centers for medicare & medicaid services office of the assistant secretary for planning and...

Centers for Medicare & Medicaid Services

Office of the Assistant Secretary for Planning and Evaluation

1

An Overview of the U.S. Health Care System

Chart Book

Centers for Medicare and Medicaid Services

And


January 31, 2007



2

Table of Contents - Section 1

Section 1: Overview of the U.S. Health Care System 8

Table 1.1 National Health Expenditures and their share of GDP, 1980-2015 9Table 1.2 National Health Expenditures per Capita, 1980-2015 10Table 1.3 Personal Health Expenditures by Source of Funds, 1960-2004 11Table 1.4 Health Insurance Coverage for the Under 65 Population, 1980-2004 12Table 1.5 Personal Health Care Expenditures by Service, 1960-2003 13Table 1.6 Annual Percent Change in Personal Health Care Expenditures for Medicare, Medicaid, and Total, 1971-2015 14Table 1.7 Average Annual Growth in Medicare & Private Health Insurance Benefits Per Enrollee, Selected Periods 15Table 1.8 Concentration of Health Spending, 1987-2002 16Table 1.9 Factors Accounting for Growth in Prescription Drug Spending per Capita, 1980-2011 17Table 1.10 Prescription Drug Expenditures by Source of Funds, 1965-2004 18Table 1.11 Sources of Payment for Nursing Home and Home Health Care, 2004 19Table 1.12 Number of People Employed in Health Care, 1990-2005 20Table 1.13 Health Care Employment by Occupation, 1983-2005 21Table 1.14 Health Care Employment Growth Projections, 2000-2010 22Table 1.15 Average Annual Salaries of Selected Groups of Workers, 2005 23Table 1.16 HMO Enrollment by Ownership Status, 1981-2004 24Table 1.17 Concentration of Managed Care Enrollment, 1988-2003 25Table 1.18 Managed Care Enrollment by Type of Plan, 1984-2004 26Table 1.19 Health Care as a Percent of Income by Age, 2004 27Table 1.20 Annual Growth Rates in the Overall CPI and MCPI, 1993-2005 28



3


Section 2: International Comparisons 29

Table 2.1 Percent of GDP Spent on Health Care by OECD Country, 1960-2004 30Table 2.2 Per Capita Spending on Medical Services by OECD Country, 1980-2004 31Table 2.3 Average Annual Growth in Per Capita Spending by Decade by OECD Country, 1960-2003 32Table 2.4 Per Capita Health Spending by Type of Service by OECD Country, 2003 33Table 2.5 Share of Total Health Spending on Outpatient care by OECD Country, 1970-2003 34Table 2.6 National Health Spending by Source of Funds by OECD Country, 2003 35Table 2.7 Per Capita Spending on Drugs and other Non-durables by OECD Country, 1970-2003 36Table 2.8 Drug Spending as a Percentage of Total Health Spending, 1980-2003 37Table 2.9 Infant Mortality Rates per 1,000 Live Births by OECD Country, 1970-2004 38Table 2.10 Male and Female Life Expectancy at Birth by OECD Country, 1960-2004 39Table 2.11 Male and Female Life Expectancy at Age 65 by OECD Country, 1960-2004 40Table 2.12 Number of Inpatient Discharges and Total Beds per 1,000 persons, by OECD Country, 2004 41Table 2.13 Average Length of Hosptial Stay for Selected OECD Countries, 2004 42Table 2.14 Medical Technology and Use of High Technology Medical Procedures by OECD Country, 2004 43Table 2.15 Selected Indicators of Mobidity by OECD Country, Selected Years 44Table 2.16 Selected Indicators of Mortality by OECD Country, 2004 45



4


Section 3: Providers 46

Table 3.1 Number of Hospitals by Type, 1980-2004 47Table 3.2 Number of Hospital Beds and Occupancy Rates by Hospital Type, 1980-2004 48Table 3.3 Number of Hospital Beds per 1,000 Persons by State, 2004 49Table 3.4 Number of Nursing Home Beds & Residents, 1985-2003 50Table 3.5 Number of Physicians per 100,000 Persons by State, 2004 51Table 3.6 Distribution of Active Physicians:1950-1998 52Table 3.7 Percentage of Physicians in Differing Practice Arrangements, 1987-2001 53Table 3.8 Physician Revenue by Payer, 1986-2004 54Table 3.9 Physician Participation in Managed Care, 1988-2001 55Table 3.10 Physician Managed Care Payment Arrangements, 2001 56Table 3.11 Hospital Participation in HMOs and PPOs, 1987-2004 57Table 3.12 Hospital Managed Care Payment Arrangements, 2001 58Table 3.13 Hospital Profit Margins for All Payers and Medicare, 1997-2004 59Table 3.14 Hospital Payment to Cost Ratios for Medicare, Medicaid, and Private Payers, 1985-2002 60Table 3.15 Change in Nursing Home Institutionalization Rate for Elderly, 1985-1999 61Table 3.16 Nursing Home Resident Rate by State, 2003 62Table 3.17 Number of Hospital Discharges and Average Length of Stay, 1980-2004 63Table 3.18 Number of Physician Visits per 1,000 Persons, 1990-2000 64



