[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 2002 Health Insurance Coverage and Selected Population Characteristics Characteristics of the Uninsured Population Under Age 65 Trends in Health Insurance Coverage 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 $41.0 billion. After adjusting for inflation, this spending figure represented $188.7 billion, or $944 per capita in constant 2001 dollars. Health care expenditures increased substantially over the next 36 years. In 2001, the most recent year for which data are available, the Nation's health care bill was $1,424.5 billion, or $5,034 per capita (Tables C-1, C-2, and C-3). The average annual rate of increase in real (i.e., adjusted for inflation) per capita expenditures was 5.8 percent from 1985 to 1990. The rate decelerated to 3.5 percent for the period from 1990 to 1995, and decelerated further to 3.1 percent from 1995 to 2000. It has been argued that this relatively low rate of growth in health expenditures during the 1990s was due to the influence of managed care. However, in recent years, expenditures have grown at rates higher than the average rates experienced during the 1990s. Real per capita health expenditures grew 5.1 percent in 2001. Real per capita health spending is projected to grow at an average annual rate of 4.7 percent between 2001 and 2005, then decelerate to an average rate of 3.6 percent between 2005 and 2010 (Table C-3). TABLE C-1--NATIONAL HEALTH EXPENDITURES, AGGREGATE AMOUNTS FOR SELECTED CALENDAR YEARS 1965-2010 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE C-2--NATIONAL HEALTH EXPENDITURES IN CONSTANT 2001 DOLLARS, SELECTED CALENDAR YEARS 1965-2010 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE C-3--NATIONAL HEALTH EXPENDITURES: PER CAPITA AMOUNTS IN CONSANT 2001 DOLLARS AND AVERAGE ANNUAL PERCENTAGE INCREASES, SELECETED CALENDAR YEARS 1965-2010 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] The majority of health spending is for personal health care services that treat or prevent illness and disease in individuals. In 2001, 86.8 percent of all health spending ($1,236.4 billion) was for personal health care. The remaining 13.2 percent ($188.1 billion) was spent on health program administration; administrative costs and profits earned by private health insurers; public health activities; noncommercial health research; and construction of health facilities (Table C-1). A combination of factors can cause personal health care spending to increase: rising prices, population growth, increases in the quantity of medical services each person receives, advances in medical knowledge and technology, and other factors. Chart C-1 depicts the share of personal health care spending growth attributable to increases in medical care prices, increases in population, and increases in real per capita health expenditures (what some experts describe as the "intensity" of care). For much of the time period shown in Chart C-1, prices played a larger role in personal health spending increases than population or non-price factors (e.g., improved medical technology or higher utilization). During the late 1990s, medical care prices, constrained by managed care, grew at lower rates than in any other year shown. Price growth is projected to increase during the next decade, though not to the high levels experienced during the 1970s and 1980s. CHART C-1--FACTORS INFLUENCING GROWTH IN NOMINAL PERSONAL EHATLH CARE EXPENDITURES, 1965-2012 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Hospital care and physician services are the two largest categories of personal health care spending. In 2001, they accounted for 31.7 percent ($451.2 billion) and 22.0 percent ($313.6 billion), respectively, of total national health expenditures (Table C-1). Another major service area, prescription drugs, grew from 5.8 percent of all national health expenditures in 1990 to 9.9 percent in 2001. In real per capita terms, spending on prescription drugs increased 11.8 percent over 2000 levels, making this category of personal health care the fastest growing. It is projected to remain the fastest growing category of personal health care in the near future (Table C-3). Direct payments for personal health care come from five general sources: consumer payments out-of-pocket, payments by private insurance companies, Federal funds, State and local funds, and "other" private funds. Out-of-pocket payments include payments by those without health insurance. Out-of-pocket payments also include payments by the insured for deductibles, coinsurance, and costs not covered by insurance (excluding premiums). "Other" private funds consist mostly of philanthropic contributions to the health care system. Ultimately, all health care spending is paid for by individuals through direct payments, cost-sharing, insurance premiums, taxes, and charitable