster than the general price level, 
and hospital utilization per person actually fell (as the 
number of adjusted admissions grew more slowly than the 
population).
    Between 1992 and 1996, the increase in total hospital 
expenses was only 5.3 percent per year. Because of this, 
although it slowed from 3.9 percent between 1985 and 1992 to 
2.8 percent between 1992 and 1996, general inflation accounted 
for more than half of the hospital cost increase in the latter 
period. Hospital utilization per person, which had fallen in 
the earlier period, rose substantially between 1992 and 1996, 
accounting for a large share of the growth in hospital 
expenses. Finally, intensity, which had been the major 
contributor to cost growth in the earlier period, was almost 
level between 1992 and 1996.

                        TABLE C-5.--SELECTED DATA ON COMMUNITY HOSPITAL EXPENSES, 1965-97
----------------------------------------------------------------------------------------------------------------
                                        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
1997................................    331.482      3.3    1,202      1.1    6,526     -0.4    217.888    -0.1
----------------------------------------------------------------------------------------------------------------
\1\ Inpatient expenses estimated from total expenses, based on the proportion of inpatient to total revenues.

 Note.--Admissions and inpatient days are adjusted to reflect the volume of outpatient visits as well as
  inpatient admissions and days.

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

 CHART C-1. FACTORS CONTRIBUTING TO GROWTH OF TOTAL HOSPITAL EXPENSES, 
                          1985-92 AND 1992-96


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

    Source: Prospective Payment Assessment Commission.


    Expenditures for hospital care are financed primarily by 
third parties, as shown in table C-6. In 1998, private health 
insurers paid 30.8 percent of the total, Medicare 32.4 percent, 
and Medicaid (including both the Federal and State shares) 15.9 
percent. The share financed by out-of-pocket payments from 
individuals was only 3.4 percent in 1998, down from 5.2 percent 
in 1980, and 9.0 percent in 1970.

                     TRENDS IN HOSPITAL UTILIZATION

                               Admissions

    For a number of years, the average annual rate of growth in 
hospital admissions has either been relatively modest or even 
declined. From 1978 through 1983, total inpatient admissions 
increased at an annual rate of 1.0 percent, and admissions for 
persons 65 and older increased an average of 4.8 percent per 
year, as shown in table C-7.
    With the introduction of Medicare's prospective payment 
system (PPS) in 1983, the number of elderly patients declined 
sharply, contrary to most expectations. However, admissions of 
patients under 65 fell even more during the first few years of 
PPS. From 1987 through 1992, total admissions continued to 
decrease, but at a slower rate, due to an increase in 
admissions among the older population. In 1993, overall 
admissions increased for the first time in 12 years, due to a 
slower rate of decline in younger patients and a continuing 
increase in those 65 and older. With the exception of 1996, 
this trend continued through 1997.

                             TABLE C-6.--NATIONAL EXPENDITURES FOR HOSPITAL CARE BY SOURCE OF FUNDS, SELECTED YEARS 1980-98
                                                                [In billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      1980              1985              1990              1995              1998
                       Source of payment                       -----------------------------------------------------------------------------------------
                                                                 Amount  Percent   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    $12.8      3.4
Third-party...................................................     97.4     94.8    159.4     94.8    246.8     96.2    338.7     96.7    370.0     96.6
  Private health insurance....................................     38.7     37.7     61.0     36.3     95.7     37.3    113.1     32.3    118.0     30.8
  Other private funds.........................................      5.0      4.9      8.3      4.9     13.8      5.4     11.3      3.2     19.1      5.0
  Government..................................................     53.7     52.3     90.1     53.6    137.3     53.5    214.3     61.2    232.9     60.8
    Federal...................................................     40.9     39.8     71.1     42.3    103.4     40.3    175.4     50.1    187.4     48.9
      Medicare................................................     26.3     25.6     48.9     29.1     68.5     26.7    112.6     32.2    123.9     32.4
      Medicaid \1\............................................      4.6      4.4      7.4      4.4     14.9      5.8     37.2     10.6     37.4      9.8
      Other Federal...........................................      9.9      9.7     14.8      8.8     20.0      7.8     25.5      7.3     26.0      6.8
    State and local...........................................     12.8     12.5     19.0     11.3     33.9     13.2     39.0     11.1     45.5     11.9
      Medicaid \2\............................................      3.9      3.8      6.3      3.7     11.6      4.5     14.8      4.2     23.4      6.1
      Other State and local...................................      8.9      8.7     12.8      7.6     22.3      8.7     24.2      6.9     22.1      5.8
                                                               -----------------------------------------------------------------------------------------
        Total.................................................    102.7    100.0    168.2    100.0    256.5    100.0    350.1    100.0    382.8    100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Federal share only.
\2\ State and local share only.

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


 TABLE C-7.--ANNUAL CHANGE IN HOSPITAL ADMISSIONS BY AGE GROUP, 1978-97
------------------------------------------------------------------------
                                           Percent change in admissions
                                        --------------------------------
                  Year                                           65 and
                                            All      Under 65    older
------------------------------------------------------------------------
1978...................................        0.4       -1.0        4.9
1979...................................        2.7        1.7        5.3
1980...................................        2.9        1.5        6.7
1981...................................        0.9        0.0        3.0
1982...................................        0.0       -1.6        4.1
1983...................................       -0.5       -2.8        4.7
1984...................................       -3.7       -4.2       -2.6
1985...................................       -4.9       -4.7       -5.2
1986...................................       -2.1       -2.5       -1.0
1987...................................       -0.6       -1.0        0.4
1988...................................       -0.4       -1.6        2.0
1989...................................       -1.0       -2.0        1.2
1990...................................       -0.5       -1.6        1.7
1991...................................       -1.1       -2.9        2.5
1992...................................       -0.8       -2.2        1.7
1993...................................        0.7       -0.5        2.9
1994...................................        0.9        0.2        2.0
1995...................................        1.4        0.4        2.9
1996...................................       -0.4       -0.8        0.4
1997...................................        0.4       -0.3        1.4
                                        --------------------------------
                                          Average annual percent change
                                        --------------------------------
1978-83................................        1.0       -0.4        4.8
1984-86................................       -3.5       -3.8       -3.0
1987-92................................       -0.7       -1.9        1.6
1992-97................................        0.6       -0.2       1.9
------------------------------------------------------------------------
Source: Medicare Payment Advisory Commission analysis of data from the
  American Hospital Association National Hospital Panel Survey.

                         Average Length of Stay

    Before the implementation of PPS, the average length of 
stay for all patients was relatively constant between 7.0 and 
7.2 days, as shown in table C-8. With the introduction of PPS 
there was a significant drop in length of stay. From 1982 to 
1984, the average stay fell from 7.2 days to 6.7 days for all 
patients and from 10.1 days to 8.9 days for patients 65 and 
older. Average length of stay stabilized at these levels 
throughout the rest of the 1980s, but has declined again in the 
1990s. Hospital stays for elderly patients were 2.2 days 
shorter, on average, in 1997 than in 1990, and for patients 
under 65 the average stay was 0.7 days shorter. This decline 
was even steeper than in the first years of PPS.

                   TABLE C-8.--AVERAGE LENGTH OF STAY AND ANNUAL CHANGE BY AGE GROUP, 1978-97
----------------------------------------------------------------------------------------------------------------
                                                         All                Under 65            65 and older
                                               -----------------------------------------------------------------
                                                  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
1997..........................................          5.4     -1.5          4.7     -0.6          6.5     -2.7
                                               -----------------------------------------------------------------
                                                                  Average annual percent change
                                               -----------------------------------------------------------------
1978-83.......................................  ...........     -0.5  ...........     -0.8  ...........     -1.7
1984-86.......................................  ...........     -2.1  ...........     -1.4  ...........     -3.1
1987-92.......................................  ...........     -0.6  ...........     -1.0  ...........     -0.9
1992-97.......................................  ...........     -3.1  ...........     -2.0  ...........    -4.8
----------------------------------------------------------------------------------------------------------------
Source: Medicare Payment Advisory Commission analysis of data from the American Hospital Association National
  Hospital Panel Survey.

                           Hospital Occupancy

    Table C-9 shows that, with slight increases in admissions 
and stable average length of stay, occupancy rates were over 70 
percent in the early 1980s. The number of hospital beds was 
increasing, exceeding 1 million by 1983. During the early years 
of PPS, however, occupancy rates decreased dramatically. From 
1983 to 1986, the aggregate occupancy rate fell from 72.2 
percent to 63.4 percent. There was a slight increase in 
occupancy rates in the late 1980s, but the sharp reduction in 
average length of stay lowered the occupancy rate below 60 
percent by 1995, despite almost 130,000 fewer beds than in 
1983. In 1997, occupancy rates rose by 1.2 percent over the 
previous year, to 59.6 percent.

                    TABLE C-9.--INPATIENT HOSPITAL OCCUPANCY RATE AND NUMBER OF BEDS, 1978-97
----------------------------------------------------------------------------------------------------------------
                                                                        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
1997................................................       181,313,462       59.6      1.2      833,254     -2.4
                                                     -----------------------------------------------------------
                                                                     Average annual percent change
                                                     -----------------------------------------------------------
1978-83.............................................  ................  .........     -0.5  ...........      1.0
1984-86.............................................  ................  .........     -4.2  ...........     -1.4
1987-92.............................................  ................  .........     -0.3  ...........     -1.0
1992-97.............................................  ................  .........     -0.9  ...........    -1.7
----------------------------------------------------------------------------------------------------------------
Source: Medicare Payment Advisory Commission analysis of data from American Hospital Association National
  Hospital Panel Survey.

                          Hospital Employment

    Hospitals experienced a significant downturn in total 
employment levels at the time PPS was introduced, as shown in 
table C-10. During 1984 and 1985, full-time equivalent 
employees declined by 2.3 percent. From 1986 through 1993, 
however, hospital employment increased.
    During the late 1970s and through the 1980s, growth in the 
number of part-time personnel exceeded growth in the number of 
full-time personnel in every year. In 1992, however, the number 
of full-time personnel grew faster than the number of part-time 
personnel for the first time in more than 20 years. This trend 
continued in 1993, but the increase in both types of personnel 
slowed dramatically. In 1994 hospital employment declined for 
the first time since the early years of PPS. This was only the 
second such period in the past three decades. The number of 
hospital employees continued to decrease until 1997 when both 
full- and part-time employees increased. Total personnel 
increased by 0.5 percent over 1996 levels.

                       TABLE C-10.--ANNUAL PERCENT CHANGE IN HOSPITAL EMPLOYMENT, 1978-97
----------------------------------------------------------------------------------------------------------------
                                                                     Total full-            Personnel
                                                                        time    --------------------------------
                                Year                                 equivalent
                                                                      employees    Total    Full time  Part time
----------------------------------------------------------------------------------------------------------------
1978...............................................................         3.7        4.1        3.3        6.8
1979...............................................................         3.5        3.9        2.9        6.7
1980...............................................................         4.7        5.2        4.0        9.1
1981...............................................................         5.4        6.0        4.8        9.4
1982...............................................................         3.7        3.7        3.6        4.1
1983...............................................................         1.4        1.5        1.2        2.3
1984...............................................................        -2.3       -2.1       -2.6       -0.8
1985...............................................................        -2.3       -2.0       -2.7       -0.1
1986...............................................................         0.3        0.4        0.2        0.9
1987...............................................................         0.7        0.9        0.4        2.3
1988...............................................................         1.1        1.4        0.7        3.3
1989...............................................................         1.6        1.9        1.2        3.6
1990...............................................................         2.1        2.3        1.8        3.6
1991...............................................................         0.6        0.7        0.6        1.0
1992...............................................................         1.6        1.5        1.7        0.9
1993...............................................................         0.7        0.6        0.8        0.2
1994...............................................................        -0.8       -0.8       -0.7       -0.9
1995...............................................................        -1.4       -1.4       -1.5       -0.9
1996...............................................................        -0.2       -0.3        0.0       -1.1
1997...............................................................         0.2        0.5        0.1        1.7
                                                                    --------------------------------------------
                                                                            Average annual percent change
                                                                    --------------------------------------------
1978-83............................................................         3.7        4.1        3.3        6.4
1984-86............................................................        -1.4       -1.2       -1.7        0.0
1987-92............................................................         1.3        1.5        1.1        2.4
1992-97............................................................        -0.3       -0.3       -0.3      -0.2
----------------------------------------------------------------------------------------------------------------
Source: Medicare Payment Advisory Commission analysis of data from the American Hospital Association National
  Hospital Panel Survey.