5

Table of Contents – Section 4, Tables 4.1 to 4.20

Section 4: Public Programs 65

Table 4.1 Public Payers’ Share of National Health Spending, 1980-2010 66Table 4.2 Personal Health Care Expenditures by Type of Service and Percent Medicare Paid, 2004 67Table 4.3 Personal Health Care Expenditures by Type of Service and Percent Medicare Paid, 1980 68Table 4.4 Where the Medicare Dollar Went, 1980 and 2005 69Table 4.5 Medicare Trustees Report: Part A Income and Expenses, 1970-2015 70Table 4.6 Number of Medicare Beneficiaries, 1970-2040 71Table 4.7 Medicare Beneficiaries as a Share of the US Population, 1970-2030 72Table 4.8 Medicare Spending for Fee-For-Service Beneficiaries by Income, 2003 73Table 4.9 Living Arrangements of Medicare Beneficiaries, 2003 74Table 4.10 Age and Gender of the Medicare Population, 2003 75Table 4.11 Total Health Care Spending for Medicare Beneficiaries, 2003 76Table 4.12 Sources of Payment for Medicare Beneficiaries’ Medical Services, 2003 77Table 4.13 Sources of Payment for Medicare Beneficiaries by Type of Service, 2003 78Table 4.14 Types of Supplemental Health Insurance held by Fee-for-Service Medicare Beneficiaries, 2003 79Table 4.15 Medicare Beneficiary Out-Of-Pocket Spending, 2003 80Table 4.16 Per Capita Out-Of-Pocket Expenses for Medicare Beneficiaries by Type of Insurance Coverage, 1993 and 2003 81Table 4.17 Distribution of Medicare Enrollees by Functional Status, 2003 82Table 4.18 Beneficiaries with Poor Health or Functional Limitations by Insurance Status, 2003 83Table 4.19 Medicare Managed Care Enrollment, 1990-2005 84Table 4.20 Medicare Beneficiaries with Prescription Drug Coverage,1992-2003 85



6

Table of Contents – Section 4, Tables 4.21 to 4.40

Section 4: Public Programs 65

Table 4.21 Total Spending for Prescription Drugs for all Medicare Beneficiaries, 1996-2003 86Table 4.22 Medicare Beneficiaries with Drug Coverage by Primary Source of Supplemental Coverage, 1995 and 2003 87Table 4.23 Personal Health Expenditures by Type of Service and Percent Medicaid Paid, 2004 88Table 4.24 Personal Health Expenditures by Type of Service and Percent Medicaid Paid, 1980 89Table 4.25 Medicaid Enrollment by Eligibility Group, 2003 90Table 4.26 Average Medicaid Payments Per Person Served by Eligibility Group, 1985-2003 91Table 4.27 Medicaid Enrollees by Eligibility Group, 1975-2003 92Table 4.28 Total Medicaid Expenditures by Type of Service, FY 2005 93Table 4.29 Total State Spending and Federal Funds Provided to States, 2004 94Table 4.30 Medicaid Spending for Long-Term Care, 1999-2003 95Table 4.31 Births Financed by Medicaid as Percent of Total Births by State, 2005 96Table 4.32 Medicaid Enrollment by Age, Sex, and Ethnicity, 2003 97Table 4.33 Medicaid Managed Care Enrollment, 1996-2004 98Table 4.34 Health Insurance Coverage of Children, 1988-2005 99Table 4.35 State Children’s Health Insurance Program Spending and Enrollment, 1998-2004 100Table 4.36 State Children’s Health Insurance Program Plan By State, 2006 101Table 4.37 State Health Spending as a Percent of Gross State Product, 2004 102Table 4.38 Share of State Health Spending Financed by Medicare and Medicaid, 2004 103Table 4.39 Share of State Health Spending Financed by Medicare, 2004 104Table 4.40 Share of State Health Spending Financed by Medicaid, 2004 105



7

Table of Contents – Sections 5 and 6

Section 5: Private Health Insurance 106

Table 5.1 Health Spending From Out-of-Pocket and Private Health Insurance, 1980-2010 107Table 5.2 Changes in Employer Health Insurance Premiums, Overall Inflation, and Workers' Earnings, 1989-2005 108Table 5.3 Change in Health Insurance Premiums by Firm Size, 1988-2005 109Table 5.4 Employee Contributions to Health Insurance Premiums, 1988-2005 110Table 5.5 Average Annual Premium Costs by Plan Type, 2005 111Table 5.6 Changes in Employee Benefit Packages, 1980-2004 112Table 5.7 Firms Offering Health Insurance Coverage by Firm Size, 1996-2005 113Table 5.8 Number of Health Plans Offered by Firm Size, 2005 114Table 5.9 Private Health Insurance Enrollment by Plan Type, 1988-2005 115Table 5.10 Employees With a Choice of Health Plans, 1988-2005 116Table 5.11 Covered Employees in Firms that Offer Health Benefits, 2005 117

