[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]






 
[1996 Green Book] APPENDIX C. NATIONAL AND INTERNATIONAL HEALTH CARE EXPENDITURES AND HEALTH INSURANCE COVERAGE

                                CONTENTS

National Health Expenditures
Expenditures for Hospital Care
Trends in Hospital Utilization
  Admissions
  Average Length of Stay
  Hospital Occupancy
  Hospital Employment
Expenditures for Physicians' Services
Supply of Hospital Beds
Supply of Physicians
Health Insurance Status in 1994
  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, 1980-94
International Health Spending
References

                      NATIONAL HEALTH EXPENDITURES

    In 1994, the Nation's health care bill totaled $949.4 
billion for the 271 million persons residing in the United 
States (Levit, Lazenby, & Sivarajan, 1996). In 1965, the year 
prior to the beginning of the Medicare and Medicaid Programs, 
national health expenditures were only $41.1 billion (see table 
C-1).
    Adjusting for inflation, health care expenditures increased 
substantially from 1965 to 1994, rising from $193.6 billion in 
1965 (in constant 1994 dollars) to $949.4 billion in 1994 (see 
table C-2). The annual rate of increase in inflation-adjusted 
per capita expenditures was 4.8 percent from 1980 to 1985 and 
5.0 percent from 1985 to 1990 (table C-3). After increasing by 
5.2 percent between 1991 and 1992, however, health expenditure 
growth per capita decelerated to 2.9 percent for 1992 to 1993 
and 2.7 percent for 1993 to 1994. This is the slowest growth 
recorded in more than three decades.

                                       TABLE C-1.--NATIONAL HEALTH EXPENDITURES, SELECTED CALENDAR YEARS 1960-2005                                      
                                                              [Dollar amounts in billions]                                                              
--------------------------------------------------------------------------------------------------------------------------------------------------------
          Spending category            1960    1965    1970     1975     1980     1985     1990     1991     1992     1993     1994   2000 \1\  2005 \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
  Percent of GDP....................     5.1     5.7     7.1      8.0      8.9     10.2     12.1     12.9     13.3     13.6     13.7      16.1      18.0
Health services and supplies........    25.2    37.7    67.9    122.3    235.6    411.8    672.9    736.3    806.0    863.1    919.2  ........  ........
  Personal health care..............    23.6    35.2    63.8    114.5    217.0    376.4    614.7    676.2    739.8    786.5    831.7   1,315.5   1,908.0
    Hospital care...................     9.3    14.0    28.0     52.6    102.7    168.3    256.4    282.3    305.3    324.2    338.5     512.4     713.4
    Physicians' services............     5.3     8.2    13.6     23.9     45.2     83.6    146.3    158.6    174.7    181.1    189.4     283.1     417.5
    Dentists' services..............     2.0     2.8     4.7      8.0     13.3     21.7     31.6     33.3     37.0     39.2     42.2      61.2      85.9
    Other professional services.....     0.6     0.9     1.4      2.7      6.4     16.6     34.7     38.3     42.1     46.3     49.6      97.4     149.3
    Home health care................     0.1     0.1     0.2      0.6      2.4      5.6     13.1     16.1     19.6     23.0     26.2      61.3     105.1
    Drugs and other medical                                                                                                                             
     nondurables....................     4.2     5.9     8.8     13.0     21.6     37.1     59.9     65.6     71.3     75.2     78.6     126.8     182.3
    Vision products and other                                                                                                                           
     medical durables...............     0.6     1.0     1.6      2.5      3.8      6.7     10.5     11.2     11.9     12.6     13.1      20.5      28.7
    Nursing home care...............     0.8     1.5     4.2      8.7     17.6     30.7     50.9     57.2     62.3     67.0     72.3     122.8     182.2
    Other personal health care......     0.7     0.8     1.3      2.5      4.0      6.1     11.2     13.6     15.6     17.8     21.8      30.1      43.6
  Program administration and net                                                                                                                        
   cost of private health insurance.     1.2     1.9     2.7      4.9     11.8     23.8     38.6     38.7     42.8     51.0     58.7      78.0     108.7
    Government public health                                                                                                                            
     activities.....................     0.4     0.6     1.3      2.9      6.7     11.6     19.6     21.4     23.4     25.7     28.8      35.5      46.0
Research and construction of medical                                                                                                                    
 facilities.........................     1.7     3.4     5.3      8.4     11.6     16.4     24.5     24.9     27.6     29.2     30.2      42.7      55.8
                                     -------------------------------------------------------------------------------------------------------------------
      Total.........................   $26.9   $41.1   $73.2   $130.7   $247.2   $428.2   $687.5   $761.3   $833.6   $892.3   $949.4  $1,471.7  $2,118.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Estimates prepared by the Congressional Budget Office, February 1995.                                                                               
                                                                                                                                                        
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 1994 DOLLARS, SELECTED CALENDAR YEARS 1960-94                           
                                                              [Dollar amounts in billions]                                                              
--------------------------------------------------------------------------------------------------------------------------------------------------------
                  Spending category                      1960     1965     1970     1975     1980     1985     1990     1991     1992     1993     1994 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Health services and supplies.........................    126.1    177.4    259.3    337.0    423.8    567.2    763.0    801.2    851.4    885.2    919.2
    Personal health care.............................    118.4    165.4    243.8    315.4    390.4    518.5    697.0    735.8    781.4    806.6    831.7
        Hospital care................................     46.5     66.1    107.0    144.8    184.7    231.8    290.8    307.2    322.4    332.5    338.5
        Physicians' service..........................     26.5     38.5     51.9     65.9     81.4    115.2    165.9    172.6    184.5    185.8    189.4
        Dentists' services...........................      9.8     13.1     17.8     21.9     24.0     29.8     35.8     36.3     39.1     40.2     42.2
        Other professional services..................      3.0      4.1      5.4      7.5     11.4     22.9     39.3     41.6     44.5     47.5     49.6
        Home health care.............................      0.3      0.4      0.8      1.7      4.3      7.6     14.9     17.5     20.7     23.6     26.2
        Drugs and other medical nondurables..........     21.3     27.7     33.7     35.9     38.9     51.0     67.9     71.4     75.3     77.1     78.6
        Visions products and other medical durables..      3.2      4.7      6.2      7.0      6.8      9.3     11.9     12.2     12.6     12.9     13.1
        Nursing home care............................      4.3      6.9     16.1     23.9     31.7     42.3     57.7     62.2     65.8     68.7     72.3
        Other personal health care...................      3.5      3.9      5.0      6.8      7.2      8.4     12.7     14.8     16.5     18.3     21.8
    Program administration and net cost of private                                                                                                      
     health insurance................................      5.8      9.1     10.4     13.5     21.3     32.7     43.8     42.1     45.2     52.3     58.7
    Government public health activities..............      1.8      2.9      5.1      8.1     12.1     16.0     22.2     23.3     24.7     26.3     28.8
Research and construction of medical facilities......      8.5     16.2     20.4     23.1     20.9     22.5     27.8     27.1     29.1     29.9     30.2
                                                      --------------------------------------------------------------------------------------------------
      Total..........................................   $134.6   $193.6   $279.8   $360.1   $444.7   $589.8   $790.8   $828.3   $880.5   $915.1   $949.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Constant dollar expenditures are calculated using the consumer price index for all urban consumers (CPI-U).                                      
                                                                                                                                                        
Source: Health Care Financing Administration, Office of the Actuary.                                                                                    


                 TABLE C-3.--NATIONAL HEALTH EXPENDITURES: PER CAPITA AMOUNTS IN CONSTANT 1994 DOLLARS, SELECTED CALENDAR YEARS 1960-94                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                  Spending category                      1960     1965     1970     1975     1980     1985     1990     1991     1992     1993     1994 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                        
      Total.......................................... ----$706-----$949---$1,303---$1,604---$1,891---$2,389---$3,047---$3,158---$3,321---$3,416---$3,510
    Health services and supplies.....................      663      869    1,207    1,501    1,802    2,296    2,940    3,054    3,211    3,304    3,396
    Personal health care.............................      623      811    1,135    1,405    1,660    2,100    2,688    2,806    2,947    3,011    3,074
        Hospital care................................      245      324      496      645      786      939    1,120    1,171    1,216    1,241    1,251
        Physicians' services.........................      139      189      241      293      346      487      639      658      696      693      700
        Dentists' services...........................       52       64       83       96      102      121      138      138      147      150      156
        Other professional services..................       16       20       25       33       49       93      152      159      168      166      183
        Home health care.............................        1        2        4        8       18       31       57       67       78       88       97
        Drugs and other medical nondurables..........      112      136      157      160      165      207      262      272      284      288      290
        Vision products and other medical durables...       17       23       29       31       29       38       46       46       48       48       49
        Nursing home care............................       22       34       75      106      135      171      223      237      248      257      267
        Other personal health care...................       18       19       23       30       31       34       49       58       62       68       81
    Program administration and net cost of private                                                                                                      
     health insurance................................       31       44       48       60       91      133      169      161      170      195      217
    Government public health activities..............       10       14       24       36       51       65       56       89       93       98      107
Research and construction of medical facilities......       45       79       95      103       89       91      107      103      110      112      112
                                                      --------------------------------------------------------------------------------------------------
Average annual percentage increase...................    60-65    65-70    70-75    75-80    80-85    85-90    92-93    93-94  .......  .......  .......
      Total..........................................      6.0      6.5      4.2      3.4      4.8      5.0      2.9      2.7  .......  .......  .......
    Health services and supplies.....................      5.6      6.8      4.4      3.7      5.0      5.1      2.9      2.8  .......  .......  .......
    Personal health care.............................      5.4      7.0      4.4      3.4      4.8      5.0      2.2      2.1  .......  .......  .......
        Hospital care................................      5.8      9.0      5.3      4.0      3.6      5.2      2.1      0.8  .......  .......  .......
        Physicians' services.........................      6.3      5.0      4.0      3.4      6.2      5.2     -0.4      1.0  .......  .......  .......
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Constant dollar expenditures are calculated using the consumer price indices for all urban consumers (CPI-U). Average annual amounts are         
  calculated on unrounded numbers.                                                                                                                      
                                                                                                                                                        
Source: Health Care Financing Administration, Office of the Actuary.                                                                                    

    Hospital care expenditures were the largest component of 
national health expenditures at $338.5 billion or 36 percent in 
1994. In terms of per capita spending, $1,251 was spent for 
hospital care in 1994 (see table C-3). Hospital expenditures 
increased only 4.4 percent in 1994, the third consecutive year 
of decelerated growth. Spending for physician services in 1994 
grew to $189.4 billion, almost 20 percent of national health 
expenditures.
    The share of personal health expenditures funded by the 
public sector increased from 39.5 percent in 1990 to 43.5 
percent in 1994, the highest level ever (see table C-4). \1\ 
The Federal Government accounted for 33.7 percent ($280 
billion) of personal health spending (including payments for 
both Medicare and Medicaid), and 9.8 percent ($81.8 billion) 
was paid by State and local government.
---------------------------------------------------------------------------
    \1\ Personal health expenditures accounted for 88 percent of 
national health expenditures in 1994. The remaining 12 percent was 
expended on program administration; administrative costs of private 
health insurance and profits earned by private health insurance: 
noncommercial health research; new construction; and government public 
health activities.
---------------------------------------------------------------------------
    In 1994, private health insurance payments (including 
premiums paid for both employers and employees) were 32.1 
percent ($266.8 billion) of personal health expenditures. 
Twenty-one percent ($174.9 billion) was paid by direct (out-of-
pocket) payments by individuals. Philanthropy and in-plant 
health services accounted for 3.4 percent.

                     EXPENDITURES FOR HOSPITAL CARE

    In 1994, the 36 percent of total national health 
expenditures spent on hospitals was 6 percentage points less 
than 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 post-acute care, 
as well as nonpatient care activities) reached $308.4 billion 
in 1995. This was up 5.3 percent from the previous year. 
Combined with the 5.0-percent increase in 1994, this produced 
the smallest 2-year rise in hospital costs in at least 30 
years. That inpatient expenses increased more slowly than total 
expenses reflects 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 6.3 percent to $1,127 in 
1995. The higher rate of growth in expenses per day reflects a 
decrease in the number of hospital days (see the discussion of 
average length of stay below). However, combined with the 6.0-
percent increase in 1994, this also produced the lowest 2-year 
increase in three decades. In fact, hospital costs per day grew 
more slowly in 1994 and 1995 than in any two single years since 
data on this measure have been available.
    The average cost per case (also adjusted to reflect 
outpatient care) rose to $6,427 in 1995, an increase of only 
1.8 percent. This represents the fifth consecutive decline in 
this growth rate. In 1994 and 1995, the increase in costs per 
case averaged 1.9 percent per year, compared with 9.1 percent 
from 1985 through 1992 and 14.0 percent from 1975 through 1982.