                 EXPENDITURES FOR PHYSICIANS' SERVICES

    Health care expenditures for physician services were $229.5 
billion in 1998, an increase of 5.4 percent from 1997. This 
amounted to 20.0 percent of national health expenditures.
    Third-party (public expenditures and private insurance) 
payments financed over 84 percent of physician services. In 
1998 private health insurance continued to be the single 
largest payer. This portion grew from 37.9 percent in 1980 to 
50.6 percent in 1993. ``The substantial and rapid shift to 
managed care among employer-sponsored private health insurance 
and public-program enrollment in the early to mid 1990s,'' 
however, resulted in the stabilization of the share of 
physician spending covered by private health insurance. From 
1993, this share changed very little and, in 1998, was 50.5 
percent (Levit et al., 2000).
    Public expenditures in this area have grown much more 
slowly, rising from 28.9 percent in 1980 to 31.9 percent ($73.3 
billion) in 1998. Of this last figure, $49.4 billion was for 
Federal Medicare payments. In contrast, out-of-pocket payments 
by individuals for physician services have decreased from 32.4 
percent in 1980 to 15.6 percent ($35.7 billion) in 1998 (table 
C-11).
    Inflation in physicians' fees has outpaced that of the U.S. 
economy as a whole since 1981 as measured by the Consumer Price 
Index (CPI). The inflation rate of 2.8 for 1999, however, is 
the lowest since 1964 (table C-12). Also, the ``excess'' rate 
of increase in physician services prices above overall 
inflation since 1993 decreased to an average 1.3 percentage 
points per year, down from 2.5 percent for the years from 1987 
to 1993 (American Medical Association, 1999).
    Physician revenue and income are directly tied to the 
prices of physicians' services. The American Medical 
Association (AMA) reports that, over the 10 years from 1987 to 
1997, mean physician income rose from $132,300 to $199,600, an 
average of 4.2 percent a year. In 1994, however, the average 
physician net income experienced the first decrease ever 
recorded by the AMA. After expenses but before taxes, average 
physician income was $182,400, a 3.6 percent decrease from 
$189,300 in 1993. From 1993 to 1997, average physician income 
grew only $10,000 or an average of 1.3 percent per year. 
Average net income in 1997 was up just 0.3 percent from 
$199,000 in 1996. Physicians' inflation-adjusted mean income 
showed no increase between 1993 and 1997 (Levit et al., 2000).
    According to the AMA, the proportion of physicians who are 
employees, i.e., who do not have an ownership interest in their 
main practice, rose at a fairly rapid rate between 1985 and 
1992 to 32 percent and increased even more quickly over the 
next 3 years, rising from 32 percent in 1992 to 43 percent in 
1994. This is attributed to a variety of factors, including the 
growth of managed care, increased competition among health 
providers, and uncertainty about the Clinton administration's 
health care reform efforts and its effect on small physician 
practices. Since 1994, however, the share of employee 
physicians has declined to 36.1 percent in 1998. This reversal 
in trend may be due to a change in the health care system and 
the fact that small physician practices are becoming more 
viable competitors for managed care contracts (American Medical 
Association, 1998b). At the same time, the portion of the 
physician work force who are self-employed (full or part owners 
of their practices), has risen from 55 percent in 1995 to 62.3 
percent in 1998. The average net income for self-employed 
physicians in 1997 was $228,200, down from $231,600 in 1996 
(table C-13). This was still almost 50 percent higher than 
employee-doctors whose average net income also fell in 1997 to 
$154,000 from $159,200 in 1996. Self-employed physicians, 
however, tend to work more hours and see more patients, have 
additional years of experience, be board certified, and are 
more likely to be male, all factors associated with higher 
physician earnings.

                             TABLE C-11.--EXPENDITURES FOR PHYSICIAN SERVICES \1\ BY SOURCE OF FUNDS, SELECTED YEARS 1980-98
                                                                [In billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    1980              1985              1990              1995              1997              1998
              Source of payment              -----------------------------------------------------------------------------------------------------------
                                               Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Out of pocket...............................    $14.7     32.4    $24.4     29.2    $32.2     22.0    $30.3     16.0    $33.8     15.5    $35.7     15.6
Third party.................................     30.6     67.6     59.2     70.8    114.2     78.0    171.6     85.0    184.0     84.5    193.8     84.4
  Private health insurance..................     17.1     37.9     33.5     40.1     66.8     45.7    104.2     51.6    109.4     50.2    116.0     50.5
  Other private funds.......................      0.4      0.8      1.4      1.6      2.7      1.8      3.8      1.9      4.6      2.1      4.5      2.0
  Government................................     13.1     28.9     24.3     29.1     44.7     30.5     63.6     31.5     70.1     32.2     73.3     31.9
    Federal.................................     10.0     22.1     19.4     23.2     35.6     24.3     50.9     25.2     57.4     26.3     60.8     26.5
      Medicare..............................      8.0     17.6     16.3     19.5     29.2     20.0     39.9     19.8     45.6     20.9     49.4     21.5
      Medicaid..............................      1.4      3.1      2.0      2.4      4.1      2.8      8.5      4.2      9.1      4.2      8.8      3.8
      Other Federal.........................      0.6      1.4      1.1      1.3      2.2      1.5      2.5      1.3      2.7      1.2      2.6      1.2
    State and local.........................      3.1      6.8      4.9      5.9      9.1      6.2     12.6      6.3     12.8      5.9     12.4      5.4
      Medicaid..............................      1.1      2.5      1.5      1.8      2.9      2.0      6.0      3.0      6.3      2.9      6.1      2.7
      Other State and local.................      2.0      4.3      3.4      4.0      6.2      4.2      6.7      3.3      6.5      3.0      6.3      2.7
                                             -----------------------------------------------------------------------------------------------------------
        Total...............................     45.2    100.0     83.6    100.0    146.3    100.0    201.9    100.0    217.8    100.0    229.5   100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Encompasses the cost of all services and supplies provided in physicians' offices, the cost for services of privately billing physicians in
  hospitals and other institutions, and the cost of diagnostic work performed in independent clinical laboratories. The salaries of staff physicians are
  counted with expenditures for the services of the employing institution.

 Note.--Numbers may not add to totals because of rounding.

 Source: Health Care Financing Administration, Office of the Actuary.


     TABLE C-12.--ANNUAL PERCENTAGE CHANGE IN SELECTED COMPONENTS OF THE CONSUMER PRICE INDEX FOR ALL URBAN
                                             CONSUMERS, \1\ 1963-99
----------------------------------------------------------------------------------------------------------------
                                                                              All items
                                                                                less       Medical   Physicians'
                              Year                                All items    medical   care total    services
                                                                                care
----------------------------------------------------------------------------------------------------------------
1963...........................................................         1.3         1.0         2.6          2.2
1964...........................................................         1.3         1.3         2.1          2.5
1965...........................................................         1.6         1.6         2.4          3.7
1966...........................................................         2.9         3.1         4.4          5.6
1967...........................................................         3.1         2.1         7.2          7.2
1968...........................................................         4.2         4.2         6.0          5.6
1969...........................................................         5.5         5.4         6.7          7.0
1970...........................................................         5.7         5.9         6.6          7.5
1971...........................................................         4.4         4.1         6.2          7.0
1972...........................................................         3.2         3.2         3.3          3.0
1973...........................................................         6.2         6.4         4.0          3.4
1974...........................................................        11.0        11.2         9.3          9.2
1975...........................................................         9.1         9.0        12.0         12.1
1976...........................................................         5.8         5.3         9.5         11.4
1977...........................................................         6.5         6.3         9.6          9.1
1978...........................................................         7.6         7.6         8.4          8.4
1979...........................................................        11.3        11.5         9.2          9.1
1980...........................................................        13.5        13.6        11.0         10.5
1981...........................................................        10.3        10.4        10.7         11.0
1982...........................................................         6.2         5.9        11.6          9.4
1983...........................................................         3.2         2.9         8.8          7.8
1984...........................................................         4.3         4.1         6.2          6.9
1985...........................................................         3.6         3.4         6.3          5.9
1986...........................................................         1.9         1.5         7.5          7.2
1987...........................................................         3.6         3.5         6.6          7.3
1988...........................................................         4.1         3.9         6.5          7.2
1989...........................................................         4.8         4.6         7.7          7.4
1990...........................................................         5.4         5.2         9.0          7.1
1991...........................................................         4.2         3.9         8.7          6.0
1992...........................................................         3.0         2.8         7.4          6.3
1993...........................................................         3.0         2.7         5.9          5.6
1994...........................................................         2.6         2.5         4.8          4.4
1995...........................................................         2.8         2.7         4.5          4.5
1996...........................................................         3.0         2.8         3.5          3.6
1997...........................................................         2.3         2.3         2.8          3.0
1998...........................................................         1.6         1.5         3.2          3.0
1999...........................................................         2.2         2.1         3.5         2.8
----------------------------------------------------------------------------------------------------------------
\1\ Consumer Price Index for All Urban Consumers, changes in annual averages.

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


                         TABLE C-13.--PHYSICIANS' AVERAGE NET INCOME \1\ AFTER EXPENSES BUT BEFORE TAXES, SELECTED YEARS 1983-97
                                                                [In thousands of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                 Percent
           Category              1983    1985    1987    1988    1989     1990     1991     1992     1993     1994     1995     1996     1997    change
                                                                                                                                                 1996-97
--------------------------------------------------------------------------------------------------------------------------------------------------------
Specialty:
    General/family practice...   $68.5   $77.9   $91.5   $94.6   $95.9   $102.7   $111.5   $114.4   $116.8   $121.4   $131.2   $139.1   $140.9      $1.3
    Internal medicine.........    93.3   101.0   121.8   130.9   146.5    152.5    149.6    162.1    180.8    174.9    185.7    185.7    193.9       4.4
    Surgery...................   145.5   155.4   187.9   207.5   220.5    236.4    233.8    250.5    262.7    255.2    269.4    275.2    261.4      -5.0
    Pediatrics................    70.7    77.1    85.3    94.9   104.7    106.5    119.3    123.9    135.4    126.2    140.5    140.6    143.5       2.1
    Obstetrics/gynecology.....   119.9   122.7   163.2   180.7   194.3    207.3    221.8    220.7    221.9    200.4    244.3    231.0    228.7      -1.0
    Radiology.................   148.0   150.8   180.7   188.5   210.5    219.4    229.8    257.3    259.8    237.4    244.4    275.1    273.4      -0.6
    Psychiatry................    80.0    88.6   102.7   111.4   111.7    116.5    127.6    132.1    131.3    128.5    137.2    133.7    135.7       1.5
    Anesthesiology............   144.7   140.2   163.1   194.5   185.8    207.4    221.1    231.1    224.1    218.1    215.1    228.4    236.2       3.4
Geographic area:
    New England...............    84.5   108.3   110.6   132.9   128.3    142.5    143.8    171.2    171.5    156.1    161.0    169.1    182.5       7.9
    Middle Atlantic...........    98.6   107.9   126.1   135.0   152.5    156.1    171.0    172.4    185.3    177.8    207.0    200.3    193.0      -3.6
    East North Central........   114.3   118.9   137.6   147.0   155.6    172.4    174.1    187.1    199.2    191.9    198.8    199.8    199.3      -0.3
    West North Central........   110.5   113.7   133.9   138.0   159.2    151.4    164.2    187.5    198.2    183.8    184.6    212.6    215.9       1.6
    South Atlantic............   106.7   112.6   133.8   156.0   165.6    169.0    168.8    186.4    192.5    189.3    198.8    196.4    199.9       1.8
    East South Central........   114.9   115.0   141.2   164.8   173.0    169.0    179.4    180.0    195.0    199.2    216.0    229.6    234.7       2.2
    West South Central........   124.4   123.3   140.4   160.7   170.5    178.8    193.3    193.8    189.1    195.5    205.9    217.5    218.4       0.4
    Mountain..................    91.4    97.5   125.5   132.1   142.6    170.9    155.0    175.7    193.2    175.4    178.8    199.1    201.1       1.0
    Pacific...................   103.1   113.6   135.4   136.0   148.1    162.5    172.4    178.1    181.2    171.8    189.9    184.6    180.9      -2.0
Employment status:
    Self-employed.............   115.9   124.5   146.2   160.0   175.3    185.6    191.0    202.3    218.0    210.2    230.8    231.6    228.2      -1.5
    Employee..................    77.6    83.8    99.6   113.0   119.2    119.8    134.0    136.1    150.7    148.2    152.5    159.2    154.0      -3.3
                               -------------------------------------------------------------------------------------------------------------------------
        All physicians \2\....   104.1   112.2   132.3   144.7   155.8    164.3    170.6    181.7    189.3    182.4    195.5    199.0    199.6      0.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Average net income after expenses but before taxes. These figures include contributions made into pension, profit-sharing, and deferred compensation
  plans.
\2\ Includes physicians in specialties not reported separately.