contributions. However, most of these payments are redistributed; what a person pays does not necessarily reflect how much health care that person receives. One who pays relatively high taxes might not have any of their health care financed by the government. Similarly, there are some people who pay health insurance premiums, yet use less care than the sum of the premiums paid. Only when individuals pay directly for the cost of treatment (either because they are uninsured or because they have not met their deductible) do personal expenditures directly reflect the amount of care received. Table C-4 shows the percent of personal health care spending attributable to each source. In 1965, 52.3 percent of all personal health care was financed out-of-pocket, whereas private insurance paid for 25.1 percent and the Federal government paid for 8.1 percent. In 2001, only 16.6 percent of personal health care was paid out-of- pocket while private insurance paid for 35.4 percent and the Federal government paid for 32.9 percent. Much of the increase in the Federal government's share of health spending occurred during the 1960s, when the Medicare and Medicaid programs were introduced. EXPENDITURES FOR HOSPITAL CARE Based on data from the Centers for Medicare and Medicaid Services (CMS), hospitals accounted for 31.7 percent of total national health expenditures in 2001, down from 41.3 percent in 1980. A different data source, the National Center for Health Statistics, provides expenses incurred by hospitals based on ownership structure (Table C-5). Total expenses for hospitals of all types reached $395.4 billion in 2000, up 6.0 percent from the previous year. This increase is higher than in recent years; expenses for hospitals of all types increased 3.9 percent in 1998 and 4.9 percent in 1999. However, the growth in 2000 is still lower than the average growth that occurred during the late 1970s TABLE C-4--PERSONAL HEALTH CARE EXPENDITURES, AGGREGATE AMOUNTS AND PERCENTAGE DISTRIBUTION, SELECTED CALENDAR YEARS 1965-2010 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE C-5-- HOSPITAL EXPENSES BY TYPE OF OWNERSHIP, SELECTED CALENDAR YEARS 1975-2000 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE C-6 -- NATIONAL EXPENDITURES ON HOSPITAL CARE BY SOURCE OF FUNDS, SELECTED CALENDAR YEARS 1965-2010 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] and the 1980s. From 1975 to 1980, hospital expenses grew at an average annual rate of 13.5 percent. From 1980 to 1985, hospital expenses grew at an average annual rate of 10.8 percent. From 1985 to 1990, hospital expenses grew at an average annual rate of 8.9 percent. Based on data from CMS, expenditures for hospital care are financed primarily by third parties, as shown in Table C-6. In 2001, private health insurers paid 33.7 percent of total hospital expenditures. Medicare financed 29.9 percent of hospital spending in 2001, and Medicaid (including both the Federal and State shares) financed 17.2 percent of hospital spending. The share financed by out-of-pocket payments from individuals was only 3.1 percent in 2001, down from 19.8 percent in 1965. TRENDS IN HOSPITAL UTILIZATION ADMISSIONS Hospital utilization in the United States has undergone major change in the past twenty years, greatly influenced by technology, health care policy, and population dynamics. During the 1970s, hospital admissions increased consistently and had reached highs of over 36 million in the early 1980s. With the introduction of Medicare's prospective payment system (PPS) in 1983, which encouraged more cost efficient treatment methods, admissions declined dramatically for several years, as shown in Table C-7. After 1987, total admissions continued to decrease, though more slowly, and reached a low of 30.7 million in 1994. Since 1994, hospital admissions again have increased each year, due in part to the growing health care needs of adults 65 and older. The largest increases, since 1999, also may be attributable to the weakening impact of managed care. Close to 34 million people were admitted to hospitals in 2001, a level roughly comparable to that of 1985. Another significant trend that has developed since the implementation of Medicare's PPS has been the increasing provision of health care services in more cost-effective outpatient settings favored by insurers. This has been made possible by scientific and technological advances which allowed surgical procedures to be completed safely in a shorter amount of time. Total outpatient visits more than doubled from 212 million in 1984 to 538 million in 2001, steadily growing by an average of over 5 percent each year (Table C-7). TABLE C-7-ANNUAL NUMBER AND CHANGE IN HOSPITAL ADMISSIONS, TOTAL OUTPATIENT VISITS, AND EMERGENCY DEPARTMENT VISITS, 1980-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Hospital emergency department