             TABLE C-4.--PERSONAL HEALTH CARE EXPENDITURES: AGGREGATE AMOUNTS AND PERCENTAGE DISTRIBUTION, SELECTED CALENDAR YEARS 1960-2005            
--------------------------------------------------------------------------------------------------------------------------------------------------------
        Spending category            1960     1965     1970     1975     1980     1985     1990     1991     1992     1993     1994   2000 \1\  2005 \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                        
(12) Amount in billions of                                                                                                                              
 dollars                                                                                                                                                
                                  ----------------------------------------------------------------------------------------------------------------------
Private..........................    $18.5    $27.9    $41.3    $69.2   $130.0   $228.4   $371.7   $399.6   $431.5   $452.3   $469.9    $691.4    $943.7
    Private health insurance.....      5.0      8.7     14.8     28.4     62.0    113.8    201.8    221.2    242.7    256.4    266.8     411.0     571.2
    Out-of-pocket payments.......     13.1     18.5     24.9     38.1     60.3    100.6    148.4    155.1    164.4    169.4    174.9     227.4     294.7
    Other private sources of                                                                                                                            
     funds.......................      0.4      0.7      1.6      2.7      7.8     14.1     21.5     23.3     24.3     26.6     28.2      53.0      77.8
Public...........................      5.1      7.3     22.5     45.3     87.3    148.0    243.0    276.6    308.3    334.1    361.8     624.1     964.3
    Federal......................      2.1      3.0     14.7     30.9     63.4    111.3    178.1    205.7    234.4    256.8    280.0     493.6     775.5
    State and local..............      3.0      4.3      7.8     14.4     23.6     36.7     64.9     70.8     73.9     77.3     81.8     130.5     188.8
                                  ----------------------------------------------------------------------------------------------------------------------
      Total......................     23.6     35.2     63.8    114.5    217.0    376.4    614.7    676.2    739.8    786.5    831.7   1,315.5   1,908.0
                                  ----------------------------------------------------------------------------------------------------------------------
                                                                                                                                                        
(12) Percentage distribution                                                                                                                            
                                  ----------------------------------------------------------------------------------------------------------------------
Private..........................     78.3     79.4     64.7     60.4     59.9     60.7     60.5     59.1     58.3     57.5     56.5      52.6      49.5
    Private health insurance.....     21.2     24.7     23.2     24.8     28.6     30.2     32.8     32.7     32.8     32.6     32.1      31.2      29.9
    Out-of-pocket payments.......     55.3     52.7     39.0     33.3     27.8     26.7     24.1     22.9     22.2     21.5     21.0      17.3      15.4
    Other private sources of                                                                                                                            
     funds.......................      1.8      2.0      2.6      2.4      3.6      3.7      3.5      3.4      3.3      3.4      3.4       4.0       4.1
Public...........................     21.7     20.6     35.3     39.6     40.1     39.3     39.5     40.9     41.7     42.5     43.5      47.4      50.5
    Federal......................      9.0      8.4     23.0     27.0     29.2     29.6     29.0     30.4     31.7     32.7     33.7      37.5      40.6
    State and local..............     12.6     12.2     12.2     12.5     10.9      9.7     10.6     10.5     10.0      9.8      9.8       9.9       9.9
                                  ----------------------------------------------------------------------------------------------------------------------
      Total......................    100.0    100.0    100.0    100.0    100.0    100.0    100.0    100.0    100.0    100.0    100.0     100.0     100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Estimates prepared by the Congressional Budget Office, February 1995.                                                                               
                                                                                                                                                        
Note.--Numbers may not add to totals due to rounding. Percentage amounts are calculated on unrounded numbers.                                           
                                                                                                                                                        
Source: Health Care Financing Administration, Office of the Actuary.                                                                                    


                        TABLE C-5.--SELECTED DATA ON COMMUNITY HOSPITAL EXPENSES, 1965-95                       
----------------------------------------------------------------------------------------------------------------
                                 Total expenses        Expenses per        Expenses per      Inpatient expenses 
                             ---------------------- adjusted inpatient  adjusted admission           \1\        
                                                            day        -----------------------------------------
            Year              Amount (in   Percent --------------------                                         
                               billions)   change              Percent   Amount    Percent  Amount (in   Percent
                                                     Amount    change              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
----------------------------------------------------------------------------------------------------------------
\1\ Inpatient expenses estimated from total expenses, based on the proportion of inpatient to total revenues.   
                                                                                                                
Note.--Admissions and inpatient days are adjusted to reflect the volume of outpatient visits as well as         
  inpatient admissions and days.                                                                                
                                                                                                                
Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association       
  National Hospital Panel Survey.                                                                               

    Chart C-1 presents the real annual growth in expenses per 
adjusted admission. This chart provides a clearer picture of 
the actual rate of increase in costs per case by removing the 
effects of general inflation. Even after taking inflation into 
account, the recent trend in hospital costs differs sharply 
from previous years. In 1994, hospital costs per case rose more 
slowly than inflation for the first time. In 1995, costs per 
case grew even more slowly relative to inflation.

   CHART C-1. REAL ANNUAL CHANGES IN HOSPITAL EXPENSES PER ADJUSTED 
                    ADMISSION (IN PERCENT), 1965-95


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


    A variety of factors other than general inflation 
contribute to aggregate changes in hospital costs, and the 
roles of these factors may vary widely over time. Chart C-2 
displays the contributions of five factors: general inflation, 
hospital input prices, population growth, utilization, and 
intensity. Between 1985 and 1992, total hospital expenses rose 
at an annual rate of 10 percent. The largest contributor to 
this increase was the intensity of hospital care; that is, the 
resources used per patient. During this period, general 
inflation also accounted for a large share of the increase in 
hospital expenses. Hospital input prices rose only slightly 
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 1995, the increase in total hospital 
expenses was only 5.7 percent per year. Because of this, 
although it slowed from 3.8 percent between 1985 and 1992 to 
2.8 percent between 1992 and 1995, general inflation accounted 
for almost 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 1995, 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 1995.
    Expenditures for hospital care are financed primarily by 
third parties, as shown in table C-6. In 1993, private health 
insurers paid 36.1 percent of the total, Medicare 28.4 percent, 
and Medicaid (including both the Federal and State shares) 13.0 
percent. The share financed by out-of-pocket payments from 
individuals was only 2.8 percent in 1993, down from 5.2 percent 
in 1985.

 CHART C-2. FACTORS CONTRIBUTING TO GROWTH OF TOTAL HOSPITAL EXPENSES, 
                          1985-92 AND 1992-95


    Note._Hospital expenses grew at an annual rate of 10.0 
percent between 1985 and 1992 and 5.7 percent between 1992 and 
1995.

    Source: Prospective Payment Assessment Commission.

                             TABLE C-6.--NATIONAL EXPENDITURES FOR HOSPITAL CARE BY SOURCE OF FUNDS, 1980, 1985, AND 1990-93                            
                                                                  [Amounts in billions]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    1980              1985              1990              1991              1992              1993      
              Source of payment              -----------------------------------------------------------------------------------------------------------
                                               Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total.......................................   $102.7    100.0   $168.2    100.0   $256.5    100.0   $282.3    100.0   $306.0    100.0   $326.6    100.0
Out of pocket...............................      5.3      5.2      8.8      5.2      9.8      3.8      9.6      3.4      9.0      2.9      9.1      2.8
Third-party payments........................     97.4     94.8    159.4     94.8    246.8     96.2    272.7     96.6    297.0     97.1    317.4     97.2
  Private health insurance..................     38.7     37.7     61.0     36.3     95.7     37.3    102.8     36.4    109.1     35.7    117.8     36.1
  Other private funds.......................      5.0      4.9      8.3      4.9     13.8      5.4     15.1      5.3     15.9      5.2     16.8      5.2
  Government................................     53.7     52.3     90.1     53.6    137.3     53.5    154.8     54.8    172.0     56.2    182.9     56.0
    Federal.................................     40.9     39.8     71.1     42.3    103.4     40.3    120.3     42.6    137.3     44.9    149.2     45.7
Medicare....................................     26.3     25.6     48.9     29.1     68.5     26.7     74.9     26.5     84.2     27.5     92.7     28.4
Medicaid\1\.................................      4.6      4.4      7.4      4.4     14.9      5.8     23.4      8.3     30.1      9.8     32.1      9.8
Other Federal...............................      9.9      9.7     14.8      8.8     20.0      7.8     22.0      7.8     23.0      7.5     24.4      7.5
  State and local...........................     12.8     12.5     19.0     11.3     33.9     13.2     34.5     12.2     34.7     11.3     33.7     10.3
    Medicare\2\.............................      3.9      3.8      6.3      3.7     11.6      4.5     11.1      3.9     10.9      3.6     10.3      3.2
    Other State and local...................      8.9      8.7     12.8      7.6     22.3      8.7     23.4      8.3     23.7      7.8     23.4      7.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Federal share only.                                                                                                                                 
\2\ State and local share only.                                                                                                                         
                                                                                                                                                        
Source: Prospective Payment Assessment Commission analysis of data from the Health Care Financing Administration, Office of the Actuary.                

                     TRENDS IN HOSPITAL UTILIZATION

                               Admissions

    From 1978 through 1983, total inpatient admissions 
increased at an annual rate of 1.0 percent, and admissions for 
persons 65 and over increased an average of 4.8 percent per 
year, as shown in table C-7. With the introduction of 
Medicare's prospective payment system (PPS) in 1983, the number 
of elderly patients declined sharply, contrary to most 
expectations. Admissions of patients under 65, however, fell 
even more during the first few years of PPS and had been 
decreasing for several years before that. From 1987 through 
1992, total admissions continued to decrease, but at a slower 
rate, due to an increase among the older population. In 1993, 
overall admissions increased for the first time in 12 years, 
due to a slower rate of decline in younger patients and a 
continuing increase in those 65 and over. This trend has 
continued, and the increase in total admissions of 1.4 percent 
in 1995 was the largest in 15 years.

 TABLE C-7.--ANNUAL CHANGE IN HOSPITAL ADMISSIONS BY AGE GROUP, 1978-95 
------------------------------------------------------------------------
                                           Percent change in admissions 
                                        --------------------------------
                  Year                                           65 and 
                                            All      Under 65     over  
------------------------------------------------------------------------
1978...................................        0.4       -1.0        4.9
1979...................................        2.7        1.7        5.3
1980...................................        2.9        1.5        6.7
1981...................................        0.9        0.0        3.0
1982...................................        0.0       -1.6        4.1
1983...................................       -0.5       -2.8        4.7
1984...................................       -3.7       -4.2       -2.6
1985...................................       -4.9       -4.7       -5.2
1986...................................       -2.1       -2.5       -1.0
1987...................................       -0.6       -1.0        0.4
1988...................................       -0.4       -1.6        2.0
1989...................................       -1.0       -2.0        1.2
1990...................................       -0.5       -1.6        1.7
1991...................................       -1.1       -2.9        2.5
1992...................................       -0.8       -2.2        1.7
1993...................................        0.7       -0.5        2.9
1994...................................        0.9        0.2        2.0
1995...................................        1.4        0.4        2.9
Average annual percent change:                                          
    1978-83............................        1.0       -0.4        4.8
    1984-86............................       -3.5       -3.8       -3.0
    1987-92............................       -0.7       -1.9        1.6
    1993-95............................        1.0        0.0        2.6
------------------------------------------------------------------------
Source: Prospective Payment Assessment 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, 
however, there was a significant drop in length of stay. From 
1982 to 1984, the average stay fell from 7.2 days to 6.7 days 
for all patients and from 10.4 days to 8.9 days for patients 65 
and over. Average length of stay stabilized at these levels 
throughout the rest of the 1980s, but has declined again in the 
1990s. Hospital stays for elderly patients were 1.6 days 
shorter, on average, in 1995 than in 1990, and for patients 
under 65 the average stay was 0.6 days shorter. This decline 
was even steeper than in the first years of PPS.

                   TABLE C-8.--AVERAGE LENGTH OF STAY AND ANNUAL CHANGE BY AGE GROUP, 1978-95                   
----------------------------------------------------------------------------------------------------------------
                                                                   All            Under 65         65 and over  
                                                           -----------------------------------------------------
                                                            Average           Average           Average         
                           Year                              length            length            length         
                                                            of stay  Percent  of stay  Percent  of stay  Percent
                                                              (in     change    (in     change    (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
Average annual percent change:                                                                                  
    1978-83...............................................  .......     -0.5  .......     -0.8  .......     -1.7
    1984-86...............................................  .......     -2.1  .......     -1.4  .......     -3.1
    1987-92...............................................  .......     -0.6  .......     -1.0  .......     -0.9
    1993-95...............................................  .......     -3.6  .......     -2.7  .......     -5.2
----------------------------------------------------------------------------------------------------------------
Source: Prospective Payment Assessment Commission analysis of data from the American Hospital Association       
  National Hospital Panel Survey.                                                                               

                           Hospital Occupancy

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

 TABLE C-9.--INPATIENT HOSPITAL OCCUPANCY RATE AND NUMBER OF BEDS, 1978-
                                   96                                   
------------------------------------------------------------------------
                                Occupancy                               
             Year                rate (in  Percent   Number of   Percent
                                 percent)   change      beds      change
------------------------------------------------------------------------
1978..........................      73.7      -0.8      954,001      0.9
1979..........................      74.5       1.0      959,269      0.6
1980..........................      76.1       2.2      970,456      1.2
1981..........................      75.8      -0.4      986,917      1.7
1982..........................      74.5      -1.6      997,720      1.1
1983..........................      72.2      -3.1    1,003,658      0.6
1984..........................      66.7      -7.6      992,616     -1.1
1985..........................      63.6      -4.7      974,559     -1.8
1986..........................      63.4      -0.3      963,133     -1.2
1987..........................      64.1       1.2      954,458     -0.9
1988..........................      64.6       0.8      942,306     -1.3
1989..........................      64.8       0.3      930,994     -1.2
1990..........................      64.5      -0.6      921,447     -1.0
1991..........................      63.5      -1.4      911,781     -1.0
1992..........................      62.3      -1.9      907,661     -0.5
1993..........................      61.4      -1.5      901,669     -0.7
1994..........................      60.3      -1.7      890,575     -1.2
1995..........................      59.7      -1.1      874,250     -1.8
Average annual percent change:                                          
    1978-83...................  .........     -0.5  ...........      1.0
    1984-86...................  .........     -4.2  ...........     -1.4
    1987-92...................  .........     -0.3  ...........     -1.0
    1993-95...................  .........     -1.4  ...........     -1.2
------------------------------------------------------------------------
Source: Prospective Payment Assessment Commission analysis of data from 
  American Hospital Association National Hospital Panel Survey.         