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

    Growth in average net income for physicians in the Middle 
Atlantic and Pacific areas, well above average in 1995, 
experienced a decrease in 1996 and 1997. The West, in 
particular, has been associated with managed care growth and 
cost containment, so that region's position is not unexpected 
(American Medical Association, 1999). After several years of 
the lowest average net income, physicians in the New England 
States had the highest percent increase in 1997 and have passed 
the Pacific Division. The East South Central region remained 
the highest at $234,700 (table C-13).
    Physician net income varies more by specialty than across 
geographic areas. Radiologists had the highest average net 
incomes in 1997 ($273,400) and psychiatrists the lowest 
($135,700). Incomes for general and family practitioners, 
however, continued to increase though the gain of 1.3 percent 
for 1997 was not as healthy as the 8.1 percent gain in 1995 and 
6.0 percent in 1996. The largest gain from 1996 to 1997 was by 
specialists in internal medicine with an increase of 4.4 
percent to $193,900. Income for surgeons fell by 5 percent from 
1996 to 1997, the largest decline among all specialties (table 
C-13).
    Table C-14 shows median net income for physicians, the 
level below and above which lie half of all earnings. While 
average physician net income reached $199,600 in 1997, median 
income which may be more representative of the typical 
physician's earnings, fell 1.2 percent in 1997 to $164,000. 
Over the decade from 1987 to 1997, the average annual rate of 
increase in the median income for all physicians was 4.3 
percent. Most of this growth had occurred by 1993. After 
adjusting for inflation, this represents a real growth of only 
0.7 percent yearly.
    Table C-15 shows the distribution of physicians' net 
incomes in 1997 for all physicians and selected specialties. 
While the average net income of all physicians was $199,600. 
Half of all physicians earned $164,000 or less. One-fourth of 
all physicians earned $120,000 or less, while one-fourth earned 
$250,000 or more. Median incomes across all physician 
specialties remain far apart in 1997 with the median income for 
orthopedic surgery at $275,000. On the lower side, pediatrics 
and psychiatry reported median incomes of $120,000 and 
$130,000.
     The AMA's Physician Socioeconomic Statistics 1999-2000 
reported that, on average, non-Federal patient care physicians 
received 42.8 percent of their incomes from private insurers. 
Medicare payments were 28.6 percent; Medicaid was a source of 
another 12 percent of doctor revenue. Patient out-of-pocket 
payments accounted for 12.2 percent (table C-16). The 
importance of each source varied by specialty, with physicians 
specializing in internal medicine receiving the highest 
percentage of revenue from Medicare. Pediatricians, on average, 
received only 1.1 percent of their income from Medicare, but 
received the highest percentage of income of any specialty 
group from Medicaid (25.5 percent).

           TABLE C-14.--MEDIAN PHYSICIAN NET INCOME, BY SELECTED CHARACTERISTICS, 1987, 1993, AND 1997
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                                         Median net income      Annualized percentage
                                                     ------------------------           change           1987-97
                      Category                                               ---------------------------   real
                                                       1987    1993    1997   1987-97  1987-93  1993-97  percent
----------------------------------------------------------------------------------------------------------------
Primary care specialties............................     $90    $130    $140      4.5      6.3      1.9      1.0
Nonprimary care specialties.........................     125     180     195      4.5      6.2      2.1      1.0

Male................................................     114     170     175      4.4      6.9      0.7      0.9
Female..............................................      72     110     120      5.2      7.3      2.2      1.7

U.S. medical graduate...............................     110     158     170      4.4      6.2      1.8      0.9
International medical graduate......................     100     150     150      4.1      7.0      0.0      0.6

Board certified.....................................     120     170     175      3.8      6.0      0.7      0.3
Not board certified.................................      90     124     138      4.4      5.5      2.7      0.8

Self employed.......................................     120     186     200      5.2      7.6      1.8      1.7
Employee............................................      84     136     140      5.2      8.4      0.7      1.7
Independent contractor..............................     100     150     165      5.1      7.0      2.4      1.6

Northeast...........................................     100     150     160      4.8      7.0      1.6      1.3
North Central.......................................     108     155     173      4.8      6.2      2.8      1.3
South...............................................     112     160     171      4.3      6.1      1.7      0.8
West................................................     110     160     155      3.5      6.4     -0.8      0.0
                                                     -----------------------------------------------------------
    All physicians..................................     108     157     164      4.3      6.4      1.1      0.7
    CPI (1982-84 = 100).............................   113.6   144.5   160.5      3.5      4.1      2.7       NA
----------------------------------------------------------------------------------------------------------------
NA--Not available.

Source: American Medical Association (1999).

    A Medical Economics Continuing Survey addressed physician 
gross income from health maintenance organizations (HMOs), 
preferred provider organizations (PPOs), and the amount in the 
form of capitation payments. According to the survey, the 
number of physicians participating in capitated plans increased 
to 44 percent in 1998 from 40 percent in 1996.
    Overall managed care participation by physicians has not 
increased since the last survey in 1996, however. In 1998, 76 
percent of physicians participated in HMOs and 81 percent in 
PPOs. The median gross income from HMOs in 1998 for those 
physicians participating in HMOs was $66,200, up from $63,770 
in 1995. For physicians in PPOs, the median gross income from 
PPOs for 1998 was $61,600, an increase from $48,660 in 1995 
(Terry, 1999b). The share of gross income from payments from 
HMOs rose from 20 percent in 1995 to 25 percent in 1998. Over 
the same period the share from PPOs rose from 15 percent to 24 
percent while the share from capitation rose from 15 percent to 
20 percent (table C-17).

  TABLE C-15.--DISTRIBUTION OF PHYSICIAN NET INCOME AFTER EXPENSES BUT
           BEFORE TAXES BY SPECIALTY AND CENSUS DIVISION, 1997
                        [In thousands of dollars]
------------------------------------------------------------------------
                                           25th                  75th
          Category              Mean    percentile   Median   percentile
------------------------------------------------------------------------
Specialty:
    General/family practice.    $140.9     $100.0     $132.0     $160.0
    Internal medicine.......     193.9      114.0      150.0      245.0
        General.............     175.8      108.0      147.0      210.0
        Cardiovascular           284.2      150.0      249.0      385.0
         diseases...........
        Gastroenterology....     221.5      150.0      175.0      300.0
        Other...............     188.7      119.0      158.0      241.0
    Surgery.................     261.4      150.0      217.0      325.0
        General.............     244.4      150.0      203.0      302.0
        Otolaryngology......     230.2      170.0      206.0      289.0
        Orthopedic..........     331.0      205.0      275.0      420.0
        Ophthalmology.......     222.1      121.0      175.0      300.0
        Urological..........     237.6      160.0      207.0      298.0
        Other...............     326.5      186.0      270.0      396.0
    Pediatrics..............     143.5      100.0      120.0      178.0
    Obstetrics/gynecology...     228.7      150.0      200.0      280.0
    Radiology...............     273.4      190.0      260.0      350.0
        Diagnostic..........     275.5      190.0      265.0      330.0
        Other...............     269.7      190.0      255.0      350.0
    Psychiatry..............     135.7       98.0      130.0      162.0
    Anesthesiology..........     236.2      175.0      220.0      288.0
    Pathology...............     200.9      140.0      175.0      220.0
    Other...................     190.3      120.0      170.0      230.0
        Emergency medicine..     197.0      145.0      195.0      230.0
        Neurology...........     188.1      117.0      164.0      250.0
        Dermatology.........     224.1      120.0      160.0      290.0
        Other...............     157.4      100.0      137.0      200.0
Geographic area:
    New England.............     182.5      110.0      150.0      230.0
    Middle Atlantic.........     193.0      120.0      160.0      240.0
    East North Central......     199.3      120.0      175.0      250.0
    West North Central......     215.9      130.0      170.0      264.0
    South Atlantic..........     199.9      112.0      166.0      250.0
    East South Central......     234.7      130.0      190.0      321.0
    West South Central......     218.4      124.0      173.0      257.0
    Mountain................     201.1      120.0      160.0      250.0
    Pacific.................     180.9      115.0      150.0      222.0
                             -------------------------------------------
        All physicians \1\..     199.6      120.0      164.0     250.0
------------------------------------------------------------------------
\1\ Includes physicians in specialties not listed separately.

 Source: American Medical Association (1999).


 TABLE C-16.--AVERAGE PERCENT OF NON-FEDERAL PHYSICIAN REVENUE BY SOURCE
                            OF PAYMENT, 1998
------------------------------------------------------------------------
                                                                 Patient
            Category              Medicare  Medicaid   Private    out of
                                                      insurance   pocket
------------------------------------------------------------------------
Specialty:
    General/family practice.....      23.3      12.4      43.5      16.8
    Internal medicine...........      43.9       8.0      35.7       9.0
    Surgery.....................      35.4       7.6      42.8      12.1
    Pediatrics..................       1.1      25.5      55.5      12.6
    Obstetrics/gynecology.......      11.0      20.3      54.1      13.0
    Radiology...................      34.3      10.4      42.0      10.7
    Psychiatry..................      16.0      17.0      36.5      21.6
    Anesthesiology..............      27.8      12.6      47.6       9.0
    Pathology...................      27.7      10.9      41.2       9.8
    Other.......................      27.7       9.7      43.0      11.6
Geographic area:
    New England.................      32.0      10.1      40.7      12.3
    Middle Atlantic.............      28.7      11.4      42.5      12.8
    East North Central..........      29.6      10.3      43.5      11.5
    West North Central..........      29.0      10.3      48.6      11.0
    South Atlantic..............      30.9      11.4      40.5      12.2
    East South Central..........      26.7      15.6      43.3      11.3
    West South Central..........      26.5      13.0      42.2      13.1
    Mountain....................      29.2      11.6      45.9      11.7
    Pacific.....................      24.9      14.3      43.2      12.3
                                 ---------------------------------------
        All physicians \1\......      28.6      12.0      42.8     12.2
------------------------------------------------------------------------
\1\ Includes physicians in specialties not listed separately.

Source: American Medical Association (1999).

                        SUPPLY OF HOSPITAL BEDS

    The national supply of community hospital beds per 1,000 
population steadily increased from the 1940s, reaching a peak 
of 4.6 beds per 1,000 population in 1975. By 1997, the number 
of beds dropped to 3.2 per 1,000 population. Among the 9 Census 
regions, the East South Central experienced the largest 
increase from 1.7 per 1,000 population in 1940 to 4.7 in 1980. 
By 1997, this number had declined to 4.2, the same number as 
the West North Central region. In contrast, the New England, 
Mountain, and Pacific regions had fewer beds per 1,000 in 1997 
than in 1940. In the period between 1990 and 1997, the New 
England and Mountain regions experienced the largest drops in 
average annual percent changes (-3.8 and -3.0, respectively). 
The East South Central region's average annual percent change 
was the smallest at -0.3 (table C-18).

                          SUPPLY OF PHYSICIANS

    Physician shortages in the 1950s and 1960s led to Federal 
and State initiatives to increase the supply of physicians. 
Since that time, however, the number of physicians in the 
United States has grown rapidly from 334,028 in 1970 to 777,859 
in 1998, a rate over four times faster than that of the total 
population.