visits also continued to rise steadily from 1984 to 1993, though at a slower rate of 2 to 3 percent (Table C-7). The 1986 Emergency Medical Treatment and Labor Act (EMTALA), which required emergency departments to perform a screening examination and treat or stabilize patients for transfer to another facility, may have influenced growth during this time frame. This was followed by several years (1994, 1996, 1997) of decline in total visits, perhaps due to restrictions by insurers. The Balanced Budget Act of 1997, however, required the Medicaid and Medicare programs to reimburse hospitals for emergency care that a reasonable person would consider necessary and many States passed laws with similar "prudent layperson" standards. Since then, hospital emergency department visits have increased by 14 percent from 93 million in 1997 to 106 million 2001. This number is expected to grow as hospital emergency departments are increasingly used as a "safety net" by persons without health insurance. AVERAGE LENGTH OF STAY Advances in medical technology and drug therapy contributed to a steady decrease in the average length of hospital stay from over 8 days in the late 1960s to 7.1 days in 1982. The implementation of the Medicare PPS system in 1983 caused the average stay to fall further to 6.5 days in 1985. The change was even greater for patients over 65, who saw a decline in length of stay from 10.1 in 1982 to 8.7 in 1985. In the latter part of the 1980s as outpatient visits increased, patients admitted to hospitals tended to be those with more severe illnesses which required longer hospital stays, and the average length of stay became more stable and even increased for those 65 or over. Beginning in the early 1990s, however, declines occurred which were even steeper than in the first years of PPS. The average length of stay in 2001 was at 4.9 for all ages, compared to 6.4 in 1990, a decrease of 23 percent. For persons over the age of 65, the average length of stay declined 33 percent from 8.7 days in 1990 to 5.8 days in 2001. Declines in the past ten years have been attributed to greater insurance coverage of post-acute care alternatives to hospitalization, an increase in managed care and other cost-containment programs, as well as continuing technological advances. TABLE C-8--AVERAGE LENGTH OF STAY AND ANNUAL CHANGE BY AGE GROUP, 1980-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] HOSPITAL OCCUPANCY Table C-9 shows that community hospital occupancy rates were over 70 percent in the early 1980s. The number of hospital beds was increasing and exceeded 1 million by 1981. Following the introduction of PPS, however, occupancy rates decreased dramatically. From 1983 to 1986, the aggregate occupancy rate fell from 73.5 percent to 64.3 percent. There was a slight increase in occupancy rates in the late 1980s, but even though the number of hospital beds had been steadily declining, a reduction in the average length of stay lowered the occupancy rate below 63 percent by 1993. Since 1997, there have been slight increases each year in hospital occupancy rates and in 2001 the nationwide rate was at 64.5 percent. During this same period of time, the number of community hospitals steadily declined from 5,830 in 1980 to 4,908 in 2001. With fewer hospitals and beds, the increasing occupancy rate is causing a struggle for some hospitals to cope with growth in patient admissions. TABLE C-9--NUMBER AND PERCENT CHANGE IN HOSPITALS, TOTAL BEDS, AND OCCUPANCY RATE, 1980 - 2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] HOSPITAL EMPLOYMENT Hospitals experienced a significant downturn in total employment levels at the time PPS was introduced, with the number of full-time equivalent hospital employees (FTEs) declining each year from 1983 to 1986 (Table C-10). Though variable, the number of FTEs increased by 2 to 3 percent through the late 1980s and early 1990s. After jumps of 4.2 percent in 1994 and 5.8 percent in 1995, the growth rate slowed. After reaching a low of 0.2 percent in 1999, it rose to 1.9 percent for both 2000 and 2001. In 2001, almost 4.0 million FTEs were employed in community hospitals. This slower rate of growth since 1996 is attributed to a response to managed care and steps taken by hospitals to assure greater efficiencies in the provision of care. There are concerns, however, that this decline in growth has occurred as the volume of admissions and outpatient visits have risen and the aging of our population puts increasing pressure on the health care delivery system. There are also questions about the quality of care that can continue to be provided by a registered nurse workforce which showed little sign of growth. RNs comprise 24 percent of the workforce in community hospitals, or 958,026 RNs in 2001. (Community hospitals employed 92 percent of the total 1,045,501 registered nurses in