                          Hospital Employment

    Hospitals experienced a significant downturn in total 
employment levels at the time PPS was introduced, as shown in 
table C-10. During 1984 and 1985, full-time equivalent 
employees declined by 2.3 percent. From 1986 through 1993, 
however, hospital employment increased. During the late 1970s 
and through the 1980s, growth in the number of part-time 
personnel exceeded growth in the number of full-time personnel 
in every year. In 1992, however, the number of full-time 
personnel grew faster than the number of part-time personnel 
for the first time in more than 20 years. This trend continued 
in 1993, but the increase in both types of personnel slowed 
dramatically. In 1994 and 1995, 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.

       TABLE C-10.--ANNUAL CHANGE IN HOSPITAL EMPLOYMENT, 1978-95       
------------------------------------------------------------------------
                                          Percent change in:            
                             -------------------------------------------
            Year                                   Personnel--          
                                Total   --------------------------------
                                 FTEs      Total    Full-time  Part-time
------------------------------------------------------------------------
1978........................        3.7        4.1        3.3        6.8
1979........................        3.5        3.9        2.9        6.7
1980........................        4.7        5.2        4.0        9.1
1981........................        5.4        6.0        4.8        9.4
1982........................        3.7        3.7        3.6        4.1
1983........................        1.4        1.5        1.2        2.3
1984........................       -2.3       -2.1       -2.6       -0.8
1985........................       -2.3       -2.0       -2.7       -0.1
1986........................        0.3        0.4        0.2        0.9
1987........................        0.7        0.9        0.4        2.3
1988........................        1.1        1.4        0.7        3.3
1989........................        1.6        1.9        1.2        3.6
1990........................        2.1        2.3        1.8        3.6
1991........................        0.6        0.7        0.6        1.0
1992........................        1.6        1.5        1.7        0.9
1993........................        0.7        0.6        0.8        0.2
1994........................       -0.8       -0.8       -0.7       -0.9
1995........................       -1.4       -1.4       -1.5       -0.9
Average annual percent                                                  
 change:                                                                
    1978-83.................        3.7        4.1        3.3        6.4
    1984-86.................       -1.4       -1.2       -1.7        0.0
    1987-92.................        1.3        1.5        1.1        2.4
    1993-95.................       -0.5       -0.5       -0.5       -0.5
------------------------------------------------------------------------
Source: Prospective Payment Assessment Commission analysis of data from 
  the American Hospital Association National Hospital Panel Survey.     

                 EXPENDITURES FOR PHYSICIANS' SERVICES

    Personal health care expenditures for physicians' services 
were $189.4 billion in 1994, an increase of 4.6 percent from 
the previous year (see table C-11). In 1994, 20 percent of 
national health expenditures and 23 percent of personal health 
expenditures were for physicians' services (see table C-1).
    Third-party (public expenditures and private insurance) 
payments financed over fourth fifths of physicians' services. 
In 1994, private health insurance paid $89.5 billion (47 
percent) for such services. Public programs paid $60.9 billion 
(32.1 percent) for such services, of which $36.1 billion was 
Federal Medicare payments. Patients or their families paid 
$35.8 billion (18.9 percent) for physicians' services (see 
table C-11).

                                                 TABLE C-11.--EXPENDITURES FOR PHYSICIAN SERVICES \1\ BY SOURCE OF FUNDS, SELECTED YEARS 1980-94                                                
                                                                                      [Amounts in billions]                                                                                     
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          1980              1985              1990              1991              1992              1993              1994      
                         Source of payment                         -----------------------------------------------------------------------------------------------------------------------------
                                                                     Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent   Amount  Percent
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Out-of-pocket payments............................................    $14.8     32.4    $24.3     29.1    $35.4     24.2    $35.6     22.4    $37.0     21.7    $37.0     20.4    $35.8     18.9
Third-party payments..............................................     30.6     67.6     59.3     70.9    110.9     75.8    123.1     77.8    136.7     78.3    144.1     79.6    153.5     81.1
Private health insurance..........................................     17.1     37.9     23.4     36.9     63.3     43.2     71.4     45.0     81.5     46.6     85.3     47.1     89.5     47.3
Other private funds...............................................      0.4      0.8      1.4      1.6      2.7      1.8      2.5      1.6      2.5      1.5      2.7      1.5      3.0      1.6
Government........................................................     13.1     28.9     24.5     29.3     45.0     30.7     49.2     31.0     52.7     30.2     56.0     30.9     60.9     32.1
    Federal.......................................................     10.0     22.1     19.5     23.4     35.9     24.5     38.6     24.3     40.9     23.4     44.0     24.3     48.6     25.7
      Medicare....................................................      8.0     17.6     16.5     19.7     29.5     20.2     30.8     19.4     31.7     18.2     33.9     18.7     36.1     20.1
      Medicaid....................................................      1.4      3.1      2.0      2.4      4.2      2.8      5.3      3.4      6.6      3.8      7.6      4.2      8.0      4.2
      Other Federal programs......................................      0.6      1.4      1.1      1.3      2.2      1.5      2.5      1.6      2.5      1.4      2.6      1.4      2.5      1.3
    State and local...............................................      3.1      6.9      4.9      5.9      9.1      6.2     10.6      6.7     11.8      6.8     12.0      6.6     12.3      6.5
      Medicaid....................................................      1.1      2.5      1.5      1.9      2.9      2.0      3.8      2.4      4.5      2.6      5.0      2.8      5.4      2.9
      Other State and local programs..............................      2.0      4.3      3.4      4.0      6.2      4.2      6.7      4.3      7.3      4.2      7.0      3.9      6.9      3.6
                                                                   -----------------------------------------------------------------------------------------------------------------------------
      Total.......................................................     45.2    100.0     83.6    100.0    146.3    100.0    158.6    100.0    174.7    100.0    181.1    100.0    189.4    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.                                                                                                                            

    Inflation continues to affect the growth in spending for 
physicians' services. Physicians' fees rose more rapidly (4.5 
percent in 1995) than prices in the economy as a whole (2.8 
percent) as measured by the consumer price index (CPI) (see 
table C-12).

 TABLE C-12.--ANNUAL PERCENTAGE CHANGES IN SELECTED COMPONENTS OF THE CONSUMER PRICE INDEX (CPI-U), \1\ 1965-95 
----------------------------------------------------------------------------------------------------------------
                                                                              All items                         
                                                                                less       Medical   Physicians'
                              Year                                All items    medical   care total    services 
                                                                                care                            
----------------------------------------------------------------------------------------------------------------
1965...........................................................         1.6         1.6         2.4          3.6
1966...........................................................         2.9         3.1         4.4          5.6
1967...........................................................         3.1         2.1         7.2          7.2
1968...........................................................         4.2         4.2         6.0          5.6
1969...........................................................         5.5         5.4         6.7          7.0
1970...........................................................         5.7         5.9         6.6          7.5
1971...........................................................         4.4         4.1         6.2          7.0
1972...........................................................         3.2         3.2         3.3          3.0
1973...........................................................         6.2         6.4         4.0          3.4
1974...........................................................        11.0        11.2         9.3          9.2
1975...........................................................         9.1         9.0        12.0         12.1
1976...........................................................         5.8         5.3         9.5         11.4
1977...........................................................         6.5         6.3         9.6          9.1
1978...........................................................         7.6         7.6         8.4          8.4
1979...........................................................        11.3        11.5         9.2          9.1
1980...........................................................        13.5        13.6        11.0         10.5
1981...........................................................        10.3        10.4        10.7         11.0
1982...........................................................         6.2         5.9        11.6          9.4
1983...........................................................         3.2         2.9         8.8          7.8
1984...........................................................         4.3         4.1         6.2          6.9
1985...........................................................         3.6         3.4         6.3          5.9
1986...........................................................         1.9         1.5         7.5          7.2
1987...........................................................         3.6         3.5         6.6          7.3
1988...........................................................         4.1         3.9         6.5          7.2
1989...........................................................         4.8         4.6         7.7          7.4
1990...........................................................         5.4         5.2         9.0          7.1
1991...........................................................         4.2         3.9         8.7          6.0
1992...........................................................         3.0         2.8         7.4          6.3
1993...........................................................         3.0         2.7         5.9          5.6
1994...........................................................         2.6         2.5         4.8          4.4
1995...........................................................         2.8         2.7         4.5          4.5
----------------------------------------------------------------------------------------------------------------
\1\ Consumer price index (CPI) for all urban (U) consumers.                                                     
                                                                                                                
Source: U.S. Department of Labor, Bureau of Labor Statistics.                                                   

    The American Medical Association reports that, over the 10 
years from 1984 to 1994, physician income rose an average 5 
percent a year. The average physician net income in 1994, 
however, experienced the first decrease ever recorded by the 
AMA. After expenses but before taxes, physician income was 
$182,400, a 3.6 percent decrease from $189,300 in 1993 (see 
table C-13).

                                  TABLE C-13.--PHYSICIANS' AVERAGE NET INCOME AFTER EXPENSES BUT BEFORE TAXES, 1983-94                                  
                                                    [Average net Income \1\ in thousands of dollars]                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                 Percent
                Category                   1983     1984    1985     1986    1987     1988    1989     1990    1991     1992    1993     1994    Change 
                                                                                                                                                 1993-94
--------------------------------------------------------------------------------------------------------------------------------------------------------
All physicians \2\......................   104.1    108.4   112.2    119.5   132.3    144.7   155.8    164.3   170.6    181.7   189.3    182.4      -3.6
Specialty:                                                                                                                                              
    General/family practice.............    68.5     71.1    77.9     80.3    91.5     94.6    95.9    102.7   111.5    114.4   116.8    121.4       3.9
    Internal medicine...................    93.3    103.2   101.0    109.4   121.8    130.9   146.5    152.5   149.6    162.1   180.8    174.9      -3.3
    Surgery.............................   145.5    151.8   155.4    162.4   187.9    207.5   220.5    236.4   233.8    250.5   262.7    255.2      -2.9
    Pediatrics..........................    70.7     74.5    77.1     81.8    85.3     94.9   104.7    106.5   119.3    123.9   135.4    126.2      -6.8
    Obstetrics/gynecology...............   119.9    116.2   122.7    135.9   163.2    180.7   194.3    207.3   221.8    220.7   221.9    200.4      -9.6
    Radiology...........................   148.0    139.8   150.8    168.8   180.7    188.5   210.5    219.4   229.8    257.3   259.8    237.4      -8.6
    Psychiatry..........................    80.0     85.5    88.6     91.5   102.7    111.4   111.7    116.5   127.6    132.1   131.3    128.5      -2.1
    Anesthesiology......................   144.7    145.4   140.2    150.2   163.1    194.5   185.8    207.4   221.1    231.1   224.1    218.1      -2.7
Census division:                                                                                                                                        
    New England.........................    84.5     87.3   108.3    107.1   110.6    132.9   128.3    142.5   143.8    171.2   171.5    156.1      -9.0
    Middle Atlantic.....................    98.6     98.4   107.9    114.6   126.1    135.0   152.5    156.1   171.0    172.4   185.3    177.8      -4.0
    East North Central..................   114.3    109.4   118.9    126.6   137.6    147.0   155.6    172.4   174.1    187.1   199.2    191.9      -3.7
    West North Central..................   110.5    110.7   113.7    120.7   133.9    138.0   159.2    151.4   164.2    187.5   198.2    183.8      -7.3
    South Atlantic......................   106.7    114.5   112.6    119.6   133.8    156.0   165.6    169.0   168.8    186.4   192.5    189.3      -1.7
    East South Central..................   114.9    122.2   115.0    122.6   141.2    164.8   173.0    169.0   179.4    180.0   195.0    199.2       2.2
    West South Central..................   124.4    119.1   123.3    129.0   140.4    160.7   170.5    178.8   193.3    193.8   189.1    195.5       3.4
    Mountain............................    91.4    102.3    97.5    108.5   125.5    132.1   142.6    170.9   155.0    175.7   193.2    175.4      -9.2
    Pacific.............................   103.1    109.4   113.6    119.0   135.4    136.0   148.1    162.5   172.4    178.1   181.2    171.8     -10.7
Location:                                                                                                                                               
    Nonmetropolitan.....................    87.2     90.9    94.2    107.7   117.9    120.9   129.4    130.5   150.4    159.2   160.0       NA        NA
    Metropolitan:                                                                                                                                       
        Less than 1,000,000.............   111.0    115.1   118.1    124.5   140.4    154.1   164.1    172.7   174.8    185.6   195.2       NA        NA
        1,000,000 and over..............   106.3    106.4   112.8    117.5   127.9    140.7   153.4    163.3   170.4    181.5   188.5       NA        NA
Employment Status:                                                                                                                                      
    Self-employed.......................   115.9    118.6   124.5    131.1   146.2    160.0   175.3    185.6   191.0    202.3   218.0    210.2      -3.6
    Employee............................    77.6     80.4    83.8     91.7    99.6    113.0   119.2    119.8   134.0    136.1   150.7    148.2      -1.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
\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.                                                                                         
                                                                                                                                                        