             TABLE C-17.--PHYSICIAN GROSS INCOME FROM MANAGED CARE AND CAPITATION BY SPECIALTY, 1998
----------------------------------------------------------------------------------------------------------------
                                                        Median 1998 gross income \1\      Percent of 1998 gross
                                                                    from:                   income \1\ from:
                 Physician specialty                 -----------------------------------------------------------
                                                         HMOs       PPOs    Capitation   HMOs   PPOs  Capitation
----------------------------------------------------------------------------------------------------------------
Anesthesiologists...................................    $82,800    $64,100     $41,240     38     28         24
Cardiologists.......................................     69,100     65,600      45,000     19     19         14
Cardio/thoracic surgeons............................     89,700     48,600      49,990     24     14         14
Family practitioners................................     66,800     52,700      49,950     26     24         22
Gastroenterologists.................................     70,500     76,100      30,000     22     23         12
General practitioners...............................     46,400     28,900      34,990     24     18         23
General surgeons....................................     66,600     51,500      60,000     24     19         20
Internists..........................................     52,700     54,000      39,990     23     22         18
Obstetrics/gynecology specialists...................    109,500     96,600      37,490     36     32         15
Ophthalmologists....................................     89,400     86,900      49,990     22     20         15
Orthopedic surgeons.................................     92,000     98,700      60,000     21     24         14
Pediatricians.......................................     64,100     73,300      54,980     35     35         28
Plastic surgeons....................................      (\2\)     87,500      80,000     18     19         21
Psychiatrists.......................................     41,100     32,100      53,970     24     20         27
                                                     -----------------------------------------------------------
    All surgical specialists........................     85,400     79,800      49,990     28     24         18
    All nonsurgeons.................................     58,400     53,300      42,490     24     23         20
    All fields......................................     66,200     61,600      44,980     25     24        20
----------------------------------------------------------------------------------------------------------------
\1\ Gross is the individual physician's share of 1998 practice receipts before professional expenses and income
  taxes. Figures exclude physicians with no HMO, PPO, or capitation contracts.
\2\ Insufficient sample. Neurosurgeons also yielded an insufficient sample.

 Source: Terry (1999b).

    Table C-19 also indicates that between 1970 and 1998, the 
number of all physicians per 100,000 civilians grew from 161 to 
286, a 78 percent increase. Table C-20 shows variations in the 
supply of non-Federal physicians relative to population by 
State. In 1998, the District of Columbia had the highest ratio 
(783 physicians per 100,000 population) while Idaho had the 
lowest ratio (176 physicians per 100,000 population).
    While concern continues about the possible oversupply of 
physicians and its effect on efforts to control health care 
spending, the Council on Graduate Medical Education's (1999; 
COGME) Fourteenth Report found that there has been progress 
toward meeting the Nation's physician work force goals. There 
has been a slight moderation in the rate of growth in physician 
supply, the number of physicians in training has leveled off, 
and the number of new entrants, particularly international 
medical graduates (IMGs), has decreased moderately over the 
past 5 years. The American Medical


                             TABLE C-18.--COMMUNITY HOSPITAL BEDS PER 1,000 POPULATION AND AVERAGE ANNUAL PERCENT CHANGE BY REGION AND STATE, SELECTED YEARS 1940-97
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Beds per 1,000 civilian population                                   Average annual percent change
                      Region and State                       -----------------------------------------------------------------------------------------------------------------------------------
                                                              1940 \1\  1950 \1\  1960 \2\   1970    1980   1990 \3\  1997 \3\  1940-60 \1\ \2\  1960-70 \2\   1970-80  1980-90 \3\  1990-97 \3\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
New England.................................................      4.4       4.2       3.9      4.1     4.1      3.4       2.6            -0.6           0.5        0.0        -1.9         -3.8
  Maine.....................................................      3.0       3.2       3.4      4.7     4.7      3.7       3.0             0.6           3.3        0.0        -2.1         -2.9
  New Hampshire.............................................      4.2       4.2       4.4      4.0     3.9      3.1       2.5             0.2          -0.9       -0.3        -2.3         -3.0
  Vermont...................................................      3.3       4.0       4.5      4.5     4.4      3.0       2.7             1.6           0.0       -0.2        -3.4         -1.5
  Massachusetts.............................................      5.1       4.8       4.2      4.4     4.4      3.6       2.8            -1.0           0.5        0.0        -2.0         -3.5
  Rhode Island..............................................      3.9       3.8       3.7      4.0     3.8      3.2       2.6            -0.3           0.8       -0.5        -1.7         -2.9
  Connecticut...............................................      3.7       3.6       3.4      3.4     3.5      2.9       2.2            -0.4           0.0        0.3        -1.9         -3.8
Middle Atlantic.............................................      3.9       3.8       4.0      4.4     4.6      4.1       3.8             0.1           1.0        0.4        -0.9         -1.1
  New York..................................................      4.3       4.1       4.3      4.6     4.5      4.1       3.9             0.0           0.7       -0.2        -0.7         -0.7
  New Jersey................................................      3.5       3.2       3.1      3.6     4.2      3.7       3.5            -0.6           1.5        1.6        -1.3         -2.0
  Pennsylvania..............................................      3.5       3.8       4.1      4.7     4.8      4.4       3.8             0.8           1.4        0.2        -0.9         -2.0
East North Central..........................................      3.2       3.2       3.6      4.4     4.7      3.9       3.2             0.6           2.0        0.7        -1.8         -2.7
  Ohio......................................................      2.7       2.9       3.4      4.2     4.7      4.0       3.2             1.2           2.1        1.1        -1.8         -3.1
  Indiana...................................................      2.3       2.6       3.1      4.0     4.5      3.9       3.3             1.5           2.6        1.2        -1.4         -2.3
  Illinois..................................................      3.4       3.6       4.0      4.7     6.1      4.0       3.4             0.8           1.6        0.8        -2.4         -2.2
  Michigan..................................................      4.0       3.3       3.3      4.3     4.4      3.7       2.9            -1.0           2.7        0.2        -1.7         -3.3
  Wisconsin.................................................      3.4       3.7       4.3      5.2     4.9      3.8       3.2             1.2           1.9       -0.8        -2.5         -2.4
West North Central..........................................      3.1       3.7       4.3      6.7     6.8      4.9       4.2             1.6           2.9        0.2        -1.7         -1.6
  Minnesota.................................................      3.9       4.4       4.8      6.1     5.7      4.4       3.6             1.0           2.4       -0.7        -2.6         -2.8
  Iowa......................................................      2.7       3.2       3.9      5.6     5.7      5.1       4.3             1.9           3.7        0.2        -1.1         -2.4
  Missouri..................................................      2.9       3.3       3.9      5.1     5.7      4.8       3.9             1.5           2.7        1.1        -1.7         -2.9
  North Dakota..............................................      3.5       4.3       5.2      6.8     7.4      7.0       6.1             2.0           2.7        0.8        -0.6         -2.0
  South Dakota..............................................      2.8       4.4       4.5      5.6     5.5      6.1       6.0             2.4           2.2       -0.2         1.0         -0.7
  Nebraska..................................................      3.4       4.2       4.4      6.2     6.0      5.5       4.7             1.3           3.5       -0.3        -1.0         -2.2
  Kansas....................................................      2.8       3.4       4.2      5.4     5.8      4.8       4.2             2.0           2.5        0.7        -1.9         -1.8
South Atlantic..............................................      2.5       2.8       3.3      4.0     4.5      3.7       3.2             1.4           1.9        1.2        -1.9         -2.0
  Delaware..................................................      4.4       3.9       3.7      3.7     3.6      3.0       2.6            -0.9           0.0       -0.3        -1.8         -2.0
  Maryland..................................................      3.9       3.6       3.3      3.1     3.6      2.8       2.5            -0.8          -0.6        1.5        -2.1         -1.6
  District of Columbia......................................      5.5       5.5       5.9      7.4     7.3      7.6       6.8             0.4           2.3       -0.1         0.3         -1.5
  Virginia..................................................      2.2       2.5       3.0      3.7     4.1      3.3       2.7             1.6           2.1        1.0        -2.1         -2.8
  West Virginia.............................................      2.7       3.1       4.1      5.4     5.5      4.7       4.5             2.1           2.8        0.2        -1.6         -0.6
  North Carolina............................................      2.2       2.6       3.4      3.8     4.2      3.3       3.1             2.2           1.1        1.0        -2.1         -0.9
  South Carolina............................................      1.8       2.4       2.9      3.7     3.9      3.3       3.2             2.4           2.5        0.5        -1.7         -0.4
  Georgia...................................................      1.7       2.0       2.8      3.8     4.6      4.0       3.4             2.5           3.1        1.9        -1.4         -2.2
  Florida...................................................      2.8       2.9       3.1      4.4     5.1      3.9       3.4             0.5           3.6        1.5        -2.4         -1.9
East South Central..........................................      1.7       2.1       3.0      4.4     4.7      4.3       4.2             3.9           1.5       -0.6        -2.2         -0.3
  Kentucky..................................................      1.8       2.2       3.0      4.0     4.5      4.3       3.9             2.6           2.9        1.2        -0.2         -3.4
  Tennessee.................................................      1.9       2.3       3.4      4.7     5.5      4.8       3.9             3.0           3.3        1.6        -1.1         -2.9
  Alabama...................................................      1.5       2.0       2.8      4.3     5.1      4.6       4.3             3.2           4.4        1.7        -1.0         -0.9
  Mississippi...............................................      1.4       1.7       2.9      4.4     5.3      5.0       4.7             3.7           4.3        1.9         0.0         -0.9
West South Central..........................................      2.1       2.7       3.3      4.3     4.7      3.8       3.2             2.3           2.7        0.9        -1.8         -2.4
  Arkansas..................................................      1.4       1.6       2.9      4.2     5.0      4.6       4.0             3.7           3.6        1.8        -0.6         -1.9
  Louisiana.................................................      3.1       3.8       3.9      4.2     4.8      4.6       4.3             1.2           0.7        1.3        -0.4         -0.9
  Oklahoma..................................................      1.9       2.5       3.2      4.5     4.6      4.0       3.3             2.6           3.5        0.2        -1.4         -2.7
  Texas.....................................................      2.0       2.7       3.3      4.3     4.7      3.5       2.9             2.5           2.7        0.9        -2.9         -2.6
Mountain....................................................      3.6       3.8       3.5      4.3     3.8      3.1       2.5            -0.1           2.1       -1.2        -2.0         -3.0
  Montana...................................................      4.9       5.3       5.1      5.8     5.9      5.8       5.1             0.2           1.3        0.2        -0.2         -1.8
  Idaho.....................................................      2.6       3.4       3.2      4.0     3.7      3.2       2.9             1.0           2.3       -0.8        -1.4         -1.4
  Wyoming...................................................      3.5       3.9       4.6      5.5     3.6      4.8       4.1             1.4           1.8       -4.1         3.1         -2.2
  Colorado..................................................      3.9       4.2       3.8      4.6     4.2      3.2       2.3            -0.1           1.9       -0.9        -2.7         -4.5
  New Mexico................................................      2.7       2.2       2.9      3.5     3.1      2.8       2.1             0.4           1.9       -1.2        -0.7         -3.9
  Arizona...................................................      3.4       4.0       3.0      4.1     3.6      2.7       2.3            -0.6           3.2        1.3        -2.8         -2.2
  Utah......................................................      3.2       2.9       2.8      3.6     3.1      2.6       2.0            -0.7           2.5       -1.5        -1.7         -3.6
  Nevada....................................................      5.0       4.4       3.9      4.2     4.2      2.8       2.1            -1.2           0.7        0.0        -3.6         -3.9
Pacific.....................................................      4.1       3.2       3.1      3.7     3.5      2.7       2.2            -1.4           1.8       -0.6        -2.6         -2.8
  Washington................................................      3.4       3.6       3.3      3.5     3.1      2.5       1.9            -0.1           0.6       -1.2        -2.1         -3.8
  Oregon....................................................      3.5       3.1       3.5      4.0     3.5      2.8       2.2             0.0           1.3       -1.3        -1.9         -3.3
  California................................................      4.4       3.3       3.0      3.8     3.6      2.7       2.3            -1.9           2.4       -0.5        -2.8         -2.2
  Alaska....................................................  ........  ........      2.4      2.3     2.7      2.3       2.4   ...............        -0.4        1.6        -1.6          0.6
  Hawaii....................................................  ........  ........      3.7      3.4     3.1      2.7       2.3   ...............        -0.8       -0.9        -1.0         -2.2
                                                             -----------------------------------------------------------------------------------------------------------------------------------
      United States.........................................      3.2       3.3       3.6      4.3     4.5      3.7       3.2             0.6           1.8        0.5        -1.7        -2.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ 1940 and 1950 data are estimated based on published figures.
\2\ 1960 includes hospital units of institutions.
\3\ Starting with 1990, excludes hospital units of institutions.