all hospitals throughout the United States.) TABLE C-10--ANNUAL NUMBER AND PERCENT CHANGE IN HOSPITAL EMPLOYMENT, 1980 - 2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] EXPENDITURES FOR PHYSICIANS' SERVICES Health care expenditures for physician services were $313.6 billion in 2001, an increase of 8.6 percent from 2000. This amounted to 22.0 percent of national health expenditures. Third-party payments financed 88.8 percent of physician services in 2001. Private health insurance was the single largest payer, accounting for 48.1 percent of total spending on physician services. The share of physician services paid by private insurance increased from 35.3 percent in 1980 to 47.8 percent in 1993. After 1993, the share of physician services financed by private insurance remained relatively stable. From 1993 to 2001, private insurance financed between 47.2 percent and 48.6 percent of total physician expenditures. The stabilization in the share of physician services funded by private insurance is likely the result of the increased use of managed care during the 1990s. Public expenditures on physician services have grown relatively slowly. In 1980, the public sector financed 30.5 percent of all physician payments; in 2001, the public sector financed 33.6 percent of all physician payments. Of the $105.4 billion spent by the government on physician services in 2001, $63.9 billion was for the Medicare program. Out-of-pocket payments by individuals for physician services have decreased from 30.2 percent in 1980 to 11.2 percent ($35.0 billion) in 2001 (Table C-11). As measured by Consumer Price Index (CPI), inflation in physicians' fees has outpaced that of the U.S. economy as a whole since 1980. The inflation rate of 2.8 percent for 2002, however, is the lowest since 1964 and the same rate of growth as 1999 (Table C-12). Also, the "excess" rate of increase in physician services prices above overall inflation since 1993 decreased to an average 1.2 percentage points per year, down from 2.9 percentage points for the years from 1981 to 1992. Mean physician net income (after expenses but before taxes) rose from $144,700 in 1988 to $205,700 in 2000 (Table C-13). This increase represents an average annual growth rate of 3.0 percent. Average annual increases in physician net income between 1988 and 2000 varied by specialty, geographic area, and employment status. On average, physicians in the specialty of radiology experienced the highest average annual increase in net income between 1988 and 2000 (4.2 percent). Over that same time period, physicians practicing anesthesiology and obstetrics/gynecology experienced the lowest average annual increase in net income (1.9 percent). Physicians in the West North Central region experienced the highest average annual increase in net income between 1988 and 2000 (3.5 percent). (The West North Central region includes North Dakota, South Dakota, Nebraska, Kansas, Minnesota, Iowa, and Missouri.) Physicians in the South Atlantic region experienced the lowest average annual increase in net income between 1988 and 2000 (2.2 percent). (The South Atlantic region includes Delaware, the District of Columbia, Maryland, Virginia, West Virginia, North Carolina, South Carolina, Georgia, and Florida.) Table C-14 shows the distribution of physicians' net incomes in 2000 by specialty and geographic region. While the average net income of all physicians was $205,700, one-half of all physicians earned $175,000 or less. One-fourth of all physicians earned $123,000 or less, while one-fourth earned $250,000 or more. Median incomes across all physician specialties remained far apart in 2000. The median income for physician's specializing in diagnostic radiology and cardiovascular diseases was $300,000, while pediatricians reported median incomes of $125,000. On average, 40.8 percent of physician practice revenue is from some form of managed care contract (Table C-15). Of all specialties, obstetrics/gynecology and pediatrics receive the highest percent of revenues from managed care (56.4 percent and 54.9 percent, respectively). Psychiatry received the lowest percent of revenues from managed care, 28.6 percent. The share of practice revenue received from managed care was lowest in East South Central States. (The East South Central region includes Kentucky, Tennessee, Mississippi, and Alabama.) The share of practice revenue received from managed care was highest in New England States. (New England States include Maine, New Hampshire, Vermont, Massachusetts, Connecticut, and Rhode Island.) SUPPLY OF HOSPITAL BEDS The national supply of community hospital beds per 1,000 population steadily increased from the 1940s, reaching 4.5 beds per 1,000 population in 1980. By 2000, the number of beds dropped to 2.9 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 5.1 in 1980. By 2000, this number