NA--Not available.                                                                                                                                      
                                                                                                                                                        
Source: American Medical Association (1995a and b).                                                                                                     

    Self-employed physicians, who are more likely to have 
additional years of experience and be board certified, earned 
an average of $210,200 in 1994 in contrast to employee-doctors 
whose net income was $148,200. Both of these practice 
arrangements reported declines in income from 1993.
    Declines in income were reported throughout the United 
States, except for the East South Central and West South 
Central census regions, which increased by 2.2 and 3.4 percent. 
Physicians in the East South Central and West South Central 
regions also had the highest average net incomes ($199,200 and 
$195,500 respectively). The lowest average net incomes 
($156,100) were for physicians in the New England area.
    Surgeons continued to have the highest average net incomes 
in 1994 ($255,200) and general and family practitioners the 
lowest ($121,400). Generalists' incomes appear to be improving 
relative to those of specialists. Average incomes for general 
and family practitioners saw a gain of 3.9 percent from 1993 to 
1994. Also, while median real incomes for all physicians 
declined from the previous year, real incomes for those in 
family practice and internal medicine fell less than those for 
most specialists (Physician Payment Review Commission, 1996).
    Table C-14 shows physicians' median net incomes by 
specialty. In the decade from 1984 to 1994, the real net income 
for general and family practitioners increased at an average 
annual rate of 2 percent. The only other specialty to show an 
average annual increase over 2 percent in real net income was 
radiology at 2.4 percent.
    Table C-15 shows average physician net incomes in nominal 
and real (or constant) dollars. Physicians average net income 
increased 202 percent between 1977 and 1994, but real income, 
expressed in 1994 dollars, increased only 23 percent (from 
$148,000 to $182,000) during this same time period.
    Table C-16 shows the distribution of physicians' net 
incomes in 1994 for all physicians and selected specialties. 
While the average net income of all physicians was $182,400, 
half of all physicians earned $150,000 or less. One-fourth of 
all physicians earned $105,000 or less, while one-fourth earned 
$220,000 or more. Anesthesiologists, radiologists, and surgeons 
had the highest median incomes, with half earning $200,000 or 
more.

             TABLE C-14.--MEDIAN PHYSICIAN NET INCOME AFTER EXPENSES BUT BEFORE TAXES, 1984 AND 1994            
                                            [In thousands of dollars]                                           
----------------------------------------------------------------------------------------------------------------
                                                                      Median net income         Average annual  
                                                               ------------------------------   percent change  
                                                                            1994      1994   -------------------
                                                                  1984     nominal  real \1\   Nominal  Real \1\
----------------------------------------------------------------------------------------------------------------
All physicians \2\............................................       $92      $150      $105       5.0       1.3
Specialty:                                                                                                      
    General/family practice...................................        63       110        77       5.7       2.0
    Internal medicine.........................................        90       150       105       5.2       1.6
    Surgery...................................................       130       219       154       5.4       1.7
    Pediatrics................................................        68       110        77       4.9       1.3
    Obstetrics/gynecology.....................................       106       182       128       5.6       1.9
    Radiology.................................................       122       220       154       6.1       2.4
    Psychiatry................................................        80       120        84       4.1       0.5
    Anesthesiology............................................       150       200       140       2.9      -0.7
    Pathology.................................................       106       152       107       3.7       0.1
Census division:                                                                                                
    New England...............................................        80       135        95       5.4       1.7
    Middle Atlantic...........................................        85       140        98       5.1       1.4
    East North Central........................................        97       164       115       5.4       1.7
    West North Central........................................        90       150       105       5.2       1.6
    South Atlantic............................................        93       160       112       5.6       1.9
    East South Central........................................       100       163       114       5.0       1.3
    West South Central........................................       100       164       115       5.1       1.4
    Mountain..................................................        92       146       102       4.7       1.1
    Pacific...................................................        95       150       105       4.7       1.0
----------------------------------------------------------------------------------------------------------------
\1\ In 1984 dollars.                                                                                            
\2\ Includes physicians in specialties not listed separately.                                                   
                                                                                                                
Source: American Medical Association (1986, 1995a).                                                             

    The continuing survey of physicians' incomes conducted by 
the magazine Medical Economics (Terry, 1993) showed that, on 
average, physicians received 83 percent of their 1992 gross 
practice incomes from third parties (see table C-17). On 
average, 17 percent came from commercial insurers, 14 percent 
from Blue Shield, 26 percent from Medicare, 10 percent from 
Medicaid, 10 percent from health maintenance organizations 
(HMOs) and independent practice associations (IPAs), and 6 
percent from preferred provider organizations (PPOs). As table 
C-17 indicates, the importance of each source of payment varied 
by specialty. Cardiothoracic surgeons received the highest 
percentage of gross pay from Medicare (50 percent). 
Pediatricians, on average, received only 1 percent of their 
gross income from Medicare, but received the highest percentage 
of gross pay from Medicaid (24 percent).

   TABLE C-15.--AVERAGE PHYSICIAN NET INCOME AFTER EXPENSES BUT BEFORE  
                             TAXES, 1977-94                             
                         [Dollars in thousands]                         
------------------------------------------------------------------------
                                                     Nominal      Real  
------------------------------------------------------------------------
1977..............................................      $60.4     $147.7
1978..............................................       64.6      146.8
1979..............................................       77.4      158.0
1980..............................................         NA         NA
1981..............................................       89.9      146.6
1982..............................................       97.7      150.0
1983..............................................      104.1      154.9
1984..............................................      108.4      154.6
1985..............................................      112.2      154.5
1986..............................................      119.5      161.6
1987..............................................      132.3      172.6
1988..............................................      144.7      181.3
1989..............................................      155.8      186.2
1990..............................................      164.3      186.3
1991..............................................      170.6      185.6
1992..............................................      181.7      191.9
1993..............................................      189.3      194.1
1994..............................................      182.4      182.4
------------------------------------------------------------------------
NA--Not available.                                                      
                                                                        
Note.--No data for 1980. Real (1994 dollars) incomes are calculated     
  using the consumer price index for all urban consumers.               
                                                                        
Source: CRS analysis of data from American Medical Association (1995a   
  and b).                                                               

    A subsequent analysis by Medical Economics (Walker, 1995) 
addressed physician income from HMOs and PPOs and the amount in 
the form of capitation payments (see table C-18). In 1994, 
almost four-fifths of physicians belonged to at least one 
managed care plan. HMOs accounted for 22 percent of gross 
income, preferred provider organizations (PPOs) for 15 percent 
of gross income, and capitation for 15 percent of gross income.

    TABLE C-16.--DISTRIBUTION OF PHYSICIAN NET INCOME AFTER EXPENSES BUT BEFORE TAXES BY SPECIALTY AND CENSUS   
                                                 DIVISION, 1994                                                 
                                            [In thousands of dollars]                                           
----------------------------------------------------------------------------------------------------------------
                                                                       25th        50th        75th             
                                                                    percentile  percentile  percentile    Mean  
----------------------------------------------------------------------------------------------------------------
All physicians \1\................................................        105         150         220      182.4
Specialty:                                                                                                      
    General/family practice.......................................         85         110         144      121.2
    Internal medicine.............................................        100         150         199      174.9
    Surgery.......................................................        150         219         300      255.2
    Pediatrics....................................................         85         110         150      126.2
    Obstetrics/gynecology.........................................        130         182         248      200.4
    Radiology.....................................................        165         220         302      237.4
    Psychiatry....................................................         90         120         150      128.5
    Anesthesiology................................................        168         200         262      218.1
    Pathology.....................................................        120         152         210      182.5
Census division:                                                                                                
    New England...................................................         98         135         180      156.1
    Middle Atlantic...............................................        100         140         220      177.8
    East North Central............................................        117         164         237      191.9
    West North Central............................................        110         150         225      183.8
    South Atlantic................................................        106         160         248      189.3
    East South Central............................................        120         163         230      199.2
    West South Central............................................        110         164         234      195.5
    Mountain......................................................        100         146         209      175.4
    Pacific.......................................................        105         150         210      171.8
----------------------------------------------------------------------------------------------------------------
\1\ Includes physicians in specialties not listed separately.                                                   
                                                                                                                
Source: American Medical Association (1995a).                                                                   


                                                      TABLE C-17.--THIRD PARTY SOURCES OF PHYSICIAN PAYMENT FOR SELECTED SPECIALTIES, 1992                                                      
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Commercial plans       Blue Shield            Medicare             Medicaid            HMOs/IPAs               PPOs       
                                                                   -----------------------------------------------------------------------------------------------------------------------------
                                                                                  As                   As                   As                   As                   As                   As   
                             Specialty                               Average    percent   Average    percent   Average    percent   Average    percent   Average    percent   Average    percent
                                                                      annual   of gross    annual   of gross    annual   of gross    annual   of gross    annual   of gross    annual   of gross
                                                                     payment   practice   payment   practice   payment   practice   payment   practice   payment   practice   payment   practice
                                                                                income               income               income               income               income               income 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Cardiologists.....................................................    $61,400        15    $56,100        14   $177,490        46    $18,220         5    $27,530         6    $16,730         4
Cardio/thoracic surgeons..........................................     61,200        12     70,670        14    241,890        50     31,410         6     44,000        10     17,980         4
Family practice...................................................     33,420        14     30,290        12     54,170        22     25,320        11     27,720        12     18,140         7
Gastroenterologists...............................................     58,600        14     57,500        15    151,640        40     21,620         6     32,140        10     19,810         5
General practice..................................................     30,870        14     23,940        12     45,230        24     20,210        12     23,300        10     15,250         5
General surgeons..................................................     62,430        19     53,810        17    103,590        33     26,100         9     31,890        10     20,510         6
Pediatricians.....................................................     36,860        15     33,350        14        810         1     53,800        24     31,890        15     22,830         9
Plastic surgeons..................................................     84,410        20     61,030        14     54,450        13     13,910         4     25,960         6     30,810         7
Psychiatrists.....................................................     38,910        20     23,610        13     22,780        11     10,870         6     10,000         5     13,190         6
Internists........................................................     31,060        12     33,700        12    101,320        39     12,380         5     22,230        10     16,290         6
Neurosurgeons.....................................................    154,920        26     77,130        14    118,990        22     35,290         7     55,620        10     39,880         7
OBG specialists...................................................     96,590        24     80,930        20     24,290         7     47,860        11     58,280        15     48,860        11
Orthopedists......................................................    122,860        24     78,430        17     95,950        21     28,810         6     43,510         9     38,570         7
All surgical specialists..........................................     83,980        20     66,010        16    105,590        26     32,030         8     41,800        10     30,930         7
All nonsurgical specialists.......................................     46,460        15     39,730        14     87,000        28     24,080        10     28,480        10     18,370         6
All M.D.s.........................................................     55,600        17     45,710        14     86,070        26     26,390        10     32,150        10     22,030         6
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Terry (1993).                                                                                                                                                                           


 TABLE C-18.--PERCENTAGE OF PHYSICIAN GROSS INCOME FROM MANAGED CARE AND
                      CAPITATION BY SPECIALTY, 1994                     
------------------------------------------------------------------------
                                         Percent of 1994 income from:   
                                     -----------------------------------
         Physician specialty                     Preferred              
                                        HMOs      provider    Capitation
                                               organizations            
------------------------------------------------------------------------
Anesthesiologists...................       26          20            22 
Cardiologists.......................       13          10             9 
Cardio/thoracic surgeons............       21          10            15 
Emergency physicians................    (\1\)       (\1\)            16 
Family practitioners................       21          10            18 
Gastroenterologists.................       17          12            14 
General practitioners...............       28          15            24 
General surgeons....................       19          10            18 
Internist...........................       20          10            15 
Neurosurgeons.......................       19          15            22 
OBG specialists.....................       32          20            14 
Orthopedic surgeons.................       19          15            14 
Pediatricians.......................       32          20            22 
Plastic surgeons....................       17          12            12 
Psychiatrists.......................       18          20            23 
Radiologists........................       17          10            17 
All surgical specialists............       22          15            15 
All nonsurgeons \2\.................       21          15            15 
All fields..........................       22          15            15 
------------------------------------------------------------------------
\1\ Insufficient sample.                                                
\2\ Includes family practitioners and general practitioners. Gross is   
  the individual physician's share of 1994 practice receipts before     
  professional expenses and income taxes. Figures exclude physicians    
  with no HMO, preferred provider organizations, or capitation          
  contracts.                                                            
                                                                        
Source: Walker (1995).                                                  

                        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 1991, the number 
of beds had dropped to 3.6 per 1,000 population and remained at 
that level in 1992 and 1993. Among the 9 census regions, the 
area experiencing the largest increase has been the East South 
Central, where beds increased from 1.7 per 1,000 population in 
1940 to 5.1 in 1980, falling back to 4.5 in 1993 (see table C-
19).