 Note.--Data for 1990 has been revised.

 Source: U.S. Public Health Service (1997). The 1997 data is from Hospital Statistics, 1999 edition, American Hospital Association.


                    TABLE C-19.--PHYSICIAN SUPPLY BY MAJOR CATEGORIES, SELECTED YEARS 1970-98
----------------------------------------------------------------------------------------------------------------
                                         1970                1980                1990                1998
            Category             -------------------------------------------------------------------------------
                                   Number    Percent   Number    Percent   Number    Percent   Number    Percent
----------------------------------------------------------------------------------------------------------------
Federal.........................    29,501        9     17,787        4     20,475         3    18,991        2
Non-Federal.....................   301,323       90    443,502       96    592,166        97   776,921      100

Patient care....................   278,535       83    376,512       80    503,870        82   621,736       80
Nonpatient care.................    32,310       10     38,404        9     43,440         8    45,264        6

Primary care....................   134,354       40    170,705       37    213,514        35   264,177       34
Primary care specialties........     3,161        1     16,642        4     30,911         5    45,740        6

Male............................   308,627       92    413,395       88    511,227        83   600,829       77
Female..........................    25,401        8     54,284       12    104,194        17   177,030       23

U.S. graduates..................   270,637       81    362,307       77    475,394        77   582,315       75
International medical graduates.    57,217       17     97,726       21    131,764        21   185,246       24
Canadian graduates..............     6,174        2      7,646        2      8,263         1    10,298        1
                                 -------------------------------------------------------------------------------
        Total physicians \1\....   334,028      100    467,679      100    615,421       100   777,859      100
                                 ===============================================================================
        Total physician-               161                 202                 244                 286
         population ratio (per
         100,000 persons).......
----------------------------------------------------------------------------------------------------------------
\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 (2000).


       TABLE C-20.--NON-FEDERAL PHYSICIAN/POPULATION RATIOS \1\ AND RANK BY STATE, SELECTED YEARS 1970-98
----------------------------------------------------------------------------------------------------------------
                                                                                                            1998
                             State                                1970   1975   1985   1990   1995   1998   rank
----------------------------------------------------------------------------------------------------------------
Alabama........................................................     90    103    152    170    202    213     42
Alaska.........................................................     74     95    137    155    164    177     50
Arizona........................................................    144    185    220    233    239    236     32
Arkansas.......................................................     92    103    150    165    192    209     43
California.....................................................    194    219    266    272    275    278     13
Colorado.......................................................    178    186    216    232    257    266     17
Connecticut....................................................    192    224    302    332    372    388      5
Delaware.......................................................    134    155    203    217    246    258     22
District of Columbia...........................................    390    467    607    658    714    783      1
Florida........................................................    155    185    236    251    269    283     11
Georgia........................................................    108    126    172    187    214    228     35
Hawaii.........................................................    160    185    239    266    283    298     10
Idaho..........................................................     94    104    133    142    162    176     51
Illinois.......................................................    138    164    217    229    265    281     12
Indiana........................................................    102    116    156    171    200    214     41
Iowa...........................................................    103    113    149    167    189    197     45
Kansas.........................................................    118    137    179    195    223    229     34
Kentucky.......................................................    102    122    162    181    211    226     37
Louisiana......................................................    120    131    187    200    241    263     20
Maine..........................................................    111    133    193    208    235    257     24
Maryland.......................................................    183    217    334    360    384    404      4
Massachusetts..................................................    207    237    331    364    420    443      2
Michigan.......................................................    125    145    190    201    232    244     28
Minnesota......................................................    151    172    223    240    267    276     14
Mississippi....................................................     84     94    126    144    155    178     49
Missouri.......................................................    129    148    195    209    236    247     27
Montana........................................................    104    116    155    181    214    222     39
Nebraska.......................................................    116    134    170    185    220    240     30
Nevada.........................................................    114    129    173    175    178    193     47
New Hampshire..................................................    140    162    207    227    248    270     15
New Jersey.....................................................    146    174    243    267    302    318      8
New Mexico.....................................................    113    130    184    206    229    238     31
New York.......................................................    236    258    318    339    391    414      3
North Carolina.................................................    111    132    185    209    239    256     25
North Dakota...................................................     96    106    168    184    224    242     29
Ohio...........................................................    133    147    199    213    242    257     23
Oklahoma.......................................................    103    113    149    160    177    186     48
Oregon.........................................................    144    171    215    233    250    261     21
Pennsylvania...................................................    152    169    234    256    301    317      9
Rhode Island...................................................    160    194    248    277    328    365      6
South Carolina.................................................     93    114    161    177    212    227     36
South Dakota...................................................     81     90    143    154    187    203     44
Tennessee......................................................    119    139    189    210    247    265     19
Texas..........................................................    117    135    174    188    206    222     38
Utah...........................................................    138    155    185    200    216    221     40
Vermont........................................................    187    207    268    288    316    349      7
Virginia.......................................................    125    149    214    233    253    265     18
Washington.....................................................    149    168    223    241    259    268     16
West Virginia..................................................    104    124    171    183    216    235     33
Wisconsin......................................................    120    137    188    207    239    251     26
Wyoming........................................................    101    108    140    156    176    196     46
                                                                ------------------------------------------------
    United States \1\..........................................    148    169    220    237    264    280  .....
----------------------------------------------------------------------------------------------------------------
\1\ The ratios are for non-Federal physicians per 100,000 civilian population. Excludes counts of physicians in
  U.S. possessions and with unknown addresses.

 Source: American Medical Association (2000).

Association also reports that the number of applicants to 
medical school declined for the second consecutive year, from 
43,020 in 1997 to 41,004 in 1998. Developments that have a 
potential impact on the supply, demand, and training of 
physicians in the coming years include an increasingly 
competitive marketplace for health services, provisions in the 
1997 Balanced Budget Act; expanded State graduate medical 
education financing activities, the growth in the supply of 
nonphysician clinicians, and new graduate medical education 
policies at the Department of Veterans Affairs.
    Questions also remain as to whether there are too many 
specialists and too few primary care physicians to meet the 
Nation's future health care needs. Concerned that shortages of 
generalist physicians were limiting access to basic medical 
services in many areas of the country, COGME, the Physician 
Payment Review Commission, the Macy Foundation, and the PEW 
Commission recommended in earlier reports that the proportion 
of generalist physicians should be significantly increased. 
Three of the four entities recommend an increase to a 50 : 50 
ratio of generalists to specialists (Traxler, 2000). In March 
1999, COGME's Fourteenth Report indicated that ``significant 
progress'' had been made in increasing the number of physicians 
entering generalist specialities. The percent of U.S. medical 
school graduates in the National Residency Match Program 
selecting generalist specialties increased from 44 percent in 
1991 to 56 percent in 1997. In 1998, about 40 percent of 
physicians were in primary care specialties and subspecialties, 
defined as general and family practice, internal medicine, 
obstetrics/gynecology, and pediatrics (table C-21 for number of 
physicians by specialty).
    The American Medical Association's Annual Survey of 
Graduate Medical Education Programs for 1998-99, however, 
reports a stop in the growth of resident enrollment in primary 
care specialties for the first time in several years (JAMA, 
1999). Data from the 2000 National Resident Matching Program 
also indicate that for the third straight year, fewer U.S. 
medical school seniors chose primary care residency positions 
in family practice, pediatrics, internal medicine and 
obstetrics and gynecology (Greene, 2000).
    Though it remains to be seen whether the primary care 
specialties will resume their growth, according to Medical 
Economics


                                      TABLE C-21.--PHYSICIANS: TOTAL AND BY SPECIALTY, PERCENT DISTRIBUTION, AND PERCENT GROWTH, 1970, 1980, 1990, AND 1998
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       1970                    1980                    1990                    1998                     Percent change
                                                             -----------------------------------------------------------------------------------------------------------------------------------
                          Specialty                                        Percent                 Percent                 Percent                 Percent
                                                                Total   distribution    Total   distribution    Total   distribution    Total   distribution  1970-80  1980-90  1990-98  1970-98
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Aerospace medicine..........................................     1,188         0.4         587         0.1         687         0.1         532         0.1      -50.6     17.0    -22.5    -55.2
Allergy/immunology..........................................     1,719         0.5       1,518         0.3       3,388         0.6       3,833         0.5      -11.7    123.2     13.1    123.0
Anesthesiology..............................................    10,860         3.3      15,958         3.4      25,981         4.2      33,947         4.4       46.9     62.8     30.7    212.6
Cardiovascular diseases.....................................     6,476         1.9       9,823         2.1      15,862         2.6      19,623         2.5       51.7     61.5     23.7    203.0
Child psychiatry............................................     2,090         0.6       3,217         0.7       4,343         0.7       5,756         0.7       56.5     32.8     32.5    175.4
Colon/rectal surgery........................................       667         0.2         719         0.2         882         0.1       1,049         0.1        7.8     22.7     18.9     57.3
Dermatology.................................................     4,003         1.2       5,660         1.2       7,557         1.2       9,239         1.2       41.4     33.5     22.2    130.8
Diagnostic radiology........................................     1,968         0.6       7,048         1.5      15,412         2.5      20,491         2.6      258.1    118.7     32.9    941.2
Emergency medicine \1\......................................         0       (\1\)       5,699         1.2      14,243         2.3      21,233         2.7      (\1\)    149.9     49.1    (\1\)
Family practice \2\.........................................         0       (\2\)      27,530         5.9      47,639         7.7      66,900         8.6      (\2\)     73.0     40.4    (\2\)
Forensic pathology..........................................       200         0.1         240         0.1         414         0.1         529         0.1       20.0     72.5     27.7    164.5
Gastroenterology............................................     2,010         0.6       4,046         0.9       7,493         1.2       9,903         1.3      101.3     85.2     32.2    392.7
General practice............................................    57,948        17.3      32,519         7.0      22,841         3.7      16,385         2.1      -43.9    -29.8    -28.3    -71.7
General preventive medicine.................................       804         0.2         810         0.2       1,036         0.2       1,688         0.2        0.7     27.9     62.9    109.9
General surgery.............................................    29,761         8.9      34,034         7.3      38,376         6.2      40,448         5.2       14.4     12.8      5.4     35.9
Internal medicine...........................................    41,872        12.5      71,531        15.3      98,349        16.0     127,574        16.4       70.8     37.5     29.7    204.7
Medical genetics \3\........................................         0       (\3\)           0       (\3\)           0       (\3\)         290         0.1      (\3\)    (\3\)     62.0    (\3\)
Neurology...................................................     3,074         0.9       5,685         1.2       9,237         1.5      12,061         1.6       84.9     62.5     30.6    292.3
Neurological surgery........................................     2,578         0.8       3,341         0.7       4,358         0.7       4,964         0.6       29.6     30.4     13.9     92.5
Nuclear medicine \1\........................................         0       (\1\)           0       (\1\)       1,340         0.2       1,415         0.2      (\1\)    (\1\)      5.6    (\1\)
Obstetrics/gynecology.......................................    18,876         5.7      26,305         5.6      33,697         5.5      39,512         5.1       39.4     28.1     17.2    109.3
Occupational medicine.......................................     2,713         0.8       2,358         0.5       2,744         0.4       3,017         0.4      -13.1     16.4      9.9     11.2
Ophthalmology...............................................     9,927         3.0      12,974         2.8      16,073         2.6      18,035         2.3       30.7     20.8     12.2     81.7
Orthopedic surgery..........................................     9,620         2.9      13,996         3.0      19,138         3.1      23,178         3.4       45.5     36.7     21.1    140.9
Otolaryngology..............................................     5,409         1.6       6,553         1.4       8,138         1.3       9,255         1.2       21.1     24.2     13.7     71.1
Pathology-anatomic/clin.....................................    10,283         3.1      13,402         2.9      16,170         2.6      18,046         2.3       30.3     20.7     11.6     75.5
Pediatrics..................................................    18,332         5.5      28,803         6.2      40,893         6.6      57,038         7.3       57.1     42.0     39.5    211.1
Pediatric cardiology........................................       487         0.1         659         0.1       1,006         0.2       1,371         0.2       35.3     52.7     36.3    181.5
Physical medicine/rehabilitation............................     1,479         0.4       2,146         0.5       4,105         0.7       6,027         0.8       45.1     91.3     46.8    307.5
Plastic surgery.............................................     1,600         0.5       2,980         0.6       4,590         0.7       6,095         0.8       86.3     54.0     32.8    280.9
Psychiatry..................................................    21,146         6.3      27,481         5.9      35,163         5.7      39,494         5.0       30.0     28.0     12.3     86.8
Public health...............................................     3,029         0.9       2,316         0.5       2,015         0.3       1,641         0.2      -23.5    -13.0    -18.6    -45.8
Pulmonary diseases..........................................     2,315         0.7       3,715         0.8       6,080         1.0       7,810         1.0       60.5     63.7     28.4    237.4
Radiology...................................................    10,524         3.2      11,653         2.5       8,492         1.4       8,272         1.1       10.7    -27.1     -2.6    -21.4
Radiation oncology..........................................       868         0.3       1,581         0.3       2,821         0.5       3,676         0.5       82.1     78.4     30.3    323.5
Thoracic surgery............................................     1,809         0.5       2,133         0.5       2,063         0.3         443         0.1       17.9     -3.3    -78.5    -75.5
Urological surgery..........................................     5,795         1.7       7,743         1.7       9,372         1.5      10,168         1.3       33.6     21.0      8.5     75.4
Other specialty.............................................     6,929         2.1       5,810         1.2       7,254         1.2       6,068         0.8      -16.1     24.9    -16.3    -12.4
Unspecified.................................................    12,486         3.7      12,289         2.6       8,058         1.3       9,994         1.3       -1.6    -34.4    -24.0    -19.9
Inactive....................................................    19,621         5.9      25,744         5.5      52,653         8.6      69,889         9.0       31.2    104.5     32.7    256.2
Not classified \4\..........................................         0       (\4\)      20,629         4.4      12,678         2.1      40,032         5.1      (\4\)    -38.5    215.8    (\4\)
Address unknown.............................................     3,204         1.0       6,390         1.4       2,780         0.5         938         0.1       99.4    -56.5    -66.2    -70.7
                                                             -----------------------------------------------------------------------------------------------------------------------------------
    Total physicians........................................   334,028       100.0     467,679       100.0     615,421       100.0     777,859       100.0       40.0     31.6     26.4    132.9
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Data were not available for emergency medicine prior to 1980 and nuclear medicine prior to 1985.
\2\ Data on family practice were not available prior to 1975.
\3\ Data on medical genetics were not available prior to 1994.
\4\ Not classified was established in 1970 but complete data were not available until 1972.