Section 6: Uninsured 118

Table 6.1 Out of Pocket Spending by the Under 65 Population by Insurance Status by Income, 2001 and 2003 119Table 6.2 Out of Pocket Spending by the Under 65 Population by Insurance Status by Type of Service, 2001 and 2003 120Table 6.3 Percent Uninsured within Age Categories, 1987-2005 121Table 6.4 Percent Uninsured within Income Categories, 1987-2005 122Table 6.5 Percent Uninsured by Ethnicity, 1987-2005 123Table 6.6 The Uninsured by Age, 1987-2005 124Table 6.7 The Uninsured by Income, 1987-2005 125Table 6.8 The Uninsured by Ethnicity, 1987-2005 126Table 6.9 The Uninsured by State, 2005 127Table 6.10 Impact on Non-Elderly Adults of Being Uninsured, 2006 128



8

Section 1

Overview of the U.S. Health Care System



9

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

1980 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Calendar Year

Bill

ion

s

0%

5%

10%

15%

20%

25%

GD

P S

har

e

NHE Projected NHE GDP Share Projected GDP Share

Table 1.1National Health Expenditures and Their

Share of Gross Domestic Product (GDP), 1980-2015

Source: CMS, Office of the Actuary, National Health Statistics Group.

Actual Projected

National health spending is projected to continue to increase as ashare of GDP over the next decade.



10

Table 1.2National Health Expenditures Per Capita, 1980-2015

Calendar Year


$ 4, 471

$ 5, 485$ 5, 879

$ 6, 280

$ 1, 067

$ 7, 129

$ 8, 636

$ 10, 339

$ 12, 357

$0

$1,000$2,000

$3,000$4,000

$5,000$6,000

$7,000$8,000

$9,000$10,000

$11,000$12,000

$13,000

1980 1998 2000 2002 2004 2006 2009 2012 2015

Actual Projected

National health spending per capita is projected to increase rapidly over the next decade.



11

0

20

40

60

80

100

1960 1970 1980 1990 2002 2004

Calendar Year

Pe

rce

nt

Table 1.3Personal Health Care Expenditures by Source of Funds:

Selected Years 1960-2004


Total Private

Total Public

$23.3 $63.1 $214.5 $609.3 $1,553

Over the last several decades, both the public and private sector share of health spending has increased, while the share from out-of-pocket spending has declined.

55% 40%27% 23% 14%

21%16%

12%

10%12%

21%

22%

28% 33% 35%

2%

3%

4%5%

5%

12%17% 18%

17%

8%

12%

11% 16%

Dollars in Billions

Other PublicMedicareTotal Medicaid, SCHIP expansion and SCHIP

Out-of-PocketOther PrivatePrivate Health Insurance

13%

7%

35%

13%

17%

16%

$1,877.6



12

Table 1.4Health Insurance Coverage for the Under 65 Population, 1980-2004

Notes: ESI - Employer Sponsored Insurance. Any Private includes ESI and individually purchased insurance. Any government includes Medicare for the disabled population.

Source: Tabulations of the March Current Population Survey files by Actuarial Research Corporation, incorporating their historical adjustments.

Over the last two decades, private coverage has declined, public coverage (mostly Medicaid) has increased a small amount, and the uninsured have grown.

0

10

20

30

40

50

60

70

80

90

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

83%

74%

1510%

8%

69%

63%

18%

1318%

ESI

Any Private

Medicaid

Any Government Uninsured



13

Table 1.5Personal Health Care Expenditures by Type of Service, 1960-2003

Ser

vice

Percent


39.3

%

47.3

%

41.7

%

36.5

%

22.9

%

21.9

%

25.9

%25

.3%

0.2% 1.

1% 2.1% 2.

9%

11.4

%

5.6% 6.

6%

10.8

%

3.6%

8.2%

8.6%

8.2%

22.5

%

15.8

%

15.2

% 16.4

%

The share of health spending on prescription drugs has grown since 1980. Physician share has stayed about the same while the hospital share grew and then declined.

35.8

%

25.7

%

7.7%

12.4

%

2.8%

15.6

%



14

0

5

10

15

20

25

30

35

40

1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015

PHCE Medicare Medicaid

Projected PHCE Projected Medicare Projected Medicaid

Table 1.6Annual Percent Change in Personal Health Care Expenditures for

Medicare, Medicaid and Total: 1971-2015P

erc

en

t

Calendar Year


Medicare Prospective

Payment System (1983)

Projected

Balanced Budget Act(1997)

BalancedBudget

Refinement Act (1999)

Actual

MedicareCatastrophic

CoverageAct of 1988

While the actual percent changes vary, overall spending for Medicare and Medicaid tend to rise and fall together.