                     TABLE C-19.--COMMUNITY HOSPITAL BEDS PER 1,000 POPULATION AND AVERAGE ANNUAL PERCENT CHANGE BY GEOGRAPHIC DIVISION AND STATE, SELECTED YEARS 1940-1993                     
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Beds per 1,000 civilian population                                     Average annual percent change                 
              Geographic division and State              ---------------------------------------------------------------------------------------------------------------------------------------
                                                          1940 \1\  1950 \1\  1960 \2\   1970    1980    1990    1992    1993   1940-60 \1\ \2\  1960-70 \2\    1970-80     1980-90     1990-93 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
United States...........................................      3.2       3.3       3.6      4.3     4.5     3.8     3.6     3.6            0.6            1.8         0.5        -1.7        -1.8
New England.............................................      4.4       4.2       3.9      4.1     4.1     3.4     3.3     3.3           -0.6            0.5         0.0        -1.9        -1.0
  Maine.................................................      3.0       3.2       3.4      4.7     4.7     3.8     3.7     3.6            0.6            3.3         0.0        -2.1        -1.8
  New Hampshire.........................................      4.2       4.2       4.4      4.0     3.9     3.1     3.1     3.0            0.2           -0.9        -0.3        -2.3        -1.1
  Vermont...............................................      3.3       4.0       4.5      4.5     4.4     3.1     2.9     3.4            1.6            0.0        -0.2        -3.4         3.1
  Massachusetts.........................................      5.1       4.8       4.2      4.4     4.4     3.6     3.6     3.5           -1.0            0.5         0.0        -2.0        -0.9
  Rhode Island..........................................      3.9       3.8       3.7      4.0     3.8     3.2     3.1     3.0           -0.3            0.8        -0.5        -1.7        -2.1
  Connecticut...........................................      3.7       3.6       3.4      3.4     3.5     2.9     2.8     2.8           -0.4            0.0         0.3        -1.9        -1.2
Middle Atlantic.........................................      3.9       3.8       4.0      4.4     4.6     4.2     4.2     4.3            0.1            1.0         0.4        -0.9         0.8
  New York..............................................      4.3       4.1       4.3      4.6     4.5     4.2     4.2     4.3            0.0            0.7        -0.2        -0.7         0.8
  New Jersey............................................      3.5       3.2       3.1      3.6     4.2     3.7     4.0     3.9           -0.6            1.5         1.6        -1.3         1.8
  Pennsylvania..........................................      3.5       3.8       4.1      4.7     4.8     4.4     4.3     4.4            0.8            1.4         0.2        -0.9         0.0
East North Central......................................      3.2       3.2       3.6      4.4     4.7     3.9     3.7     3.6            0.6            2.0         0.7        -1.8        -2.6
  Ohio..................................................      2.7       2.9       3.4      4.2     4.7     4.0     3.8     3.7            1.2            2.1         1.1        -1.8        -2.6
  Indiana...............................................      2.3       2.6       3.1      4.0     4.5     3.9     3.8     3.7            1.5            2.6         1.2        -1.4        -1.7
  Illinois..............................................      3.4       3.6       4.0      4.7     6.1     4.0     3.9     3.8            0.8            1.6         0.8        -2.4        -1.7
  Michigan..............................................      4.0       3.3       3.3      4.3     4.4     3.7     3.4     3.3           -1.0            2.7         0.2        -1.7        -3.7
  Wisconsin.............................................      3.4       3.7       4.3      5.2     4.9     3.8     3.7     3.5            1.2            1.9        -0.8        -2.5        -2.7
West North Central......................................      3.1       3.7       4.3      6.7     6.8     4.9     4.8     4.7            1.6            2.9         0.2        -1.7        -1.4
  Minnesota.............................................      3.9       4.4       4.8      6.1     5.7     4.4     4.2     4.1            1.0            2.4        -0.7        -2.6        -2.3
  Iowa..................................................      2.7       3.2       3.9      5.6     5.7     5.1     5.0     4.8            1.9            3.7         0.2        -1.1        -2.0
  Missouri..............................................      2.9       3.3       3.9      5.1     5.7     4.8     4.7     4.6            1.5            2.7         1.1        -1.7        -1.4
  North Dakota..........................................      3.5       4.3       5.2      6.8     7.4     7.0     7.0     7.0            2.0            2.7         0.8        -0.6         0.0
  South Dakota..........................................      2.8       4.4       4.5      5.6     5.5     6.1     6.1     6.0            2.4            2.2        -0.2         1.0        -0.5
  Nebraska..............................................      3.4       4.2       4.4      6.2     6.0     5.4     5.3     5.2            1.3            3.5        -0.3        -1.0        -1.3
  Kansas................................................      2.8       3.4       4.2      5.4     5.8     4.8     4.7     4.6            2.0            2.5         0.7        -1.9        -1.4
South Atlantic..........................................      2.5       2.8       3.3      4.0     4.5     3.7     3.6     3.5            1.4            1.9         1.2        -1.9        -1.8
  Delaware..............................................      4.4       3.9       3.7      3.7     3.6     3.0     3.1     3.1           -0.9            0.0        -0.3        -1.8         1.1
  Maryland..............................................      3.9       3.6       3.3      3.1     3.6     2.9     2.7     2.6           -0.8           -0.6         1.5        -2.1        -3.6
  District of Columbia..................................      5.5       5.5       5.9      7.4     7.3     7.5     7.6     7.3            0.4            2.3        -0.1         0.3        -0.9
  Virginia..............................................      2.2       2.5       3.0      3.7     4.1     3.3     3.2     3.1            1.6            2.1         1.0        -2.1        -2.1
  West Virginia.........................................      2.7       3.1       4.1      5.4     5.5     4.7     4.6     4.7            2.1            2.8         0.2        -1.6         0.0
  North Carolina........................................      2.2       2.6       3.4      3.8     4.2     3.4     3.4     3.3            2.2            1.1         1.0        -2.1        -1.0
  South Carolina........................................      1.8       2.4       2.9      3.7     3.9     3.3     3.2     3.2            2.4            2.5         0.5        -1.7        -1.0
  Georgia...............................................      1.7       2.0       2.8      3.8     4.6     4.0     3.9     3.9            2.5            3.1         1.9        -1.4        -0.8
  Florida...............................................      2.8       2.9       3.1      4.4     5.1     4.0     3.8     3.8            0.5            3.6         1.5        -2.4        -1.7
East South Central......................................      1.7       2.1       3.0      4.4     5.1     4.8     4.6     4.5            2.9            3.9         1.5        -0.6        -2.1
  Kentucky..............................................      1.8       2.2       3.0      4.0     4.5     4.4     4.3     4.2            2.6            2.9         1.2        -0.2        -1.5
  Tennessee.............................................      1.9       2.3       3.4      4.7     5.5     4.9     4.7     4.5            3.0            3.3         1.6        -1.1        -2.8
  Alabama...............................................      1.5       2.0       2.8      4.3     5.1     4.6     4.5     4.5            3.2            4.4         1.7        -1.0        -0.7
  Mississippi...........................................      1.4       1.7       2.9      4.4     5.3     5.3     4.9     4.9            3.7            4.3         1.9         0.0        -2.8
West South Central......................................      2.1       2.7       3.3      4.3     4.7     3.9     3.7     3.8            2.3            2.7         0.9        -1.8        -2.6
  Arkansas..............................................      1.4       1.6       2.9      4.2     5.0     4.7     4.7     4.5            3.7            3.6         1.8        -0.6        -1.4
  Louisiana.............................................      3.1       3.8       3.9      4.2     4.8     4.6     4.5     4.5            1.2            0.7         1.3        -0.4        -0.7
  Oklahoma..............................................      1.9       2.5       3.2      4.5     4.6     4.0     3.8     3.7            2.6            3.5         0.2        -1.4        -2.6
  Texas.................................................      2.0       2.7       3.3      4.3     4.7     3.5     3.4     3.3            2.5            2.7         0.9        -2.9        -1.9
Mountain................................................      3.6       3.8       3.5      4.3     3.8     3.1     2.9     2.9           -0.1            2.1        -1.2        -2.0        -2.2
  Montana...............................................      4.9       5.3       5.1      5.8     5.9     5.8     5.3     5.1            0.2            1.3         0.2        -0.2        -4.2
  Idaho.................................................      2.6       3.4       3.2      4.0     3.7     3.2     3.2     3.1            1.0            2.3        -0.8        -1.4        -1.1
  Wyoming...............................................      3.5       3.9       4.6      5.5     3.6     4.9     4.8     4.8            1.4            1.8        -4.1         3.1         0.7
  Colorado..............................................      3.9       4.2       3.8      4.6     4.2     3.2     2.9     2.9           -0.1            1.9        -0.9        -2.7        -3.2
  New Mexico............................................      2.7       2.2       2.9      3.5     3.1     2.9     2.7     2.6            0.4            1.9        -1.2        -0.7        -3.6
  Arizona...............................................      3.4       4.0       3.0      4.1     3.6     2.7     2.5     2.5           -0.6            3.2         1.3        -2.8        -2.5
  Utah..................................................      3.2       2.9       2.8      3.6     3.1     2.6     2.4     2.4           -0.7            2.5        -1.5        -1.7        -2.6
  Nevada................................................      5.0       4.4       3.9      4.2     4.2     2.9     2.7     2.7           -1.2            0.7         0.0        -3.6        -2.4
Pacific.................................................      4.1       3.2       3.1      3.7     3.5     2.7     2.6     2.5           -1.4            1.8        -0.6        -2.6        -2.5
  Washington............................................      3.4       3.6       3.3      3.5     3.1     2.5     2.4     2.3           -0.1            0.6        -1.2        -2.1        -2.7
  Oregon................................................      3.5       3.1       3.5      4.0     3.5     2.9     2.6     2.5            0.0            1.3        -1.3        -1.9        -4.8
  California............................................      4.4       3.3       3.0      3.8     3.6     2.7     2.6     2.5           -1.9            2.4        -0.5        -2.8        -2.5
  Alaska................................................  ........  ........      2.4      2.3     2.7     2.3     2.3     2.2  ...............         -0.4         1.6        -1.6        -1.5
  Hawaii................................................  ........  ........      3.7      3.4     3.1     2.8     2.7     2.7  ...............         -0.8        -0.9        -1.0        -1.2
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ 1940 and 1950 data are estimated based on published figures.    \2\ 1960 includes hospital units of institutions.                                                                           
                                                                                                                                                                                                
Source: U.S. Public Health Service (1996).                                                                                                                                                      

                          SUPPLY OF PHYSICIANS

    National concern about physician shortages in the 1950s and 
1960s led to Federal and State initiatives to increase the 
supply of physicians. Since that time, the number of physicians 
in the United States has grown rapidly from 334,028 in 1970 to 
684,414 in 1994. According to an Institute of Medicine report, 
this rate has been 1\1/2\ times faster than the growth rate of 
the Nation's population (Lohr, Vanselow, & Detmer, 1996).
    Table C-20 indicates that between 1970 and 1994, the number 
of all physicians per 100,000 civilians grew from 161 to 263, a 
63-percent increase. Table C-21 shows variations in the supply 
of non-Federal physicians relative to population by State. In 
1994, the District of Columbia had the highest ratio (693 
physicians per 100,000 population) while Mississippi had the 
lowest ratio (145 physicians per 100,000 population). The 
number of physicians in the United States is expected to 
continue to increase until the year 2020 when the Bureau of 
Health Professions estimates there will be 269 physicians per 
100,000 population.
    In 1994, about 34 percent of physicians were in primary 
care specialties, defined as general and family practice, 
internal medicine, obstetrics/gynecology, and pediatrics (see 
table C-22 for number of physicians by specialty). The National 
Resident Matching Program announced in March, 1996, that more 
than half of U.S. medical school seniors plan to spend at least 
their first year of residency training in general practice.
    In 1994, there were 97,832 residents in training. The 
number of U.S. medical school graduates, which rose rapidly in 
the late 1960s and early 1970s, has been relatively stable over 
the past decade (see table C-23).
    Increasing numbers of residency positions are occupied, 
however, by international medical graduates (IMGs). Due to 
stricter immigration laws and more rigorous competency 
requirements, IMGs dropped from over 40 percent of all 
residents in 1971 to about 17 percent in 1985. Since then, 
however, the percentage of IMGs in training in the United 
States increased 88 percent, from 12,509 in 1985 to 23,499 in 
1994 and is now at 24 percent of all residents in training 
(table C-24).

                    HEALTH INSURANCE STATUS IN 1994

    Most people have some form of health insurance. In 1994, an 
estimated 84.9 percent of the total noninstitutionalized 
population had public or private coverage during at least part 
of the year. However, an estimated 39.6 million Americans, or 
15.1 percent of the population, were without coverage in 1994. 
Almost all of the uninsured were under age 65; consequently, 
17.0 percent of the nonelderly population were uninsured. This 
section examines characteristics of both the insured and the 
uninsured populations in 1994, and reviews trends in health 
insurance coverage over the 1979-94 period (see Smith & 
Nuschler, 1996).