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

 Source: American Medical Association (2000).

(Terry, 1999a), some U.S. health care markets are becoming 
saturated with primary care doctors. The demand for specialist 
services under managed care is also increasing due to the 
growth of point-of-service plans and the expansion of patient 
rights as consumers push for greater access.
    In 1998, there were 97,383 residents in training. This 
figure, which had leveled off over the last several years, 
decreased in 1998 by 760 from the previous year. The number of 
U.S. medical school graduates, which rose rapidly in the late 
1960s and early 1970s, has been relatively stable since 1980 
(table C-22).

  TABLE C-22.--MEDICAL SCHOOL GRADUATES, FIRST-YEAR RESIDENTS AND TOTAL
                           RESIDENTS, 1965-98
------------------------------------------------------------------------
                                          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...................................         NA     14,258     56,872
1977...................................     13,607     15,900     59,000
1978...................................     14,393     16,800     63,163
1979...................................     14,966     17,600     64,615
1980...................................     15,135     18,702     61,465
1981...................................     15,667     18,389     69,738
1982...................................     15,985     18,976     69,142
1983...................................     15,824     18,794     73,000
1984...................................     16,327     19,539     75,125
1985...................................     16,319     19,168     75,514
1986...................................     16,125     18,183     76,815
1987...................................     15,836     18,067     81,410
1988...................................     15,887     17,941     81,093
1989...................................     15,620     18,131     82,000
1990...................................     15,336     18,322     82,902
1991...................................     15,481     19,497     86,217
1992...................................     15,386     19,794     88,620
1993...................................     15,512     21,616     96,469
1994...................................     15,579     19,293     97,832
1995...................................     15,911     21,372     98,035
1996...................................     15,902     21,394     98,076
1997...................................     15,953     21,808     98,143
1998...................................     16,143     21,732    97,383
------------------------------------------------------------------------
NA--Not available.

 Source: American Medical Association (various years).

    International medical graduates (IMGs) comprised 17 percent 
of total physicians in 1970. By 1998, this had risen to 24 
percent of the total physician population (table C-19). The 
number of residency positions occupied by IMGs fluctuated over 
the period 1971-95. Due to stricter immigration laws and more 
rigorous competency requirements, IMGs dropped from 41 percent 
of all residents in 1971 to about 17 percent in 1985. Since 
then the number of IMGs in training in the United States has 
more than doubled, from 12,509 in 1985 to 25,531 in 1997 (26 
percent of all residents in training). In 1998, however, the 
total number of IMG residents decreased slightly (table C-23). 
Also, according to the American Medical Association, the number 
of IMGs entering graduate medical education has dropped 13.2 
percent since 1993. COGME predicts that a new examination 
effective July 1998, which tests IMGs for both clinical and 
spoken English language proficiency, may further reduce the 
number of IMGs applying for and entering residency training.

      TABLE C-23.--INTERNATIONAL MEDICAL GRADUATE RESIDENTS \1\ BY
                   CITIZENSHIP, SELECTED YEARS 1971-98
------------------------------------------------------------------------
                                          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
1996........................     24,703         25      3,817     20,886
1997........................     25,531         26      3,979     21,552
1998........................     25,415         26      4,350    21,065
------------------------------------------------------------------------
\1\ International medical graduates are defined by location of
  education.
\2\ Includes 6,192 permanent resident aliens.

 Source: American Medical Association (various years).

                    HEALTH INSURANCE STATUS IN 1998

    Most people have some form of health insurance. In 1998, an 
estimated 83.7 percent of the total noninstitutionalized 
population had public or private coverage during at least part 
of the year. However, an estimated 44.3 million Americans, or 
16.3 percent of the population, were without coverage in 1998. 
Almost all of the uninsured were under age 65; consequently, 
18.4 percent of the nonelderly population were uninsured. This 
section examines characteristics of both the insured and the 
uninsured populations in 1998, and reviews trends in health 
insurance coverage over the 1979-98 period (Smith, 1999).
    Estimates of health insurance coverage in 1998 are based on 
analysis of the March 1999 Current Population Survey (CPS), a 
household survey by the Department of Commerce's Census Bureau. 
Each year's March CPS asks whether individuals had coverage 
from selected sources of health insurance at any time during 
the preceding calendar year. Thus, the March 1999 CPS reflects 
respondents' recollections of coverage during all of 1998. \1\
---------------------------------------------------------------------------
    \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-24 provides a breakdown of health insurance 
coverage by type of insurance and age. In 1998, young adults 
ages 19 to 24 were the least likely to have health insurance. 
While 56 percent of this group were covered under an 
employment-based plan, almost one-third (32 percent) had no 
health insurance. These young adults comprised 8 percent of the 
U.S. population, but 16 percent of the uninsured population. 
These individuals are often too old to be covered as dependents 
on their parents' policies, and as entry-level workers they do 
not have strong ties to the work force; some may choose to 
remain uninsured and spend their money on other items. After 
age 25, the percentage of people with health insurance 
increases. Of those age 65 and older, 96 percent were covered 
by Medicare and/or Medicaid, and 1 percent were uninsured. The 
remainder of this section focuses on the population under age 
65.

                    TABLE C-24.--HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND AGE, 1998
----------------------------------------------------------------------------------------------------------------
                                                             Type of insurance \1\  (in percent)
                                 Population --------------------------------------------------------------------
              Age                    (in                 Medicare
                                  millions)  Employment   and/or    Private  Military \3\     Other    Uninsured
                                              based \2\  Medicaid  nongroup                public \4\
----------------------------------------------------------------------------------------------------------------
Under 5........................       19.6        60.5       23.9      4.5         3.1           1.3       15.4
5-18...........................       56.4        65.8       17.1      5.3         3.1           1.0       15.7
19-24..........................       22.0        55.6        9.3      5.9         3.0           0.6       31.7
25-34..........................       38.5        66.0        6.6      5.3         2.6           0.4       23.7
35-54..........................       80.0        73.6        6.5      7.2         3.1           0.4       15.7
55-61..........................       16.9        68.8       10.4     11.0         4.7           0.4       14.9
62-64..........................        6.0        61.4       18.0     13.9         4.8           0.5       15.2
65 and older...................       32.4        34.9       96.0     31.8         3.7           1.2        1.1
                                --------------------------------------------------------------------------------
      Total....................      271.7        63.3       21.4      9.6         3.2           0.7       16.3
----------------------------------------------------------------------------------------------------------------
\1\ People may have more than one source of health insurance; percentages may total to more than 100.
\2\ Group health insurance through employer or union.
\3\ Military health care or veterans coverage.
\4\ State programs for low-income individuals.

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

Other demographic characteristics
    Table C-25 shows the rate of health insurance coverage by 
type of insurance and selected demographic characteristics--
race, family type, region, poverty level, and citizenship--for 
people under age 65. In 1998 whites were most likely to have 
health insurance (86 percent) while Hispanics were least likely 
(63 percent). Hispanics


TABLE C-25.--HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND DEMOGRAPHIC CHARACTERISTICS FOR PEOPLE UNDER AGE
                                                    65, 1998
----------------------------------------------------------------------------------------------------------------
                                                                           Type of insurance (percent) \1\
                                                        Population ---------------------------------------------
                                                            (in                  Medicaid
                                                         millions)  Employment      or      Other \3\  Uninsured
                                                                     based \2\   Medicare
----------------------------------------------------------------------------------------------------------------
Race/ethnicity:
    White.............................................       166.0        74.5         7.6      11.2        13.7
    Black.............................................        31.5        52.5        24.1       8.2        23.8
    Hispanic..........................................        30.0        44.2        17.8       5.0        37.0
    Other.............................................        11.9        62.1        12.3      11.1        22.0
Family type:
    Female-headed with children.......................        29.7        42.8        36.2       6.6        22.5
    Male- or two-parent-headed with children..........       116.1        74.0         8.0       9.9        14.9
    No children.......................................        93.5        66.4         7.4      11.3        21.4
Region:
    Northeast.........................................        45.3        69.2        12.5       8.3        15.8
    Midwest...........................................        55.8        73.8        10.0       8.8        13.7
    South.............................................        82.9        64.8        11.1      11.2        20.6
    West..............................................        55.4        62.4        11.8      11.1        21.7
Poverty level: \4\
    <1.0 of poverty...................................        31.8        20.7        42.7       7.5        35.8
    1.0-1.49 of poverty...............................        19.5        38.4        24.6       9.9        34.9
    1.5-1.99 of poverty...............................        20.7        55.3        13.6      11.2        27.5
    2.0+ of poverty...................................       167.3        80.8         3.4      10.4        12.0
Citizenship:
    Native............................................       215.9        69.1        11.5      10.2        16.2
    Naturalized.......................................         7.9        63.0         7.8      11.3        23.5
    Noncitizens.......................................        15.6        42.3         9.4       6.8        45.1
                                                       ---------------------------------------------------------
      Total...........................................       239.3        67.2        11.3      10.0       18.4
----------------------------------------------------------------------------------------------------------------
\1\ People may have more than one source of health insurance; percentages may total to more than 100.
\2\ Group health insurance through employer or union.
\3\ Private nongroup health insurance, veterans coverage, military health care or other government coverage.
\4\ In 1998, the weighted average poverty threshold for a family of four was $16,660.