had declined to 3.8, but was second in rank to West North Central which had 3.9 beds per 1,000. In contrast, the New England and Pacific regions never rose above their 1940 levels. The Middle Atlantic, East North Central, and Mountain Census regions experienced increases in the 1970s, but are now also below their 1940 levels. While all Census regions experienced a decrease in the number of hospital beds between 1990 and 2000, the New England (-3.0), Mountain (-2.9), and Pacific (-2.5) regions experienced the largest drops in average annual percent changes. The change in the Middle Atlantic region was the smallest at -1.9 percent (Table C-16). TABLE C-11 -- EXPENDITURES FOR PHYSICIAN SERVICES BY SOURCE OF FUNDS, SELECTED CALENDAR YEARS 1965-2010 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE C-12 -- ANNUAL PERCENTAGE CHANGE IN SELECTED COMPONENTS OF THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS, 1960-2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE C-13 - PHYSICIANS' AVERAGE NET INCOME1 AFTER EXPENSES BUT BEFORE TAXES, SELECTED CALENDAR YEARS 1988-2000 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE C-14--DISTRIBUTION OF PHYSICIAN NET INCOME AFTER EXPENSES BUT BEFORE TAXES, BY SPECIALTY AND CENSUS DIVISION [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE C-15--AVERAGE PERCENT OF PRACTICE REVENUE FROM MANAGED CARE, 2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE C-16--COMMUNITY HOSPITAL BEDS PER 1,000 POPULATION AND AVERAGE ANNUAL PERCENT CHANGE BY REGION AND STATE, SELECTED YEARS 1940-2000 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] SUPPLY OF PHYSICIANS Physician shortages in the 1950s and 1960s led to Federal and State initiatives to increase the supply of physicians. The resulting growth in the number of physicians per capita led to forecasts that an oversupply was imminent and that the nation had too few generalists and too many specialists. In 1994, the Council on Graduate Medical Education (COGME) reported that by the year 2000, "an expected staffing ratio of one physician for every 370 Americans, was more than adequate and the nation would do well to greatly scale back its residency programs and shift training away from specialists and toward primary care." (Weiner, 2002) Tables C-17 and C-19 indicate that while the total number of physicians grew by 40 percent from 1970 (334,028) to 1980 (467,679), over the next ten years the number grew at a slower rate (31.7 percent) to 615,241 in 1990. From 1990 to 2000, the total number of physicians grew 32.3 percent to 813,770. In 2000, the total physician-population ratio was 294 per 100,000 persons or one physician for every 340 Americans. The predicted physician surplus did not materialize, due in part to the lack of sustained impact of managed care. According to the American Medical Association, the percent of physicians in primary care and primary care specialties (general and family practice, internal medicine, obstetrics and gynecology, and pediatrics) has remained relatively stable at approximately 34-40 percent since 1970. (See Tables C-17 and C-19 for number of physicians by specialty.) Some hospitals, however, are now reporting it difficult to recruit specialists such as radiologists, orthopedic surgeons, anesthesiologists, and cardiologists (Thrall, 2003). There are also concerns about the geographic distribution of physicians and a continuing problem with access to care in more rural areas. Table C-18 shows variations in the supply of non-Federal physicians relative to population by State. In 2000, the District of Columbia had the highest ratio (718 physicians per 100,000 population) while Idaho had the lowest ratio (178 physicians per 100,000 population). The adequacy of physician supply is once again the subject of debate. Richard Cooper and colleagues at the Medical College of Wisconsin forecast that the demand for physician services will continue to increase as the U.S. economy grows. They warn that as the U.S. population expands and ages, if the per capita number of physicians remains flat, today's small national shortage of physicians will become a deficit of 200,000 by 2020 (Cooper, 2002). The Council on Graduate Medical Education is reported to be reconsidering its earlier position in the light of a study by Ed Salzberg of the University of TABLE C-17--PHYSICIAN SUPPLY BY MAJOR CATEGORIES, SELECTED YEARS 1970-2000 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Albany Center for Health Workforce Studies that forecasts a shortage of about 150,000 physicians by 2020 (Romano, 2003). The long training "pipeline" makes it difficult to predict physician supply. According to the Association of American Medical Colleges (AAMC), since reaching an all-time high of 47,000 for the 1996 entering class, the number of medical school applicants declined to 33,501 for 2002. They projected an increase of 4 to 6 percent for 2003, based on the number of individuals who took the Medical College Admission Test in 2002 and initial applications. While the number of residents in training declined from 98,143 in 1997 to 96,410 in 2001, there was an increase to 98,258 for 2002. The number of medical school graduates remained more stable, though declining slightly from 16,143 in 1998 to 15,640 in 2002 (Table C-20). The supply of international medical graduates (IMGs) also could have a significant impact on the U.S. physician workforce. IMGs comprised 17 percent of total physicians in 1970. By 2000, this had risen to 24 percent of the total physician population (Table C-17). 