                  TABLE C-20.--PHYSICIAN SUPPLY BY MAJOR CATEGORIES, 1970, 1980, 1990, AND 1994                 
----------------------------------------------------------------------------------------------------------------
                                         1970                1980                1990                1994       
            Category             -------------------------------------------------------------------------------
                                   Number    Percent   Number    Percent   Number    Percent   Number    Percent
----------------------------------------------------------------------------------------------------------------
Total physicians \1\............   334,028  ........   467,679  ........   615,421  ........   684,414  ........
                                 -------------------------------------------------------------------------------
    Federal.....................    29,501        9     17,787        4     20,475         3    22,454        3 
    Non-Federal.................   301,323       91    443,502       96    592,166        97   660,582       97 
        Metropolitan (non-                                                                                      
         Federal only)..........   258,265      (86)   385,365      (87)   521,668        88   584,727      (89)
        Nonmetropolitan (non-                                                                                   
         Federal only)..........    43,058      (14)    58,137      (13)    70,498        12    75,855      (12)
    Patient care................   278,535       83    376,512       80    503,870        82   562,456       82 
    Nonpatient care.............    32,310       10     38,404        9     43,440         8    43,012        6 
    Male........................   308,627       92    413,395       88    511,227        83   551,151       81 
    Female......................    25,401        8     54,284       12    104,194        17   133,263       20 
    International medical                                                                                       
     graduates..................    57,217       17     97,726       21    131,764        21   154,576       23 
    Total physician-population                                                                                  
     ratio (per 100,000 persons)       161  ........       202  ........       244  ........       263  ........
----------------------------------------------------------------------------------------------------------------
\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.--Numbers may not add due to rounding.                                                                     
                                                                                                                
Source: American Medical Association (1996).                                                                    


 TABLE C-21.--NON-FEDERAL PHYSICIAN/POPULATION RATIOS AND RANK BY STATE,
                         SELECTED YEARS 1970-94                         
[Ratios: Non-Federal physicians (M.D.s) per 100,000 civilian population]
------------------------------------------------------------------------
                                                                    1994
             State               1970   1975   1985   1990   1994   rank
------------------------------------------------------------------------
Alabama.......................     90    103    152    170    190     41
Alaska........................     74     95    137    155    151     50
Arizona.......................    144    185    220    233    230     23
Arkansas......................     92    103    150    165    183     43
California....................    194    219    266    272    270     11
Colorado......................    178    186    216    232    246     16
Connecticut...................    192    224    302    332    360      5
Delaware......................    134    155    203    217    235     20
District of Columbia..........    390    467    607    658    693      1
Florida.......................    155    185    236    251    258     13
Georgia.......................    108    126    172    187    199     37
Hawaii........................    160    185    239    266    273     10
Idaho.........................     94    104    133    142    154     49
Illinois......................    138    164    217    229    252     14
Indiana.......................    102    116    156    171    189     42
Iowa..........................    103    113    149    167    181     44
Kansas........................    118    137    179    195    212     31
Kentucky......................    102    122    162    181    199     36
Louisiana.....................    120    131    187    200    225     28
Maine.........................    111    133    193    208    228     24
Maryland......................    183    217    334    360    367      4
Massachusetts.................    207    237    331    364    400      2
Michigan......................    125    145    190    201    218     29
Minnesota.....................    151    172    223    240    259     12
Mississippi...................     84     94    126    144    145     51
Missouri......................    129    148    195    209    227     25
Montana.......................    104    116    155    181    196     40
Nebraska......................    116    134    170    185    209     33
Nevada........................    114    129    173    175    168     47
New Hampshire.................    140    162    207    227    240     19
New Jersey....................    146    174    243    267    291      8
New Mexico....................    113    130    184    206    218     30
New York......................    236    258    318    339    369      3
North Carolina................    111    132    185    209    225     27
North Dakota..................     96    106    168    184    211     32
Ohio..........................    133    147    199    213    233     21
Oklahoma......................    103    113    149    160    168     46
Oregon........................    144    171    215    233    242     17
Pennsylvania..................    152    169    234    256    287      9
Rhode Island..................    160    194    248    277    305      7
South Carolina................     93    114    161    177    196     38
South Dakota..................     81     90    143    154    178     45
Tennesssee....................    119    139    189    210    233     22
Texas.........................    117    135    174    188    196     39
Utah..........................    138    155    185    200    205     35
Vermont.......................    187    207    268    288    306      6
Virginia......................    125    149    214    233    240     18
Washington....................    149    168    223    241    251     15
West Virginia.................    104    124    171    183    207     34
Wisconsin.....................    120    137    188    207    226     26
Wyoming.......................    101    108    140    156    160     48
                               -----------------------------------------
      United States \1\.......    148    169    220    237    252  .....
------------------------------------------------------------------------
\1\ Excludes counts of physicians in U.S. possessions and with unknown  
  addresses.                                                            
                                                                        
Source: American Medical Association (1996).                            


  TABLE C-22.--FEDERAL AND NON-FEDERAL PHYSICIANS FOR TOTAL AND OFFICE-BASED ACTIVITY BY SPECIALTY 1980, 1990,  
                                                      1994                                                      
----------------------------------------------------------------------------------------------------------------
                                                                  Federal and non-Federal physicians            
                                                     -----------------------------------------------------------
                                                             1980                1990                1994       
                      Specialty                      -----------------------------------------------------------
                                                                 Office              Office              Office 
                                                        Total     based     Total     based     Total     based 
----------------------------------------------------------------------------------------------------------------
Allergy immunology..................................     1,518     1,371     3,388     2,453     3,729     2,726
Anesthesiology......................................    15,958    11,338    25,981    17,803    31,816    21,962
Cardiovascular diseases.............................     9,823     6,729    15,862    10,680    18,437    12,917
Child psychiatry....................................     3,217     1,961     4,343     2,615     5,212     3,261
Dermatology.........................................     5,660     4,378     7,557     6,006     8,353     6,709
Diagnostic radiology................................     7,048     4,191    15,412     9,815    19,175    12,079
Emergency medicine..................................     5,699     3,362    14,243     8,420    17,744    10,604
Family practice.....................................    27,530    18,378    47,639    37,476    54,829    42,162
Gastroenterology....................................     4,046     2,737     7,493     5,200     9,087     6,707
General practice....................................    32,519    29,642    22,841    20,517    18,454    16,048
General surgery.....................................    34,034    22,426    38,376    24,520    37,902    24,209
Internal medicine...................................    71,531    40,617    98,349    57,950   111,427    67,897
Neurology...........................................     5,685     3,253     9,237     5,595    10,921     7,131
Neurological surgery................................     3,341     2,468     4,358     3,092     4,710     3,419
Obstetrics/gynecology...............................    26,305    19,513    33,697    25,485    36,649    28,211
Ophthalmology.......................................    12,974    10,603    16,073    13,068    17,144    14,297
Orthopedic surgery..................................    13,996    10,728    19,138    14,199    21,533    16,580
Otolaryngology......................................     6,553     5,266     8,138     6,367     8,785     6,856
Pathology \1\.......................................    13,642     6,081    16,584     7,494    18,253     8,963
Pediatrics \2\......................................    29,462    18,210    41,899    27,073    49,357    32,152
Physical med./rehab.................................     2,146     1,014     4,105     2,183     5,224     3,025
Plastic surgery.....................................     2,980     2,438     4,590     3,835     5,206     4,313
Psychiatry..........................................    27,481    16,004    35,163    20,146    37,702    22,551
Pulmonary diseases..................................     3,715     2,048     6,080     3,662     7,189     4,631
Radiology...........................................    11,653     7,802     8,492     6,060     7,932     5,885
Radiation oncology..................................     1,581     1,027     2,821     1,968     3,493     2,450
Urological surgery..................................     7,743     6,228     9,372     7,398     9,727     7,779
Other specialty.....................................     5,810     2,418     7,254     2,656     7,643     3,323
Other surgical specialties \3\......................     2,852     2,261     2,945     2,389     3,273     2,459
Other remaining specialties \4\.....................     6,071     2,549     7,822     3,316     8,354     3,706
Unspecified.........................................    12,289     4,959     8,058     1,554     6,208     2,032
Not classified......................................    20,629  ........    12,678  ........    14,283  ........
Other categories \5\................................    32,134  ........    55,433  ........    64,663  ........
    Total physicians................................   467,679   272,000   615,421   360,995   684,414   407,044
----------------------------------------------------------------------------------------------------------------
\1\ Includes pathology and forensic pathology.                                                                  
\2\ Includes pediatrics, pediatric cardiology, and pediatric allergy.                                           
\3\ Includes colon and rectal surgery and thoracic surgery.                                                     
\4\ Includes aerospace medicine, general preventive medicine, nuclear medicine, occupational medicine, medical  
  genetics, and public health.                                                                                  
\5\ Includes inactive and address unknown; these categories are included in total physicians only, not in office-
  based practice.                                                                                               
                                                                                                                
Note.--Data for 1990 and 1994 are as of January 1. Data for 1980 are as of December 31.                         
                                                                                                                
Source: American Medical Association.                                                                           

    Estimates of health insurance coverage in 1994 are based on 
analysis of the March 1995 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 1995 CPS reflects 
respondents' recollections of coverage during all of 1994. \2\
---------------------------------------------------------------------------
    \2\ 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. The March 1995 CPS attempted to resolve this 
controversy by asking about health insurance coverage during the last 
week, as well as during the last year. Results from these new questions 
are still being reviewed.
---------------------------------------------------------------------------

   Health Insurance Coverage and Selected Population Characteristics

Age
    Table C-25 provides a breakdown of health insurance 
coverage by type of insurance and age. In 1994, young adults 
ages 18 to 24 were the least likely to have health insurance. 
While 52 percent of this group were covered under an 
employment-based plan, over one-fourth (27 percent) had no 
health insurance. These young adults comprised 10 percent of 
the U.S. population, but 17 percent of the uninsured 
population. These individuals are often too old to be covered 
as dependents on their parents' policies, and as entry-level 
workers they do not have strong ties to the work force; some 
may choose to remain uninsured and spend their money on other 
items. After age 25, the percentage of people with health 
insurance increases. Of those age 65 and over, 97 percent were 
covered by Medicare or Medicaid, and 1 percent were uninsured. 
The remainder of this section focuses on the population under 
age 65.

  TABLE C-23.--MEDICAL SCHOOL GRADUATES, FIRST-YEAR RESIDENTS AND TOTAL 
                           RESIDENTS, 1965-94                           
------------------------------------------------------------------------
                                          Medical     First-            
                  Year                     school      year      Total  
                                         graduates  residents  residents
------------------------------------------------------------------------
1965...................................      7,409      9,670     31,898
1966...................................      7,574     10,316     31,898
1967...................................      7,743     10,419     33,743
1968...................................      7,973     10,464     35,047
1969...................................      8,059     10,808     37,139
1970...................................      8,367     11,552     39,463
1971...................................      8,974     12,066     42,512
1972...................................      9,551     11,500     45,081
1973...................................     10,391     11,031     49,082
1974...................................     11,613     11,628     52,685
1975...................................     12,714     13,200     54,500
1976...................................      (\1\)     14,258     56,872
1977...................................     13,607     15,900     59,000
1978...................................     14,393     16,800     63,163
1979...................................     14,966     17,600     64,615
1980...................................     15,135     18,702     61,465
1981...................................     15,667     18,389     69,738
1982...................................     15,985     18,976     69,142
1983...................................     15,824     18,794     73,000
1984...................................     16,327     19,539     75,125
1985...................................     16,319     19,168     75,514
1986...................................     16,125     18,183     76,815
1987...................................     15,836     18,067     81,410
1988...................................     15,887     17,941     81,093
1989...................................     15,620     18,131     82,000
1990...................................     15,336     18,322     82,902
1991...................................     15,481     19,497     86,217
1992...................................     15,386     19,794     88,620
1993...................................     15,512     21,616     96,469
1994...................................     15,579     19,293     97,832
------------------------------------------------------------------------
\1\ Not available.                                                      
                                                                        
Source: American Medical Association (various years).                   


  TABLE C-24.--INTERNATIONAL MEDICAL GRADUATE RESIDENTS BY LOCATION OF  
            EDUCATION AND CITIZENSHIP, SELECTED YEARS 1971-94           
------------------------------------------------------------------------
                                          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  \1\ 14,06
                                                                       9
1993........................     22,706         24      5,056     17,650
1994........................     23,499         24      4,285     19,214
------------------------------------------------------------------------
\1\ Includes 6,192 permanent resident aliens.                           
                                                                        
Source: American Medical Association (1986 and various years).          