Medicare Extended toDisabled & ESRD

(1973)

Medicaid Taxes& Donations

(1991)

PHCE

Medicare

Medicaid

PHCE(projected)

Medicare(projected)

Medicaid(projected)



15

Table 1.7Average Annual Growth in Medicare and

Private Health Insurance Benefits Per Enrollee : Selected Periods

9.2

10.9

7.6

6.4

10.9

4.3

-0.2

5.9

9.5

12.8

-2

0

2

4

6

8

10

12

14

16

Per

cen

t

Medicare Private Health Insurance


Entire Period Selected Calendar Year Periods

Except for 1993-1997, Medicare has grown slightly more slowly than private health insurance.

Calendar Years

1970-

20041970-1993

1993-1997

1997-1999

1999-2004



16

Table 1.8Concentration of Health Spending, 1987-2002

Source: Yu, William W. & Trena M.Ezzati-Rice, Medical Expenditure Panel Survey Statistical Brief #81, AHRQ, May 2005.

Health spending remains highly concentrated on a small percentage of people. The top1% of people account about a quarter of all health spending,

Population Ranked By Expenditures

97%

70%

56%

28%

97%

69%

56%

28%

97%

64%

49%

22%

Top 1% Top 5% Top 10% Top 50%

1987

1996

2002

Pe

rce

nta

ge

of

Ex

pe

nd

itu

res



17

Table 1.9Factors Accounting for Growth in Prescription Drug Spending

per Capita, 1980-2011

Note: Utilization also includes the effects of intensity and population growth. Per capita drug spending in 1990 was $252

* Without the effect of Part D, overall growth would be 8.1% (price: 3.8%, Utilization 4.3%)Source: CMS, Office of the Actuary, Health Affairs Web Exclusive, Exhibit 6, pp. W70

8

4 3.3 3.51.5

3.7 3.8

2.7

8.3

4.9 4.5

6.2

4.4 4.5

0

2

4

6

8

10

12

14

1988-1993 1993-2003 2003-2004 2004-2005 2005-2006 2006-2010 2010-2015

Calendar Years

Av

era

ge

An

nu

al P

erc

en

t C

ha

ng

eDrug Utilization (Number of Prescriptions per Capita)

Drug Prices (Consumer Price Index - Drugs)

10.7%

12.3%

8.2% 8.0% 8.1% 7.7%

8.3%

*

Drug Prices and Utilization significantly affect prescription drug spending per capita.



18

Table 1.10Prescription Drugs Expenditures by Source of Funds,

1965-2004

Note: Percentages may not sum to 100 due to rounding. Drug spending grew from $3.7 billion in 1965 to $188.5 billion in 2004


93%

63%

32%25%

4%

24%

46%

48%

4%14%

22%27%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1965 1985 2000 2004

Out-of-Pocket Private Health Insurance Public

The share of drug spending covered by public and private sources has grown significantly.



19

Table 1.11Sources of Payment for Nursing Home and Home Health Care, 2004

Most such care is paid for by Medicare and Medicaid.


Out-of-Pocket29.6%

Private LTC Ins.

8.4%

Medicaid47.3%

Medicare14.8%

Medicaid

34%

Private LTC Ins.12.9%

Out-of-Pocket12.3%

Medicare40.8%

Total nursing home and home health care spending in 2004 is $148 Billion

Nursing Home Home Care



20

Table 1.12Number of People Employed in Health Care, 1990-2005

Note: Not seasonally adjusted. Health Care Employment includes those who work in ambulatory health care services, hospitals, and nursing and residential care facilities. Source: Kaiser Family Foundation, Trends and Indicators in the Changing Health Care Marketplace, 2006 Chartbook.

Number of people employed in health is growing.

8.28.6

9 9.3 9.5 9.8 10.1 10.4 10.5 10.7 10.9 11.2 11.5 11.8 12.1 12.3

0

2

4

6

8

10

12

14

Em

plo

ym

en

t in

Mill

ion

s

Health Services

Employment as a %

of Non-Farm Private

Sector Employment

7.5% 1990 8.0% 1991 8.2% 1992 8.3% 1993 8.3% 1994 8.4% 1995 8.4% 19968.4% 19978.4% 1998 8.3% 1999 8.2% 20008.5% 2001 8.8% 2002 9.1% 20039.2% 20049.2% 2005



21

Table 1.13Health Care Employment by Occupation, 1983-2005

Source: Dept. of Labor, Bureau of Labor Statistics. Occupational Employment Statistics.

Health care employment growth varies by occupation.

0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200

Managers, Medicine & Health

Medical Scientists

Physicians

Dentists

Optometrists

Health Diagnosing Practitioners

Licensed Practial Nurses

Registered Nurses

Pharmacists

Dietitians

Respiratory Therapists

Occupational Therapists

Physical Therapists

Speech Therapists

Physicians' Assistants

Clinical Laboratory Technologists & Technicians

Dental Hygienists

Health Record Technologists & Technicians

Radiologic Technicians

Employment (Thousands)

1990 2000 2005

Percent Change 1990-05

72.3%

-67.4%

139.4%

0.8%

11.8%

-23.5%

150.9%

151.9%

26.1%

-23.9%

-24.1%

46.2%

33.6%

80.8%

-9.5%

-24.6%

-17.1%

-57.1%

485.7%

. . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. .

. . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . .



22

Table 1.14Health Care Employment Growth Projections, 2000-2010

*Note: Five of the nation’s top 10 fastest growing occupations are in health care.

Source: Dept. of Labor, Bureau of Labor Statistics. Monthly Labor Review. November 2001.

Over the next decade, health care employment is expected to grow at a rapid rate.

15%19%

3%

25%

33%

62%57%

53%47%

26%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

TotalEmployment

Growth

ServiceSector

ManufacturingSector

Health CarePractitioners& TechnicalOccupations

Health CareSupport

Occupations

Personal &Home Care

Aides

MedicalAssistants

PhysicianAssistants

Home HealthAides

R.N.s

2000

-201

0 E

mp

loym

ent

Gro

wth

General Health Care Occupations

Fastest Growing* Specific Health Care Occupations



23

Table 1.15Average Annual Salaries for Selected Groups of Workers, 2005

Source: National Compensation Survey: Occupational Wages in the US, June 2005 . US Department of Labor, July 2006.

Health professionals earn higher than average incomes.

$39,629

$57,282 $58,843 $55,760

$99,547$93,515

$133,717

$0

$25,000

$50,000

$75,000

$100,000

$125,000

$150,000

PhysicalTherapists

RNs Dentists Pharmacists Physicians

Health Professionals

Professional,Technical,SpecialtyWorkers

AllWorkers



24

Table 1.16HMO Enrollment by Ownership Status, 1981-2004

Note: HMO enrollment includes enrollees in both traditional HMOs and point-of-service (POS) plans through: group/commercial plans, Medicare, Medicaid, the Federal Employees Health Benefits Program, direct pay plans, supplemental Medicare plans, and unidentified HMO products.

Source: Kaiser Family Foundation. Trends & Indicators in the Changing Health Care Marketplace, 2006 Chartbook.

The proportion of HMO enrollees in not-for-profit plans stabilized in 1997.

37.4% 37.3% 38.3% 40.3%

62.6% 62.7% 61.7% 59.7%

74.0%

53.8%47.8%

36.7% 36.3% 36.0% 36.5%

88.0%

46.2%

26.0%

12.0%

63.5%64.0%63.7%63.3%

52.2%

0%

20%

40%

60%

80%

100%

1981 1985 1989 1993 1997 1998 1999 2000 2001 2002 2003 2004

% Non-Profit % For-Profit

Total HMO enrollment in 2004 = 66.1 Million



25

Table 1.17Concentration of Managed Care Enrollment, 1988-2003

*Note: The decrease in concentration does not represent a decline, but rather a change in the methodology. Note: The largest national managed care firms include Kaiser Foundation Health Plans, UnitedHealth Group, WellPoint Health Networks, Aetna, and Health HMO enrollment includes enrollees in both traditional HMOs and point of service plans.

Source: Kaiser Family Foundation. Trends & Indicators in the Changing Health Care Marketplace, 2005 – Chartbook.

Half of managed care enrollees are enrolled in the nation’s 10 largestmanaged care firms.

66.0

48.048.045.8

54.6 56.2

65.064.1 65.2 66.5

0

10

20

30

40

50

60

70

80

1988 1991 1994 1997 1998 1999 2000 2001 2002 2003

Pe

rce

nt

En

rolle

d in

10

La

rge

st

Fir

ms

*



26

Table 1.18Managed Care Enrollment by Type of Plan, 1984-2004

Note: Plans analyzed are comprehensive HMO plans. Traditional HMOs and point of service plans are included, managed care carveouts for selected services such as behavioral health are not included. Enrollment includes group and commercial plans, Medicare, Medicaid, Federal Employee group health program, and others.Source: Kaiser Family Foundation, Trends & Indicators in the Changing Health Care Marketplace, 2006 Chartbook.

Mixed model HMO plans grew rapidly before 2000 and declined less rapidly after 2000.

2.1 4.3 2.4 0.2

6.68 9.7 8.7 7 7.4 7.2

3.55.6 3.9

3.3 7.1 8.3 8.32.9

13.5 16.227.5

33.5 29.921.5

6.7

23.1

32.1

28.9

0.20.40.8

28.5

0

10

20

30

40

50

60

70

80

1984 1988 1992 1996 2000 2002 2004

En

rolle

es

(in

mill

ion

s)

Staff Group Network IPA Mixed

31.4

38.8

63.3

78.9

15.1

NA19.5%23.3%43.6%13.6%

NA43.0%18.0%25.4%13.6%

17.3%41.7%10.0%24.8%6.2%

36.4%43.4%5.3%

13.7%1.2%

40.0%41.9%8.9%8.8%0.4%

MixedIPANetworkGroupStaff

38.4%40.2%11.2%9.9%0.2%

66.1

43.7%32.6%12.5%11%0.3%

74.2



27

Those over 65 and those with incomes under $20,000 spend a higher percentage of their income on health than other groups.