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

comprised 13 percent of the under 65 population, but were 25 
percent of the uninsured population; comparable numbers for 
blacks were 13 percent and 17 percent, respectively. The rate 
of employment-based health coverage was highest among whites 
(75 percent) and the rate of Medicaid/Medicare coverage was 
highest for blacks (24 percent). \2\
---------------------------------------------------------------------------
    \2\ Medicaid covered 10 percent of the nonelderly population and 
Medicare covered less than 2 percent. About 22 percent of blacks had 
Medicaid coverage.
---------------------------------------------------------------------------
    People in male-headed or two-parent families with children 
were most likely to be insured (85 percent), followed by those 
in families with no children (79 percent) and those in female-
headed families with children (78 percent). While the rates of 
coverage were similar for male-present (one- or two-parent) and 
female-headed (single-parent) families with children, the 
sources of coverage were quite different: coverage was 
employment based for 74 percent of male-present families 
compared to 43 percent of female-headed families, while 
coverage came from Medicaid/Medicare for 8 percent of male-
present families compared to 36 percent of female-headed 
families.
    People living in the Midwest were more likely to have 
insurance (86 percent) than people in the Northeast (84 
percent), West (78 percent), and South (79 percent). About 70 
percent of those living in the Northeast and Midwest had 
employment-based health insurance compared to about 63 percent 
in the South and West.
    Among individuals with incomes at least two times the 
poverty level, 88 percent had health insurance compared to 64 
percent of the poor (i.e., those with incomes less than the 
poverty level). The poor accounted for 13 percent of the under 
65 population, but were 26 percent of the uninsured. Only 21 
percent of the poor received health coverage through 
employment, while 43 percent had either Medicaid or Medicare 
coverage. Over 80 percent of people with incomes at least two 
times the poverty level were covered through an employer, and 3 
percent had Medicaid or Medicare coverage.
    Among people born with U.S. citizenship (i.e., natives), 84 
percent had health insurance compared to 55 percent of 
noncitizens. Noncitizens accounted for 7 percent of the 
population under 65, but were 16 percent of the uninsured. 
About 42 percent of noncitizens were covered through 
employment, compared to about two-thirds of citizens.
Employment characteristics
    Table C-26 shows the rate of health insurance coverage by 
employment characteristics for people under age 65 who were 
workers or their dependents. In 1998, the rate of employment-
based health insurance coverage generally increased as firm 
size increased. Among workers and dependents of workers in 
large firms (1,000 or more employees), 90 percent were insured 
compared to 70 percent in small firms (under 10 employees). 
People in small firms accounted for 16 percent of the under 65 
population but 27 percent of the uninsured. Insurance coverage 
varied according to industry as well. Agriculture and personal 
services had the highest proportion of uninsured workers and 
dependents--over 30 percent. Employment-based coverage was most 
likely for workers and dependents in public administration, 
finance/insurance, mining, and manufacturing of durable goods. 
Among workers, 85 percent of those employed full time, full 
year had health insurance and it was most often obtained 
through their own employment (68 percent); their dependents had 
comparable levels of coverage. Workers with part-


     TABLE C-26.--HEALTH INSURANCE COVERAGE BY EMPLOYMENT CHARACTERISTICS \1\ FOR PEOPLE UNDER AGE 65, 1998
----------------------------------------------------------------------------------------------------------------
                                                                           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............................................        39.3        17.2        31.6      26.4        30.2
  10-24...............................................        18.2        27.8        33.6      19.2        24.9
  25-99...............................................        27.5        34.7        36.7      14.8        18.9
  100-499.............................................        30.6        40.7        36.2      14.3        14.5
  500-999.............................................        12.2        44.3        38.2      13.0        11.2
  1,000+..............................................        85.9        42.9        39.9      14.1        10.0
Industry: \5\
  Agriculture.........................................         5.6        15.2        26.5      30.0        33.1
  Mining..............................................         1.3        38.3        45.5       8.6        12.9
  Construction........................................        16.5        24.2        34.6      16.5        29.1
  Durable goods.......................................        23.9        41.2        44.3      10.7         9.8
  Nondurable goods....................................        14.2        39.3        40.0      11.0        14.6
  Transportation......................................        17.0        39.8        41.6      11.5        13.0
  Wholesale trade.....................................         9.1        36.1        42.7      12.5        14.1
  Retail trade........................................        31.0        27.1        29.9      21.2        26.8
  Finance/insurance...................................        13.5        42.1        40.6      12.3        10.2
  Business services...................................        14.7        28.8        33.2      21.1        22.3
  Personal services...................................         5.8        21.9        25.3      27.5        30.9
  Entertainment.......................................         3.3        34.0        30.8      20.6        21.3
  Professional services...............................        45.5        42.3        36.8      16.3        11.3
  Public administration...............................        12.2        43.1        39.0      26.7         5.3
Labor force attachment of
    workers:
  Full time, full year................................        94.2        67.8        12.0      10.3        14.9
  Part time, full year................................         7.3        38.4        16.2      23.4        27.8
  Full time, part year................................        15.6        50.0         8.5      19.2        28.8
  Part time, part year................................         6.4        25.1        16.2      31.6        34.0
Labor force attachment of workers' dependents: \1\
  Full time, full year................................        76.2         0.0        76.3      17.3        13.3
  Part time, full year................................         3.2         0.0        41.9      40.4        24.7
  Full time, part year................................         8.6         0.0        43.6      42.9        22.1
  Part time, part year................................         2.2         0.0        24.0      63.6        21.3
Not in labor force....................................        25.7    \6\ 13.1    \6\ 10.8      51.2        30.9
                                                       ---------------------------------------------------------
      Total...........................................       239.3        33.2        34.0      20.5       18.4
----------------------------------------------------------------------------------------------------------------
\1\ For dependents, employment characteristics are for the person providing dependent coverage under employment-
  based or private insurance. If other coverage, characteristics are from the head of household or spouse if
  head is not employed.
\2\ People may have more than one source of health insurance.
\3\ Group health insurance through employer or union.
\4\ Medicare, Medicaid, private nongroup health insurance, veterans coverage, and other government coverage.
\5\ For persons who worked and their dependents.
\6\ Person was retired, disabled, or answered questions inconsistently.

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

time, part-year employment had an insured rate of 66 percent. 
Workers who worked less than full time, full year and their 
dependents represented 18 percent of the population, but 27 
percent of the uninsured, while nonworkers were 11 percent of 
the population and 18 percent of the uninsured.

        Characteristics of the Uninsured Population Under Age 65

    As reported above, people who lack health insurance differ 
from the population as a whole: they are more likely to be 
poor, young adults, Hispanic, and work for small firms. Chart 
C-2 illustrates selected characteristics of the uninsured 
population under age 65 in 1998--age, race, poverty level, 
citizenship, firm size, and labor force ties. Over one-fourth 
(27 percent) of the uninsured were under age 19, and 52 percent 
were white. A large proportion (46 percent) had incomes two or 
more times the poverty level, while 26 percent were poor. 
Almost 80 percent were native citizens and 27 percent worked or 
were dependents of workers in small firms (one to nine 
employees). Over half (55 percent) were full-time, full-year 
workers or their dependents, 27 percent had less than full time 
attachment to the labor force, and 18 percent had no labor 
force ties.


 CHART C-2. CHARACTERISTICS OF THE UNINSURED POPULATION UNDER AGE 65, 
                                  1998


    Note._Totals may not equal sum of rounded components.

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


                  Trends in Health Insurance Coverage

    Trends in coverage by type of insurance for the 
noninstitutionalized U.S. population under age 65 are shown in 
table C-27. Data for 1980 are not available because the CPS 
omitted some health insurance questions for that year. Changes 
in the CPS questionnaire, on which these rates are based, 
preclude direct comparisons between three time periods: 1979-
86, 1987-93, and 1994-98.\3\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    Between 1979 and 1986, the percent covered by all forms of 
health insurance decreased, with a decrease of 3 percentage 
points between 1979 and 1984 and a slight increase between 1984 
and 1986, but not to levels shown previously. Between 1979 and 
1986, the percent of the population insured by government 
programs remained roughly stable, and the percents with 
employment-based and other coverage steadily declined. Between 
1987 and 1993, the percent covered also declined by about 3 
percentage points, from about 86 percent to 83 percent. During 
this period, the percent with employment-based coverage 
continued to decline steadily, the percent with Medicare or 
Medicaid increased, the percent with other types of coverage 
declined and then rose to about where it was in 1987, and the 
percent uninsured continued to steadily increase. Since 1993 
the percent covered has declined from 83 percent to 82 percent. 
The large changes between 1993 and 1994 in employment-based and 
other coverage, which includes private nongroup coverage, 
appear to be a function of changes in the CPS questionnaire.
    Differences in coverage between 1986 and 1987, and between 
1993 and 1994, are a function both of changes in the CPS 
questionnaire and actual changes in coverage. Assuming that all 
differences between 1986 and 1987, and between 1993 and 1994, 
are due to questionnaire changes and no changes in coverage 
patterns occurred during these transition periods, we can 
estimate trends from 1979 to 1998. Over this period, the 
percent with employment-based coverage decreased by about 7 
percentage points. From 1979 through 1986, the percent with 
employment-based coverage declined by 2.6 percent points, from 
68.6 to 66.0 percent. From 1987 through 1993, the decline was 
6.2 percentage points. If we assume no change in insurance 
coverages from 1986 to 1987, and from 1993 to 1994, the total 
decline from 1979 to 1994 was 8.8 percentage points (i.e., 2.6 
percentage points plus 6.2 percentage points). The percent with 
employment-based coverage increased by 1.9 percentage points 
between 1994 and 1998, from 65.3 to 67.2 percent for a total 
decrease of about 7 percentage points (i.e., -8.8 + 1.9) from 
1979 to 1998. Note that the decreases in coverage do not equal 
the increases in uninsured because some individuals had more 
than one type of coverage. Similarly, over the 1979-98 period,


                TABLE C-27.--HEALTH INSURANCE COVERAGE FOR THE NONINSTITUTIONALIZED U.S. POPULATION UNDER 65, SELECTED YEARS 1979-98 \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
1983...........................................     134,908     65.7      18,501      9.0      30,505     14.9      34,796     17.0     205,322    100.0
1985...........................................     137,461     65.7      18,711      8.9      29,924     14.3      36,741     17.6     209,272    100.0
1987 \1\.......................................     143,497     67.5      19,919      9.4      25,957     12.2      30,673     14.4     212,495    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 \1\.......................................     140,439     61.3      31,398     13.7      27,706     12.1      39,349     17.2     228,973    100.0
1994 \1\.......................................     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
1996...........................................     153,924     65.5      31,143     13.3      18,636      7.9      41,379     17.6     234,915    100.0
1997...........................................     157,079     66.3      27,822     11.7      24,516     10.3      43,115     18.2     237,011    100.0
1998...........................................     160,773     67.2      26,945     11.3      24,035     10.0      43,923     18.4     239,348   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.

the percent with Medicaid or Medicare increased by about 3 
percentage points, the percent with other types of coverage 
declined by about 2 percentage points, and the percent 
uninsured increased by approximately 7 percentage points.