                    TABLE C-25.--HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND AGE, 1994                   
----------------------------------------------------------------------------------------------------------------
                                                                        Type of insurance \1\                   
                                        Population -------------------------------------------------------------
                  Age                       (in     Employment   Medicare or   Private                          
                                         millions)   based \2\  Medicaid \3\   nongroup  Military \3\  Uninsured
                                                     (percent)    (percent)   (percent)    (percent)   (percent)
----------------------------------------------------------------------------------------------------------------
Under 5...............................       20.3        57.0         30.3         3.8          2.3        14.0 
5-17..................................       50.2        64.2         20.0         5.0          2.2        14.3 
18-24.................................       25.2        52.3         12.8        10.5          3.3        26.7 
25-34.................................       41.4        65.3          9.5         4.8          1.5        22.0 
35-54.................................       73.0        72.8          7.3         6.0          3.0        14.7 
55-59.................................       10.8        68.4          9.5         9.2          6.3        13.7 
60-64.................................        9.9        61.4         14.8        12.5          7.8        14.1 
65+...................................       31.3        35.4         96.6        32.6          5.0         0.9 
      Total...........................      262.1        61.7         23.4         9.4          3.2        15.2 
----------------------------------------------------------------------------------------------------------------
\1\ People may have more than one source of health insurance; percentages may total to more than 100.           
\2\ Group health insurance through employer or union.                                                           
\3\ Military health care or veterans coverage.                                                                  
                                                                                                                
Source: Congressional Research Service analysis of data from the March 1995 Current Population Survey.          

Other demographic characteristics
    Table C-26 shows the rate of health insurance coverage by 
type of insurance and selected demographic characteristics--
race, family type, region, and poverty level--for people under 
age 65. In 1994 whites were most likely to have health 
insurance (87 percent) while Hispanics were least likely (65 
percent). Hispanics comprised 11 percent of the under 65 
population, but were 23 percent of the uninsured population; 
comparable numbers for blacks were 13 percent and 16 percent, 
respectively. The rate of employment-based health coverage was 
highest among whites (72 percent) and the rate of Medicaid/
Medicare coverage was highest for blacks (29 percent). \3\
---------------------------------------------------------------------------
    \3\ Medicaid covered 12 percent of the nonelderly population and 
Medicare covered 2 percent. About 27 percent of blacks had Medicaid 
coverage.

TABLE C-26.--HEALTH INSURANCE COVERAGE BY TYPE OF INSURANCE AND DEMOGRAPHIC CHARACTERISTICS FOR PEOPLE UNDER AGE
                                                    65, 1994                                                    
----------------------------------------------------------------------------------------------------------------
                                                                                Type of insurance \1\           
                                                                    --------------------------------------------
                                                         Population               Medicaid                      
                                                             (in     Employment      or                Uninsured
                                                          millions)   based \2\   Medicare  Other \3\  (percent)
                                                                      (percent)  (percent)                      
----------------------------------------------------------------------------------------------------------------
Race/ethnicity:                                                                                                 
    White..............................................       166.1        72.3        9.0       10.0       13.3
    Black..............................................        30.5        49.9       28.9        6.8       21.0
    Hispanic...........................................        26.1        40.6       23.0        4.6       35.3
    Other..............................................         8.2        59.3       16.4        9.2       21.1
Family type:                                                                                                    
    Female-headed with children........................        29.1        36.3       44.5        6.5       19.0
    Male- or two-parent-headed w/children..............       115.2        72.9       10.0        7.2       14.5
    No children........................................        86.5        64.9        7.7       12.1       19.8
Region:                                                                                                         
    Northeast..........................................        44.5        67.9       13.1        7.4       15.1
    Midwest............................................        54.1        71.2       12.5        8.8       12.2
    South..............................................        81.0        62.8       13.6        9.7       19.4
    West...............................................        51.2        60.6       14.7        9.2       20.3
Poverty level:                                                                                                  
    <1.0 of poverty....................................        34.9        15.0       49.5        9.1       31.8
    1.0-1.49 of poverty................................        20.9        38.1       24.8       10.8       32.9
    1.5-1.99 of poverty................................        21.6        55.6       13.5       10.3       26.3
    2.0+ of poverty....................................       153.4        81.8        3.8        8.5       10.3
                                                        --------------------------------------------------------
      Total............................................       230.8        65.3       13.5        9.0       17.1
----------------------------------------------------------------------------------------------------------------
\1\ People may have more than one source of health insurance; percentages may total to more than 100.           
\2\ Group health insurance through employer or union.                                                           
\3\ Private nongroup health insurance, veterans coverage, or military health care.                              
                                                                                                                
Source: Congressional Research Service analysis of data from the March 1995 Current Population Survey.          

    People in male-headed or two-parent families with children 
were most likely to be insured (86 percent), followed by those 
in female-headed families with children (81 percent) and in 
families with no children (80 percent). While the rates of 
coverage were similar for male-present (one- or two-parent) and 
female-headed (single-parent) families with children, the 
sources of coverage were quite different: coverage was 
employment based for 73 percent of male-present families 
compared to 36 percent of female-headed families, while 
coverage came from Medicaid/Medicare for 10 percent of male-
present families compared to 44 percent of female-headed 
families.
    People living in the Midwest were more likely to have 
insurance (88 percent), than people in the Northeast (85 
percent), South (81 percent), and West (80 percent). About 70 
percent of those living in the Northeast and Midwest had 
employment-based health insurance compared to about 60 percent 
in the South and West.
    Among individuals with incomes at least two times the 
poverty level, 90 percent had health insurance compared to 68 
percent of the poor (i.e., those with incomes less than one 
times the poverty level). The poor accounted for 15 percent of 
the under 65 population, but comprised 28 percent of the 
uninsured. Only 15 percent of the poor received health coverage 
through employment, while 50 percent had either Medicaid or 
Medicare. Over 80 percent of people with incomes at least two 
times the poverty level were covered through an employer, and 4 
percent had Medicaid/Medicare.
Employment characteristics
    Table C-27 shows the rate of health insurance coverage by 
employment characteristics for people under age 65 who were 
workers or their dependents. In 1994, the rate of employment-
based health insurance coverage increased as firm size 
increased. Among workers and dependents of workers in large 
firms (1,000 or more employees), 92 percent were insured 
compared to 67 percent in small firms (under 10 employees). 
People in small firms accounted for 15 percent of the under 65 
population but 29 percent of the uninsured. Insurance coverage 
varied according to industry as well. Agriculture, personal 
services, and construction 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, mining, and manufacturing of durable 
goods. Among workers, 86 percent of those employed full time, 
full year had health insurance and it was most often obtained 
through their employment (78 percent); their dependents had 
comparable levels of coverage. Workers with part-time, part-
year employment had an insured rate of 67 percent. Workers who 
worked less than full time, full year and their dependents 
comprised 21 percent of the population, but 33 percent of the 
uninsured, while nonworkers were 12 percent of the population 
and 17 percent of the uninsured.

        Characteristics of the Uninsured Population Under Age 65

    As reported above, people who lack health insurance differ 
from the population as a whole: they are more likely to be 
poor, young adults, Hispanic, and work for small firms. Chart 
C-3 illustrates selected characteristics of the uninsured 
population under age 65 in 1994--age, race, poverty level, 
region, firm size, and labor force ties. One-fourth (25 
percent) of the uninsured were under age 18, and 56 percent 
were white. A large proportion (40 percent) had incomes two or 
more times the poverty level, while 28 percent were poor. Forty 
percent of the uninsured lived in the South, and 29 percent 
worked or were dependents of workers in small firms (one to 
nine employees). Half were full-time, full-year workers or 
their dependents, 33 percent had less than full time attachment 
to the labor force, and 17 percent had no labor force ties.

     TABLE C-27.--HEALTH INSURANCE COVERAGE BY EMPLOYMENT CHARACTERISTICS \1\ FOR PEOPLE UNDER AGE 65, 1994     
----------------------------------------------------------------------------------------------------------------
                                                                                 Type of insurance \2\          
                                                                     -------------------------------------------
                                                          Population                From                        
                                                              (in      From own   other's   Other \4\  Uninsured
                                                           millions)   job \3\    job \3\                       
                                                                      (percent)  (percent)  (percent)  (percent)
----------------------------------------------------------------------------------------------------------------
Firm size: \5\                                                                                                  
  Under 10..............................................        34.4       19.3       19.8       30.3       33.2
  10-24.................................................        16.3       27.6       26.7       21.1       27.7
  25-99.................................................        25.3       35.8       32.7       16.1       19.4
  100-499...............................................        29.6       40.0       38.9       12.6       12.7
  500-999...............................................        12.0       43.1       40.0       10.6       10.2
  1,000+................................................        84.6       42.7       42.5       11.5        8.2
Industry: \5\                                                                                                   
  Agriculture...........................................         5.7       16.0       17.2       33.8       34.9
  Mining................................................         1.5       35.6       49.7        8.3        9.9
  Construction..........................................        13.9       25.1       27.7       20.1       30.2
  Durable goods.........................................        23.0       40.2       44.5        8.8       10.1
  Nondurable goods......................................        16.4       40.1       40.0       11.5       12.6
  Transportation........................................        15.9       39.7       42.0       10.7       11.9
  Wholesale trade.......................................         8.5       37.8       38.3       13.8       13.6
  Retail trade..........................................        27.0       29.1       26.1       22.7       25.7
  Finance/insurance.....................................        12.4       42.9       38.4       12.6        9.8
  Business services.....................................        11.4       27.9       25.1       23.6       26.9
  Personal services.....................................         5.9       21.5       19.1       30.6       32.9
  Entertainment.........................................         2.6       32.3       28.2       21.2       23.2
  Professional serv.....................................        44.0       42.1       36.8       14.8       10.6
  Public admin..........................................        13.9       43.3       48.1       12.5        3.8
Labor force attachment                                                                                          
    workers:                                                                                                    
  Full time, full year..................................        76.5       78.5        1.1        9.0       14.4
  Part time, full year..................................         6.5       41.2        6.4       25.5       30.4
  Full time, part year..................................        16.5       49.3        3.6       20.9       30.0
  Part time, part year..................................         7.3       25.8        8.2       37.0       32.7
Dependents: \1\                                                                                                 
  Full time, full year..................................        76.5        0.6       78.6       13.9       11.5
  Part time, full year..................................         3.9        0.7       52.3       29.9       21.4
  Full time, part year..................................        11.3        0.3       52.7       36.9       18.2
  Part time, part year..................................         3.6        0.4       30.9       54.9       19.3
Not in labor force......................................        28.7    \6\ 9.8   \6\ 10.4       61.0       23.3
                                                         -------------------------------------------------------
      Total.............................................       230.8       33.0       32.4       21.7       17.1
----------------------------------------------------------------------------------------------------------------
\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 not employed.                                                                                            
\2\ People may have more than one source of health insurance.                                                   
\3\ Group health insurance through employer or union.                                                           
\4\ Medicare, Medicaid, private nongroup health insurance, veterans coverage, and military health.              
\5\ For persons who worked and their dependents.                                                                
\6\ Person was retired, disabled, or answered questions inconsistently.                                         
                                                                                                                
Source: Congressional Research Service analysis of data from the March 1995 Current Population Survey.          

 CHART C-3. CHARACTERISTICS OF THE UNINSURED POPULATION UNDER AGE 65, 
                                  1994


    Note._Totals may not sum to 100 percent due to rounding.

    Source: Congressional Research Service analysis of data 
from the March 1995 Current Population Survey.

                  Trends in Health Insurance Coverage

    Trends in coverage by type of insurance for the 
noninstitutionalized U.S. population under age 65 are shown in 
table C-28. Data for 1980 are not available because the CPS 
omitted some health insurance questions for that year. Changes 
in the CPS questionnaire, on which these rates are based, 
preclude direct comparisons between three time periods: 1979-
86, 1987-93, and 1994. \4\
---------------------------------------------------------------------------
    \4\ 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 towards more group coverage. / Care 
must be exercised when considering these numbers. Also note that 
individuals may have had more than one source of coverage.

                        TABLE C-28.--HEALTH INSURANCE COVERAGE FOR THE NONINSTITUTIONALIZED U.S. POPULATION UNDER 65, 1979-94 \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 \5\............................................    133,074     68.6     17,031      8.8     32,631     16.8     28,451     14.7    197,104    100.0
1981 \5\............................................    137,158     67.9     18,520      9.2     32,392     16.0     30,487     15.1    201,926    100.0
1982................................................    135,991     66.8     18,326      9.0     31,699     15.6     32,496     16.0    203,674    100.0
1983................................................    134,908     65.7     18,501      9.0     30,505     14.9     34,796     17.0    205,322    100.0
1984................................................    134,936     65.2     18,701      9.0     30,653     14.8     36,544     17.7    206,998    100.0
1985................................................    137,461     65.7     18,711      8.9     29,924     14.3     36,741     17.6    209,272    100.0
1986 \1\............................................    138,919     66.0     19,095      9.1     29,014     13.8     36,818     17.5    210,579    100.0
1987 \1\............................................    143,497     67.5     19,919      9.4     25,957     12.2     30,673     14.4    212,495    100.0
1988................................................    144,136     67.2     20,437      9.5     25,009     11.7     32,368     15.1    214,508    100.0
1989................................................    144,716     66.9     20,762      9.6     25,603     11.8     33,039     15.3    216,426    100.0
1990................................................    142,520     65.2     23,821     10.9     25,723     11.8     34,352     15.7    218,551    100.0
1991................................................    142,359     64.5     26,170     11.9     25,034     11.4     35,069     15.9    220,589    100.0
1992 \6\............................................    141,262     62.5     28,924     12.8     26,017     11.5     38,222     16.9    226,119    100.0
1993................................................    140,439     61.3     31,398     13.7     27,706     12.1     39,349     17.2    228,973    100.0
1994................................................    150,663     65.3     31,177     13.5     20,665      8.9     39,428     17.1    230,838    100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\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, veteran's coverage, or military health care.                                                                     
\5\ Data not available for 1980 because the survey omitted some health insurance questions.                                                             
\6\ 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 1995 Current Population Surveys.                                                 

    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. In 1994, the 
percent covered was about the same as in 1993 (83 percent), 
while the percent covered under government programs declined 
slightly. 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 1994. Over this period, the 
percent with employment-based coverage decreased by about 9 
percentage points. From 1979 through 1986, the percent with 
employment-based coverage declined by 2.6 percent points, from 
68.6 to 66.0 percent. From 1987 through 1993, the decline was 
6.2 percentage points. If we assume no change in insurance 
coverages from 1986 to 1987, and from 1993 to 1994, the total 
decline from 1979 to 1994 was 8.8 percentage points (i.e., 2.6 
percentage points plus 6.2 percentage points). 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 1979-94 period, the percent with Medicaid 
or Medicare increased by about 5 percentage points, the percent 
with other types of coverage declined by about 3 percentage 
points, and the percent uninsured increased by approximately 6 
percentage points.