Source: Dept. of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey.

Table 1.19Health Care as a Percent of Income by Age, 2004

By Income LevelBy Age Group

11.4%

5.6%3.8%

2.9%

0

2

4

6

8

10

12

14

16

Under 35 35 to 54 55 to 64 65 andover

Per

cent

of I

ncom

e S

pent

on

Hea

lth

3.2%5.0%

6.9%

15%

0

2

4

6

8

10

12

14

16

Less than$20,000

$20,000 to$49,999

$50,000 to$69,999

$70,000and above

Perc

ent o

f Inc

ome

Spen

t on

Hea

lth

Age Group Income Level



28

Table 1.20Annual Growth Rates in the Overall Consumer Price Index (CPI) and

Medical-Specific Consumer Price Index (MCPI), 1993-2005

Source: Dept. of Labor, the Bureau of Labor Statistics.

Medical prices have risen faster than overall consumer prices.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

CPI MCPI

MCPI

CPI



29

Section 2

International Comparisons



30

Table 2.1Percent of GDP Spent on Health Care by OECD Country, 1960-2004

*For 1960, no data was available.**2003 data was used because 2004 were not available.Note: The data is arrayed by spending growth from 1990 to 2004. The medians include all OECD countries.

Source: OECD Health Data 2006.

The U.S. has had a higher share of GDP spent on health than the OECD median forthe past four decades.

6.4

9.9

8.1 8

10.6

5.4

3.9

3

5.14.5 4.5

6.2

77 7.1

5.6

8.7 8.89

6 5.9

8.5

11.9

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

Canada United Kingdom Japan** Germany* United States

Per

cen

t

1960 1970 1980 1990 2004

15.3

Median: 3.9% 5.1% 6.8% 7.5% 9.6 %



31

$1,406

$1,984

$2,308$2,153

$1,951

$4,451

$617$675 $783 $827

$1,445$1,348 $1,365

$2,132

$1,423$1,639

$2,027

$3,408

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Canada France Germany Japan United States

1980 1990 2000 2004

Table 2.2Per Capita Spending on Medical Services by OECD Country, 1980-2004

* 2003 Data Used for Germany and Japan

Source: OECD Health Data, 2006

US spending is growing rapidly compared with other OECD countries.



32

Table 2.3Average Annual Growth in Per Capita Spending by Decade

by OECD Country, 1960-2003

^ Average annual change calculated from 2000-2002Note: Each bar represents the average annual nominal growth over the decade. The data is arrayed by spending growth from 1990 to 1999. The medians include all OECD countries.Source: OECD Health Data 2005.

Health spending growth over the last decade is lower in OECD countries than in prior decades.

8.8

6.35.7

7.5

3.9 4.2

10.3

18.0

9.58.9

11.1

6.5

14.113.5

11.6

13.0

9.9

11.1

7.6

6.86.0

9.9

8.08.3

6.25.6

4.35.1

4.43.7

0

2

4

6

8

10

12

14

16

18

20

Canada France United States Germany Japan^ United Kingdom^

Per

cen

t

1960-1969 1970-1979 1980-1989 1990-1999 2000-2003



33

Table 2.4Per Capita Health Spending by Type of Service by OECD Country, 2003


Per capita outpatient spending in the US is almost double inpatient spending. In other OECD countries per capita inpatient spending is greater than outpatient spending.

$1,053

$2,473

$843 $670 $666

$675

$202 $113

$162

$131

$12 $13$51

$709

$509$467

$581

$454

$380

$89

$256

$70$247

$766$1,056$1,114

$1,551

$167

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

United States Japan Germany France Canada

Inpatient Outpatient Ancillary Home Health Drugs Nursing Home

*



34

22.6%

31.9%33.4%

30.4%

39.6%

20.9%

48.4%

31.2%

25.1%

44.6%

32.3%

43.9%

26.1%

31.6%

25.3%

20.8%

43.5%

31.3%

25.3%

43.3%

0%

10%

20%

30%

40%

50%

60%

Japan Canada Germany United States

1970 1980 1990 2000 2003

Table 2.5Share of Total Health Spending on Out-Patient Care by OECD

Country, 1970-2003

Source: OECD Health Data 2006

In 2003, the U.S. spent the highest percent of total healthcare spending on out-patient care; In 1970 Japan spent an even higher percent of total health care

spending on outpatient care



35

Table 2.6National Health Spending by Source of Funds by OECD Country, 2003

4%9%

32%

69%

17%

75% 68%13%

2%

12%9%

37%

13%

1%4%

4% 1%

8% 10%14% 15% 18%

0.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

France Germany United States Canada Japan

Perc

en

t o

f T

ota

l H

ealt

h E

xp

en

dit

ure

Out-of-PocketPayments

All Other PrivateFunds

Private Insurance

Social SecuritySchemes

GeneralGovernment, Excl.Social Security

Source: OECD Health Data 2006

Source of funding varies significantly by country. For instance, out-of-pocket spending ranges from 8% to 18% of health spending, with the U.S. at about the median.