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 more than doubled, from 12,509 in 1985 to 25,783 in 2002 (26 percent of all residents in training). In 1998, the Education Commission for Foreign Medical Graduates (ECFMG) began requiring that IMGs pass a basic clinical skills examination. According to the ECFMG, "the number of IMGs seeking and receiving certification has decreased, but the quality of the applicants appears to have improved and the number of IMGs certified annually continues to adequately fill GME positions not taken by U.S. medical graduates." (Whelan, 2002) While the portion of IMGs in the U.S. physician workforce continues to represent approximately one-quarter of the physicians practicing in the U.S., since 1999, there has been a decrease in the number of foreign nationals and a trend toward a higher percent of U.S. citizens in the pool applying for certification. There is considerable uncertainty as to whether there is enough evidence to suggest a coming physician shortage. Those who are skeptical that there is a doctor shortage suggest it is limited to problems with recruitment of specialists such as radiologists, orthopedic surgeons, anesthesiologists, and cardiologists, or to hospitals in certain areas because of specific market conditions. They also point to the difficulties in predicting how the economy will shape health care, e.g, if consumer-directed plans become more common, demand for services could fall. New kinds of health care delivery systems also could emerge with changes in licensing allowing clinicians to do some of the work now restricted to doctors (Thrall, 2003). TABLE C-18--NON-FEDERAL PHYSICIAN/POPULATION RATIOS1 AND RANK BY STATE, SELECTED YEARS 1970-2000 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE C-19 -- PHYSICIANS TOTAL AND BY SPECIALTY, PERCENT DISTRIBUTION, AND PERCENT GROWTH, FOR 1970, 1980, 1990, AND 2000 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE C-20 -- MEDICAL SCHOOL GRADUATES, FIRST-YEAR RESIDENTS, AND TOTAL RESIDENTS, SELECTED YEARS 1965-2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE C-21 -- INTERNATIONAL MEDICAL GRADUATE RESIDENTS BY CITIZENSHIP, SELECTED YEARS 1971-2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] HEALTH INSURANCE STATUS IN 2002 Most people have some form of health insurance. In 2002, an estimated 84.8 percent of the total noninstitutionalized population had public or private coverage during at least part of the year. However, an estimated 43.6 million Americans, or 15.2 percent of the population, were without coverage in 2002. Almost all the uninsured were under age 65; consequently, 17.2 percent of the nonelderly population was uninsured. This section examines characteristics of both the insured and the uninsured populations in 2002 (Peterson, 2003), and reviews trends in health insurance coverage over the 1987-2002 period. Estimates of health insurance coverage in 2002 are based on analysis of the March 2003 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 2003 CPS reflects respondents' recollection of coverage during all of 2002. HEALTH INSURANCE COVERAGE AND SELECTED POPULATION CHARACTERISTICS Age Table C-22 provides a breakdown of health insurance coverage by type of insurance and age. In 2002, compared to other age groups, those under age 5 had the highest rates of coverage in Medicaid, the State Children's Health Insurance Program (SCHIP), or some other program for low-income individuals (30 percent). Young adults ages 19 to 24 were the most likely to have gone without health insurance for the entire year. While most in this age group (55 percent) were covered under an employment-based plan, 31 percent had no health insurance. Young adults are often too old to be covered as dependents on their parents' policies and, as entry-level workers, do not have strong ties to the work force. In addition, some may feel that they are in good health and choose to remain uninsured, spending their money on other items. After age 25, the percentage of people without health insurance decreases. Of those age 65 and over, 95 percent were covered by Medicare, and less than 1 percent were uninsured