           UNCOMPENSATED CARE COSTS IN PPS HOSPITALS, 1980-94

    Uncompensated care is a term used to describe services 
provided to patients who are unable or unwilling to pay. It 
includes charity care and bad debts. Charity care is care for 
which no payment is expected. Bad debts are charges not paid by 
uninsured individuals, including copayments not paid by insured 
individuals. For this analysis, hospital charges have been 
adjusted to reflect the cost of care that was provided but not 
paid for.
    Public hospitals and some private institutions receive 
government operating subsidies that at least partially offset 
their uncompensated care costs. These subsidies are not always 
directed specifically toward charity care, but they nonetheless 
serve to lessen the burden of a high charity care load. This 
analysis examines uncompensated care both before and net of 
government subsidies.
    The financial burden of uncompensated care increased 
substantially in the first half of the 1980s, as shown in table 
C-29. Between 1980 and 1986, uncompensated care costs before 
government subsidies grew at an annual rate of 14.7 percent, 
rising from $3.9 billion to $8.9 billion. By 1992, 
uncompensated care costs had grown to $14.9 billion. After 
1992, this trend leveled off, with uncompensated care rising at 
6.1 percent per year. While uncompensated care was rising 
rapidly during the 1980s, government subsidies were increasing 
at a much slower rate. In 1980, the proportion of uncompensated 
care costs offset by State and local government operating 
subsidies was 27.8 percent. By 1986, that proportion had fallen 
to 22.3 percent, and by 1992, subsidies to all community 
hospitals equalled only 18.9 percent of uncompensated care 
costs. In the early 1990s, subsidies have grown more rapidly, 
although they still covered less than 20 percent of 
uncompensated care in 1994. In that year, uncompensated care 
losses--that is, costs net of government subsidies--totaled 
$13.5 billion.
    These trends are reflected in chart C-4, which compares 
uncompensated care costs to total hospital expenses in each 
year. In 1980, 5.5 percent of the resources expended by 
community hospitals were for patients that could not or would 
not pay for their care. After accounting for government 
subsidies, the uncompensated care burden was 3.9 percent. By 
1986, uncompensated care costs hit their peak of 6.4 percent of 
total expenses, and uncompensated care losses rose to 4.9 
percent. In the early 1990s, uncompensated care costs have 
fallen to about 6 percent of total expenses, while 
uncompensated care losses have stayed at just under 5 percent 
of total expenses.
    The burden of uncompensated care is borne by hospitals in 
every group, but some types of hospitals devote a higher 
percentage of their resources than others to this care (see 
table C-30). Hospitals in large urban areas (metropolitan areas 
with populations of 1 million or greater) had uncompensated 
care costs equal to 6.2 percent of their total expenses in 
1994, compared with 5.4 percent for other urban areas and 5.1 
percent for rural hospitals. However, hospitals in the major 
cities also receive the bulk of subsidies from State and local 
governments, so their uncompensated care losses were about the 
same as for other hospitals.
    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 1994 devoted 17.6 percent of their 
resources to patients who could not or would not pay, and 
sustained losses on these patients equal to 8.0 percent of 
their total costs. Other hospitals sustained much smaller 
losses, and there were no major differences by teaching status. 
Hospitals that receive Medicare disproportionate share payments 
(see the discussion in appendix D) tend to sustain greater 
losses on uncompensated care, and urban government hospitals 
also devote a greater proportion of their resources to this 
care. Proprietary hospitals provide somewhat less uncompensated 
care than voluntary hospitals.

                   TABLE C-29.--COMMUNITY HOSPITAL UNCOMPENSATED CARE COSTS AND GOVERNMENT OPERATING SUBSIDIES, SELECTED YEARS 1980-92                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Amount (billions)                         Average annual percent change  
                                                         -----------------------------------------------------------------------------------------------
                                                             1980        1986        1992        1993        1994       1980-86     1986-92     1992-94 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Uncompensated care costs before government subsidies....        $3.9        $8.9       $14.9       $15.9       $16.8        14.7         8.9         6.1
Government operating subsidies \1\......................         1.1         2.0         2.8         3.1         3.2        10.5         6.0         7.1
Uncompensated care costs net of government subsidies....         2.8         6.9        12.1        12.8        13.5        16.1         9.7         5.8
Proportion of uncompensated care costs covered by                                                                                                       
 government subsidies (in percent)......................        27.8        22.3        18.9        19.5        19.3                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ 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.                   

   CHART C-4. UNCOMPENSATED CARE AS A PERCENTAGE OF TOTAL COMMUNITY 
                       HOSPITAL EXPENSES, 1980-94


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

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

TABLE C-30.--COMMUNITY HOSPITAL UNCOMPENSATED CARE COSTS AS A PROPORTION
                 OF TOTAL COSTS, BY HOSPITAL GROUP, 1994                
                              [In percent]                              
------------------------------------------------------------------------
                                  Uncompensated care  Uncompensated care
                                     costs, before       costs, net of  
         Hospital group               government          government    
                                       subsidies           subsidies    
------------------------------------------------------------------------
Large urban.....................                6.2                 4.8 
Other urban.....................                5.4                 4.7 
Rural...........................                5.1                 4.7 
Major teaching, public..........               17.6                 8.0 
Major teaching, nonpublic.......                5.1                 4.7 
Other teaching..................                4.7                 4.6 
Nonteaching.....................                4.8                 4.5 
Disproportionate share large                                            
 urban..........................                7.7                 5.6 
Disproportionate share other                                            
 urban..........................                6.1                 5.1 
Disproportionate share rural....                6.0                 5.7 
Nondisproportionate share.......                4.0                 3.9 
Voluntary.......................                4.6                 4.5 
Proprietary.....................                4.0                 4.0 
Urban government................               14.2                 6.7 
Rural government................                5.9                 4.6 
------------------------------------------------------------------------
Note.--Government operating subsidies include all subsidies from State  
  and local government, up to total uncompensated care costs at each    
  hospital.                                                             
                                                                        
Source: Prospective Payment Assessment Commission analysis of data from 
  the American Hospital Association Annual Survey of Hospitals.         

                     INTERNATIONAL HEALTH SPENDING

    This section analyzes trends in health expenditures for 24 
Organization for Economic Cooperation and Development (OECD) 
countries from 1970 to 1993. Table C-31 illustrates total 
health expenditures as a percentage of gross domestic product 
(GDP). In 1970, the mean percent of GDP spent on health care by 
OECD countries was 5.1 percent with the United States being 45 
percent higher than the average with 7.4 percent. By 1993, the 
overall mean percent of GDP devoted to health expenditures had 
increased to 8.3 percent while U.S. health spending as a share 
of GDP had increased to 14.1 percent, some 70 percent greater 
than the OECD average.
    The second to the last column in table C-31 presents per 
capita health expenditures denominated in U.S. dollars. The 
last column illustrates public health expenditures as a percent 
of total health spending. This public percentage ranged from 
43.9 in the United States to over 90 in Luxembourg and Norway. 
The OECD average was 75.4 percent.

      TABLE C-31.--TOTAL HEALTH EXPENDITURES AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT [GDP], PER CAPITA HEALTH SPENDING, AND PERCENTAGE OF MEDICAL     
                                  EXPENDITURES COVERED BY PUBLIC INSURANCE SCHEME, FOR SELECTED CALENDAR YEARS 1970-93                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Year                                        Per              
                       Country                        -----------------------------------------------------------------------------   capita    Percent 
                                                          1970       1980       1985       1900       1991       1992       1993       1993      public 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Australia............................................        5.7        7.3        7.7        8.2        8.5        8.8        8.5     $1,493       67.7
Austria..............................................        5.4        7.9        8.1        8.4        8.6        8.8        9.3      1,777       66.2
Belgium..............................................        4.1        6.6        7.4        7.6        8.1        8.2        8.3      1,601       88.9
Canada...............................................        7.1        7.4        8.5        9.4       10.0       10.3       10.2      1,971       71.9
Denmark..............................................        6.1        6.8        6.3        6.3        6.6        6.5        6.7      1,296       82.6
Finland..............................................        5.7        6.5        7.3        8.0        9.1        9.4        8.8      1,363       79.3
France...............................................        5.8        7.6        8.5        8.9        9.1        9.4        9.8      1,835       74.4
Germany..............................................        5.9        8.4        8.7        8.3        8.4        8.7        8.6      1,815       70.2
Greece...............................................        4.0        4.3        4.9        5.3        5.3        5.4        5.7        500       75.8
Iceland..............................................        5.2        6.4        7.0        8.2        8.4        8.5        8.3      1,564       83.9
Ireland..............................................        5.6        9.2        8.2        7.0        7.4        7.1        6.7        922       76.7
Italy................................................        5.2        6.9        7.0        8.1        8.4        8.5        8.5      1,523       73.1
Japan................................................        4.6        6.6        6.5        6.6        6.7        6.9        7.3      1,495       71.8
Luxembourg...........................................        4.1        6.8        6.8        7.2        7.3        7.4        6.9      1,993       91.0
Netherlands..........................................        6.0        8.0        8.0        8.2        8.4        8.6        8.7      1,531       77.7
Norway...............................................        5.0        6.6        6.4        7.5        8.0        8.3        8.2      1,592       93.3
New Zealand..........................................        5.2        7.2        6.5        7.3        7.7        7.7        7.7      1,179       77.2
Portugal.............................................        3.1        5.9        7.0        5.4        5.9        6.0        7.3        866       55.5
Spain................................................        3.7        5.6        5.7        6.6        6.5        7.0        7.3        972       78.6
Sweden...............................................        7.2        9.4        8.9        8.6        8.5        7.9        7.5      1,266       82.9
Switzerland..........................................        5.2        7.3        8.1        8.4        9.0        9.3        9.9      2,283       69.0
Turkey...............................................         NA        4.0        2.8        4.0        4.7        4.1         NA         NA         NA
United Kingdom.......................................        4.5        5.8        6.0        6.2        6.6        7.1        7.1      1,213       83.0
United States........................................        7.4        9.2       10.8       12.6       13.2       13.6       14.1      3,299       43.9
OECD average.........................................        5.1        7.0        7.2        7.6        7.9        8.1        8.3      1,537       75.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
NA--Not available.                                                                                                                                      
                                                                                                                                                        
Source: Schieber, Poullier, & Greenwald (1994) and Health Care Financing Administration.                                                                

                               REFERENCES

American Medical Association. (various years). JAMA [Each year 
        this journal devotes an issue to medical education. The 
        most recent is September 6, 1995, 274(9).]
American Medical Association. (1986). Socioeconomic 
        characteristics of medical practice. Chicago: Author.
American Medical Association. (1995a). Physician marketplace 
        statistics. Chicago: Author.
American Medical Association. (1995b). Socioeconomic 
        characteristics of medical practice. Chicago: Author.
American Medical Association. (1996). Physician characteristics 
        and distribution in the United States, 1995-96 edition. 
        Chicago: Author.
Levit, K.R., Lazenby, H.C., & Sivarajan, L. (1996). Health care 
        spending in 1994: Slowest in decades. Health Affairs, 
        15(2), pp. 130-44.
Lohr, K.N., Vanselow, N.A., & Detmer, D.E. (Eds.). (1996). The 
        nation's physician workforce: Options for balancing 
        supply and requirements. Washington, DC: National 
        Academy Press.
Physician Payment Review Commission. (1996). 1996 annual report 
        to Congress. Washington, DC: Author.
Schieber, G.J., Poullier, J-P., & Greenwald, L.M. (1994, Fall). 
        Health system performance in OECD countries, 1980-92. 
        Health Affairs, 13, pp. 100-112.
Smith, M., & Nuschler, D. (1996, April 4). Health insurance 
        coverage: Characteristics of the insured and uninsured 
        populations in 1994 (95-1146EPW). Washington, DC: 
        Congressional Research Service.
Terry, K. (1993). Where more of your income is coming from. 
        Medical Economics, 70, pp. 126-139.
U.S. Public Health Service, Department of Health and Human 
        Services. (1996, May). Health: United States, 1995 (PHS 
        96-1232). Washington, DC: Author.
Walker, L. (1995). How big is doctors' prepaid income? Medical 
        Economics, 72, pp. 172-74; 177-78; 181-82.