36

Table 2.7Per Capita Spending on Pharmaceuticals and Other Non-Durables


Expenditures in U.S. dollars using purchasing power parity rates.Note: Data is arrayed by spending levels for 2003. Japan not available for 1970.Source: OECD Health Data 2006.

Variation across countries is increasing. Recent growth in North America is most rapid.

$425 $438

$514

$572

$709

$43 $34$49 $43

$123

$67$112

$96

$128

$202

$252$258$248$239

$539$498

$363$367$398

$0

$100

$200

$300

$400

$500

$600

$700

Japan Germany Canada France United States

1970 1980 1990 2000 2003

*



37

Table 2.8Drug Spending as a Percentage of Total Health Spending


8.009

15.917

1616.9

20.3

18.8

13.4

14.313.6

14.6

21.221.4

18.718.4

99.1

11.712.4

Canada France Germany Japan* UnitedStates

1980 1990 2000 2003

*2003 data for Japan is not available; 2002 was usedSource: OECD Health data, 2006.

Although, recent drug spending in the United States on this measure has grown, it is still low compared to other OECD

countries



38

Table 2.9Infant Mortality Rates per 1,000 Live Births by OECD Country, 1970-2004

Note: The median includes all OECD countries. The decrease from 1960-2004 is in percentage points.2003 data used for Canada and the United States as the latest available.Source: OECD Health Data 2006.

OECD country infant mortality rates have declined since 1970.

0

5

10

15

20

25

1970 1980 1990 2004

United States

United States

Median

Median

Canada

Canada

France

France

Japan

Japan



39

Table 2.10Male and Female Life Expectancy at Birth by OECD Country,

1960-2004

*2003 data was used because 2004 was not available.Note: Data are arrayed by male life expectancy; countries are kept together. The medians include all OECD countries.Source: OECD Health Data 2006

76.9

79

77.6

80.1

79.9

83.8

83

82.7

73.4

59.5

73.1

70.2

74.9

73.9

73.6

74.4

70.1

73.9

70

77.4

78.1

78.9

77.3

78.4

72.7

78.885.6

0 30 60 90

Hungary

Czech Republic

Mexico

United States*

Denmark

France

Australia

Sweden

Japan

Year

1960 1980 2004

65.965.5

68.6

72.6

72.7

74.8

75.2

76.7

78.1

78.465.3

71.2

67

70.4

67.9

55.8

66.6

67.9

73.4

72.8

66.8

71.2

64.1

70

70.2

71

78.6

0 30 60 90

Hungary

Czech republic

Mexico

United States*

Denmark

France

Australia

Sweden

Japan

Year

1960 1980 2004

Male Female

Median = 67.2 70.0 76.4 Median = 72.5 76.6 81.4

*

Japan has the highest life expectancy at birth for both males and females.



40

Table 2.11Male and Female Life Expectancy at Age 65 by OECD Country,

1960-2004

Note: Data are arrayed by male life expectancy; countries are kept together * 2003 data **Data are 2001 for females and 2002 for males.Source: OECD Health Data 2006.

13.8

14.5

15.3

15.8

14.6

15.6

15.6

14.1

14.6

14.3

17.6

18.3

17

18.2

17.9

17.7

16.9

17.3

18.6

19.8

18.6

21.3

21.1

23.3

0 10 20 30

Hungary

CzechRepublic*

Denmark*

United States*

Mexico

France**

Australia

Japan

Year

1960 1980 2004

12.3

12.5

13.7

12.8

14.2

12.5

12.5

11.6

11.6

11.2

13.6

14.1

15.4

13.6

13.7

14.6

13.1

13.9

15.5

16.8

17.1

17.1

17.8

18.2

0 10 20

Hungary

CzechRepuiblic*

Denmark*

United States*

Mexico

France**

Australia

Japan

Year

1960 1980 2004

Male FemaleJapan has the highest male and female life expectancy



41

Table 2.12Number of In-Patient Discharges and Total Beds per 1,000 Persons

by OECD Country, 2004

42

84

88

109

90.4

119

104

235

157

140

229

269

201

263

311

0 50 100 150 200 250 300 350

Mexico*

Turkey

Canada*

Spain*

Portugal

United States*

Ireland

United Kingdom

Australia*

Italy*

Czech Republic

France*

Germany*

Hungary

Austria

Discharge rates generally track bed supply.

Source: OECD Health Data 2006 * 2004 data not available, used 2003.