for the entire year. The remainder of this section focuses on the population under age 65. TABLE C-22--HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND AGE, 2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Other Demographic Characteristics Table C-23 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 2002, whites were least likely to be uninsured (12 percent), while Hispanics were most likely (34 percent). The rate of employment-based health coverage was highest among whites (74 percent), and the rate of public coverage was highest among blacks (25 percent). People residing in two-parent families were most likely to have employment-based health insurance (74 percent) and least likely to be uninsured (13 percent). People in a family headed by a single mother were most likely to have public coverage (37 percent), compared to other family types, while people in a family headed by a single father were most likely to be uninsured (28 percent). Although people in single-father families were more likely to have employment- sponsored health insurance than those in single-mother families, that difference was eclipsed by the higher rates of public coverage in single-mother families. TABLE C-23--HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND DEMOGRAPHIC CHARACTERISTICS FOR PEOPLE UNDER AGE 65, 2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] People were less likely to be uninsured if they lived in the Midwest (13 percent) or the Northeast (15 percent) than if they lived in the South (20 percent) or West (19 percent). At least 70 percent of those living in the Northeast and Midwest had employment-based health insurance, compared to 63 percent in the South and the West. TABLE C-24--HEALTH INSURANCE COVERAGE BY EMPLOYMENT CHARACTERISTICS FOR PEOPLE UNDER AGE 65, 2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Among individuals with incomes at least two times the poverty level, 11 percent went without health insurance compared to 34 percent of the poor (i.e., those with incomes below the poverty level). Only 20 percent of the poor received health coverage through employment, and 44 percent had public coverage. Eighty percent of people with incomes at least two times the poverty level were covered through an employer, and only 5 percent had public coverage. Non-citizens were more likely to be uninsured than people born with U.S. citizenship (i.e., "native") - 45 percent versus 15 percent, respectively. Non-citizens accounted for 8 percent of the population under 65 but were 20 percent of the uninsured. About 42 percent of non-citizens were covered through employment, compared to 69 percent of native citizens. Employment characteristics For the second year in a row, the prevalence of job-related health insurance fell, to 67 percent among the nonelderly in 2002. Table C-24 shows the rate of health insurance coverage by the employment characteristics of the primary worker in the family. In 2002, only 9 percent of workers in large firms (1,000 or more employees) and their dependents were uninsured, compared to 34 percent in small firms (less than 10 employees). People who reported working in small firms and their dependents accounted for 15 percent of the under 65 population but 29 percent of the uninsured. Insurance coverage varied according to industry, as well. The category of arts, entertainment, recreation, accommodation and food services had the highest proportion of uninsured workers and dependents (34 percent). Only 5 percent of those associated with employment in public administration were uninsured, and none of those associated with employment in the armed forces were uninsured. CHARACTERISTICS OF THE UNINSURED POPULATION UNDER AGE 65 People who lack health insurance differ from the population as a whole: they are more likely to be young adults, poor, Hispanic, or employees in small firms. Chart C-2 illustrates selected characteristics of those under age 65 who were uninsured for 2002. Approximately 17 percent of the uninsured were 19 to 24 years old, even though this age group represents less than 9 percent of the under 65 population. Although Hispanics were more likely to be uninsured than any other racial or ethnic group, they made up less than 30 percent of the uninsured. Whites (non-Hispanics who report being only white) were the most numerous racial or ethnic group among the uninsured. More than half (55 percent) of the uninsured were full time, full year workers or their spouses and children. Approximately 18 percent had no attachment to the labor force. More than three- quarters of the uninsured were above the poverty level. Even though the poor accounted for only 12 percent of the under 65 population, they represented 24 percent of the uninsured. For the second year in a row, more than a quarter of the uninsured were not native-born citizens (that is, they were either not citizens or were naturalized citizens). TRENDS IN HEALTH INSURANCE COVERAGE Historical trends in coverage by type of insurance for the noninstitutionalized U.S. population under age 65 are shown in Table C-25. Because of changes in the CPS questionnaire, direct comparisons of the years shown can only be made within these three time periods: 1987-1993, 1994-1999, and 1999-2002. 