UNCOMPENSATED CARE COSTS IN PROSPECTIVE PAYMENT SYSTEM (PPS) HOSPITALS, 
                                1980-98

    Uncompensated care is a term used to describe services 
provided to patients who are unable or unwilling to pay. It 
includes charity care and bad debts. Charity care is care for 
which no payment is expected. Bad debts are charges not paid by 
uninsured individuals, including copayments not paid by insured 
individuals. For this analysis, hospital charges have been 
adjusted to reflect the cost of care that was provided but not 
paid for.
    Public hospitals and some private institutions receive 
government operating subsidies that at least partially offset 
their uncompensated care costs. These subsidies are not always 
directed specifically toward charity care, but they nonetheless 
serve to lessen the burden of a high charity care load. This 
analysis examines uncompensated care both before and net of 
government subsidies.
     The financial burden of uncompensated care increased 
substantially in the first half of the 1980s, as shown in table 
C-28. Between 1980 and 1986, uncompensated care costs before 
government subsidies grew at an annual rate of 14.7 percent, 
rising from $3.9 billion to $8.9 billion. Between 1986 and 
1992, uncompensated care costs had grown at an annual rate of 
8.9 percent, to $14.9 billion. Since 1992, the growth trend has 
declined; uncompensated care rose at 5.4 percent per year until 
1995 and then at 2.9 percent from 1995 to 1998. By 1998, 
uncompensated care costs (before government subsidies) in 
community hospitals equaled $19 billion. Over this same time 
period, government operating subsidies for uncompensated care 
grew at a much slower rate. Since 1995, the amount of operating 
subsidies has declined absolutely, from 3.1 billion to 2.5 
billion in 1998. In 1980, the proportion of uncompensated care 
costs offset by State and local government operating subsidies 
was 27.8 percent. By 1986, that proportion had fallen to 22.3 
percent, and by 1993 subsidies to community hospitals equaled 
only 19.5 percent. Subsidies fell sharply since then, covering 
18.0 percent of uncompensated care costs in 1995 and only 13.2 
percent of those costs in 1998. In that year, uncompensated 
care losses--that is, costs net of government subsidies--
totaled $16.5 billion.
    These trends are reflected in chart C-3, which compares 
uncompensated care costs to total hospital expenses in each 
year. In 1980, 5.5 percent of the resources expended by 
community hospitals were for patients who could not or would 
not pay for their care. After accounting for government 
subsidies, the uncompensated care burden was 3.9 percent. By 
1986, uncompensated care costs hit their peak of 6.4 percent of 
total expenses, and uncompensated care losses rose to 4.9 
percent. Throughout the 1990s, uncompensated care costs were 
just over 6 percent of total expenses, while uncompensated care 
losses increased to just over 5 percent of total expenses.

                   TABLE C-28.--COMMUNITY HOSPITAL UNCOMPENSATED CARE COSTS AND GOVERNMENT OPERATING SUBSIDIES, SELECTED YEARS 1980-98
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Amount (billions)                           Average annual percent change
                                                     ---------------------------------------------------------------------------------------------------
                                                       1980    1986    1992    1993    1995    1996    1997    1998   1980-86  1986-92  1992-95  1995-98
--------------------------------------------------------------------------------------------------------------------------------------------------------
Uncompensated care costs before government subsidies    $3.9    $8.9   $14.9   $15.9   $17.5   $18.0   $18.5   $19.0     14.7      8.9      5.4      2.9
Government operating subsidies \1\..................     1.1     2.0     2.8     3.1     3.1     3.1     2.6     2.5     10.5      6.0      3.7     -7.2
Uncompensated care costs net of government subsidies     2.8     6.9    12.1    12.8    14.3    14.9    15.8    16.5     16.1      9.7      5.8      4.9
Proportion of uncompensated care costs covered by       27.8    22.3    18.9    19.5    18.0    17.3    14.2   13.2
 government subsidies (in percent)..................
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Government operating subsidies include all subsidies from State and local government, up to total uncompensated care costs at each hospital.

 Note.--Totals may not equal sum of rounded components.

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

   CHART C-3. UNCOMPENSATED CARE AS A PERCENTAGE OF TOTAL COMMUNITY 
                      HOSPITAL EXPENSES, 1980-98 


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

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


    The burden of uncompensated care is borne by hospitals in 
every group, but some types of hospitals devote a higher 
percentage of their resources than others to this care (table 
C-29). Hospitals in urban areas had uncompensated care costs 
equal to 6.3 percent of their total expenses in 1998, compared 
with 5.2 percent for rural hospitals. However, urban hospitals 
also receive the bulk of subsidies from State and local 
governments. Urban hospitals' uncompensated care losses are 5.4 
percent which is still higher than those in rural hospitals at 
4.8 percent, but the differential has narrowed.
    Among major teaching hospitals (those with at least 0.25 
residents per bed), there is a sharp difference between those 
that are public and those that are privately owned: Public 
major teaching hospitals in 1998 devoted 18.8 percent of their 
resources to patients who could not or would not pay, and 
sustained losses on these patients equal to 12 percent of their 
total costs. This compares to private major teaching hospitals 
which devoted 5.1 percent of their resources to uncompensated 
care and sustained losses equal to 5 percent of their total 
costs. Public teaching hospitals with fewer residents per bed 
devoted 10.7 percent of their resources to patients who could 
not or would not pay and sustained losses equal to 8 percent of 
their total costs.
    Uncompensated care costs and losses are highly concentrated 
among a relatively small group of hospitals, particularly in 
urban areas: Urban government hospitals devoted 14.6 percent of 
their resources to uncompensated care and sustained losses on 
nonpaying patients equal to 9.8 percent of their total costs. 
Urban proprietary hospitals provide the least care to nonpaying 
patients, only 4 percent of their total costs.

TABLE C-29.--COMMUNITY HOSPITAL UNCOMPENSATED CARE COSTS AS A PROPORTION
                 OF TOTAL COSTS, BY HOSPITAL GROUP, 1998
                              [In percent]
------------------------------------------------------------------------
                                      Uncompensated      Uncompensated
                                       care costs,      care costs, net
          Hospital group            before government    of government
                                        subsidies          subsidies
------------------------------------------------------------------------
Urban.............................            6.3                5.4
Rural.............................            5.2                4.8

Major teaching, public............           18.8               12.0
Major teaching, private...........            5.1                5.0
Other teaching, public............           10.7                8.0
Other teaching, private...........            4.2                4.2
Nonteaching, public...............            6.3                5.1
Nonteaching, private..............            4.6                4.5

Urban voluntary...................            4.6                4.5
Urban proprietary.................            4.1                4.0
Urban government..................           14.6                9.8
Rural voluntary...................            4.9                4.8
Rural proprietary.................            5.2                5.2
Rural government..................            5.8                4.7
                                   -------------------------------------
    All hospitals.................            6.0                5.2
------------------------------------------------------------------------
Note.--Government operating subsidies include all subsidies from State
  and local government, up to total uncompensated care costs at each
  hospital.

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

                     INTERNATIONAL HEALTH SPENDING

    This section analyzes trends in health expenditures for the 
29 Organization for Economic Cooperation and Development (OECD) 
countries from 1970 to 1997. Table C-30 illustrates total 
health expenditures as a percentage of gross domestic product 
(GDP). In 1970, the mean percent of GDP spent on health care by 
25 reporting OECD countries was 5.0 percent with the United 
States being 46 percent higher than the average with 7.3 
percent. By 1995, the overall mean percent of GDP devoted to 
health expenditures had increased to 7.9 percent while U.S. 
health spending as a share of GDP had increased to 14.1 
percent. Over the next 2 years, the OECD average remained at 
7.8 percent while the U.S. figure was 14.1 percent in 1996 and 
13.9 percent in 1997.
    The second to the last column in table C-30 presents per 
capita health expenditures denominated in U.S. dollars. In 
1997, the United States spent $4,095 per capita on health 
compared to an OECD average of $1,615, calculated on a 
purchasing power parity basis. The last column illustrates 
public health expenditures as a percent of total health 
spending. This public percentage ranged from 45.5 in Korea and 
46.4 in the United States to 91.8 in Luxembourg. The OECD 
average was 74.1 percent.

  TABLE C-30.--TOTAL HEALTH EXPENDITURES AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT, PER CAPITA HEALTH SPENDING, AND PERCENTAGE OF MEDICAL EXPENDITURES
                                          COVERED BY PUBLIC OECD COUNTRIES FOR SELECTED CALENDAR YEARS 1970-97
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                          Per
                       Country                          1960    1965    1970    1975    1980    1985    1990    1995    1996    1997    capita   Percent
                                                                                                                                         1997     public
--------------------------------------------------------------------------------------------------------------------------------------------------------
Australia............................................     4.9     5.1     5.7     7.5     7.3     7.7     8.2     8.4     8.6     8.4    $1,909     66.7
Austria..............................................     4.3     4.6     5.3     7.2     7.7     6.7     7.2     8.0     8.0     8.3     1,905     73.0
Belgium..............................................     3.4     3.9     4.1     5.9     6.5     7.3     7.5     7.9     7.8     7.6     1,768     87.6
Canada...............................................     5.4     5.9     7.0     7.2     7.2     8.3     9.2     9.4     9.3     9.2     2,175     69.8
Czech Republic.......................................  ......  ......  ......  ......     3.8     4.5     5.4     7.5     7.2     7.2       943     91.7
Denmark..............................................     3.6  ......     5.9     6.3     9.3     8.7     8.3     8.1     8.1     8.0     2,042     83.8
Finland..............................................     3.9     4.9     5.7     6.4     6.5     7.3     8.0     7.7     7.8     7.4     1,525     76.0
France...............................................     4.2     5.2     5.8     7.0     7.6     8.5     8.9     9.8     9.8     9.6     2,047     74.2
Germany..............................................     4.8     5.1     6.3     8.8     8.8     9.3     8.7    10.4    10.8    10.7     2,364     77.1
Greece...............................................     3.1  ......     5.7  ......     6.6  ......     7.6     8.4     8.4     8.6     1,196     57.7
Hungary..............................................  ......  ......  ......  ......  ......  ......     6.1     7.0     6.6     6.5       642     69.1
Iceland..............................................     3.3     3.9     5.0     5.3     6.2     7.3     7.9     8.2     8.2     7.9     1,981     83.8
Ireland..............................................     3.8     4.2     5.3     7.7     8.7     7.9     6.7     7.0     6.4     6.3     1,293     76.7
Italy................................................     3.6     4.3     5.2     6.2     7.0     7.1     8.1     7.7     7.8     7.6     1,613     69.9
Japan................................................     3.0     4.5     4.6     5.6     6.5     6.7     6.1     7.2     7.1     7.2     1,760     79.9
Korea................................................  ......  ......     2.3     2.3     3.7     4.3     5.2     5.4     5.9     6.0       870     45.5
Luxembourg...........................................  ......  ......     3.7     5.1     6.2     6.1     6.6     6.7     6.8     7.0     2,303     91.8
Mexico...............................................  ......  ......  ......  ......  ......  ......     3.6     4.9     4.6     4.7       363     60.0
Netherlands..........................................     3.8     4.3     5.9     7.5     7.9     7.9     8.3     8.8     8.7     8.5     1,933     72.6
New Zealand..........................................     4.3  ......     5.2     6.7     6.0     5.3     7.0     7.3     7.3     7.6     1,357     77.3
Norway...............................................     2.9     3.5     4.5     6.0     7.0     6.7     7.8     8.0     7.8     7.5     2,017     82.2
Poland...............................................  ......  ......  ......  ......  ......  ......     4.4     4.5     4.9     5.2       386     90.4
Portugal.............................................  ......  ......     2.8     5.6     5.8     6.3     6.4     7.8     7.9     7.9     1,148     60.0
Spain................................................     1.5     2.6     3.7     4.9     5.6     5.7     6.9     7.3     7.4     7.4     1,183     76.1
Sweden...............................................     4.7     5.5     7.1     7.9     9.4     9.0     8.8     8.5     8.6     8.6     1,762     83.3
Switzerland..........................................     3.1     3.6     4.9     6.6     6.9     7.7     8.3     9.6    10.1    10.0     2,611     69.9
Turkey...............................................  ......  ......     2.4     2.7     3.3     2.2     3.6     3.3     3.8     4.0       259     72.8
United Kingdom.......................................     3.9     4.1     4.5     5.5     5.6     5.9     6.0     6.9     6.9     6.8     1,391     84.6
United States........................................     5.2     5.9     7.3     8.2     9.1    10.6    12.6    14.1    14.1    13.9     4,095     46.4
                                                      --------------------------------------------------------------------------------------------------
    OECD average.....................................  ......  ......     5.0  ......     6.8  ......     7.2     7.9     7.8     7.8     1,615    74.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: OECD Health Data 1999.

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