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. Consequently, differences in coverage between 1993 and 1994 are a function of changes in the CPS questionnaire in addition to actual changes in coverage. It is not possible to assess the impact of each on the estimate for 1994. Beginning with 1999 data, the survey included a followup question to those who reported no source of insurance to confirm that they were indeed uninsured. This question resulted in the release of new estimates for 1999, reducing the number of uninsured estimated through the survey. Table C-25 first shows the 1999 results before the verification question was asked, followed by the results that reflect the impact of the verification question, which is now standard in the survey. Between 1987 and 1993, the percentage of nonelderly Americans without health insurance increased by about 3 percentage points, from about 14 percent to 17 percent. During this period, the percent with employment-based coverage declined steadily, the percent with Medicare or Medicaid increased, and the percent uninsured continued to steadily increase. Between 1994 and 1999, the percent with employment-based coverage increased by 2.5 percentage points from 65.3 to 67.8 percent. Between 2000 and 2002, the percent with employment-based coverage declined for the first time since the early 1990s. From 1999 to 2002, the number of people with government-provided health insurance increased by 5.1 million. Following declines in the number of uninsured from 1998 to 2000, the number of uninsured rose in 2001 and 2002 - to 43.3 million (17.2 percent of the nonelderly population) in 2002. CHART C-2--CHARACTERISTICS OF THE UNINSURED POPULATION UNDER AGE 65, 2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE C-25--HEALTH INSURANCE COVERAGE FOR THE NONINSTITUTIONALIZED U.S. POPULATION UNDER 65, 1987-2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] INTERNATIONAL HEALTH SPENDING This section analyzes trends in health expenditures for the 29 Organization for Economic Cooperation and Development (OECD) countries from 1960 to 2000. Table C-26 illustrates total health expenditures as a percentage of gross domestic product (GDP). Of the countries reporting data in 1960, the mean percent of GDP spent on health care was 4.0 percent. In 2000, the mean percent of GDP spent on health care by OECD countries was 8.1 percent. For all years for which data are available, the share of GDP spent on health care by the United States was higher than the OECD average. Since 1982, the United States has spent a larger share of its GDP on health care than any other OECD nation. In terms of dollars per capita, the United States spent $4,631 on health care in 2000, more than double the OECD average of $1,967. The per capita amount spent in the United States was the highest of all the OECD countries for which data are available. Switzerland spent $3,222 per capita on health care, the second- highest amount of all OECD nations. The public sector plays a relatively small role in financing U.S. health care costs compared to other OECD countries. In 2000, 44.3 percent of health care in the United States was financed by the government. This share is smaller than any other OECD country. By contrast, the public sector funded 91.4 percent of health care in the Czech Republic in 2000. This share is larger than any other OECD country. TABLE C-26 -- TOTAL HEALTH EXPENDITURES AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT, PER CAPITA HEALTH SPENDING AND PERCENTAGE OF MEDICAL EXPENDITURES PUBLICLY FUNDED, OECD COUNTRIES FOR SELECTED CALENDAR YEARS 1960-2000 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] REFERENCES American Hospital Association. Hospital Statistics. Individual years, 1981-2003. American Medical Association. (various years). JAMA [Each year of this journal devotes an issue to medical education. The most recent is 2002. 290(9).] American Medical Association. (1998a). Physician marketplace statistics 1997/98. Chicago. American Medical Association. (1998b). Socioeconomic characteristics of medical practice 1997/98. Chicago. American Medical Association. (1999). Physician Socioeconomic Statistics, 1999-2000 Edition. Chicago. American Medical Association. (2002). Physician Characteristics and Distribution in the United States, 2002-2003 Edition. Chicago. Association of American Medical Colleges. (2003, October 30). 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