1.9

2.6

3.4

3.4

3.7

3.3

4.2

4.1

3.8

4.2

8.7

7.5

8.6

7.8

7.7

0 2 4 6 8 10

Mexico

Turkey

Canada*

Spain*

Portugal

United States

Ireland

United Kingdom

Australia*

Italy*

Czech Republic

France

Germany

Hungary

Austria

Discharges/1000 Number of beds/1000



42

ALOS: in-patient care - Days Australia*Austria*Czech RepublicDenmarkFinlandFranceGermanyHungaryIrelandItaly*JapanKorea*Mexico*NorwayPortugalSlovak RepublicSpain*SwitzerlandTurkeyUnited kingdomUnited States

Copyright OECD HEALTH DATA 2005, June 0516.7

7.8

10.7

5.2

10

13.4

10.4

8.2

7.5

7.7

36.3

13.5

4.1

8.2

8.9

8.6

8.7

11.9

5.7

7.2

6.5

0 5 10 15 20 25 30 35 40

Australia*

Austria*

Czech Republic

Denmark

Finland

France

Germany

Hungary

Ireland

Italy*

Japan

Korea*

Mexico*

Norway

Portugal

Slovak Republic

Spain*

Switzerland

Turkey

United kingdom

United States

*2003 Data.; **2002 data ***no data available Countries are listed alphabetically. Data Expressed in Days


Table 2.13Average Length of Hospital Stay For Selected OECD Countries, 2004

Average Length of Stay- In-Patient Acute Average Length of Stay- Appendicitis*

The length of stay for specific procedures varies differently from total length of stay

3.2

6.1

5.7

3.5

3.1

4.7

6.1

5.8

4.5

4.6

6.3

3.6

3.3

4.2

4.6

4.8

5.6

4.1

4.1

3.3

0 2 4 6 8

Australia*

Austria

Czech Republic

Denmark*

Finland

France

Germany*

Hungary

Ireland

Iitaly*

Japan***

Korea**

Mexico*

Norway

Portugal

Slovak Republic

Spain*

Switerland

Turkey

United Kingdom

United States*



43

Table 2.14Medical Technology and Use of High-Technology Medical Procedures

by OECD Country, 2004

*2003 data,**2002 data, ***2001 data, ****2000 data, *****earlier data. Medians reflect all OECD countries

Source: OCED Health Data 2006

MRIs per Million People

CT Scanners per Million People

Coronary BypassProcedures per100,000 People

Coronary AngioplastyProcedures per 100,000 People

Patients UndergoingDialysis per

100,000 People

Bone MarrowTransplants per 100,000 People

Australia 3.7 20.8***** 77.9* 153.0* 39.5 5.6*

Austria 14.9 28.5 54.6* 174.8**** 43.7 4.6

Canada 4.9 10.3 97.6* 167.4*** 56.4 3.9***

Denmark 10.2 14.5 60.0* 156.9* 45.1 0.7*****

France 3.2 7.5 40.8*** 155.9**** 26.2***** 6.9

Germany 6.6 15.4 86.5 301.6 73.9 4.8

Greece 2.3** 17.1** 59.6***** 122.9** 75.4 1.9

Hungary 2.6 6.8 135.5 235.8 49.6 2.8

Italy 10.2 20.6 46.5* 92.4* 34.4***** 7.1*

Japan 35.3** 92.6** _ _ 194.3 0.9

Mexico 1.7 3.1 2.3 1.5 37.2 0.1

Netherlands 3.9***** 9***** 58.2 92.6* 28.2***** 3.6

Poland 1* 6.3* 8***** 19***** …… 2.1*

Spain 7.7 13.3 29.9* 58.5* 49.3 4.6

Sweden 7.9***** 14.2***** 75.1* 144.0* 25.5***** 2.0***

Switzerland 14.3 17.9 32.6 85.6 26.5***** 1.7

United Kingdom 5.0 7.0 55.5 113.4 41.6 4.2

United States

….. ….. 160.7* 426.4* 159.5* 5.1*

Median 6.0* 14.0* 60.0* 158.5* 45.1* 2.9*

Different countries spend health dollars in different ways: Japan has the highest rate of diagnostic high-tech procedures, the U.S. has the highest rate of heart procedures.



44

Table 2.15Selected Indicators of Morbidity by OECD Country, Selected Years

*2003, **2002, ***2001, ****2000, *1999 or earlierMedian includes all OECD countries.Source: OECD Health Data 2006.

2002Incidence of

Cancer(All Types of

Malignant Neoplasms)per 100,000

2004Incidence of

AIDSin Population,per 1,000,000

2004Total Surgeries on an In-patient Basis,

per 1,000

2004Percentage of

Population That is Obese (BMI >30)

2004Percentage of

Population That are Daily Smokers

2004Percentage of

Total Live Births That are Low-

birthweight Births

Australia 312.0 12.0 50.2* 21.7***** 17.7 6.3*

Austria 275.5 8.2 133.6* 9.1***** 36.3***** 6.8

Canada 299.9 9.4 44.8* 122.4 15.0 5.8*

Denmark 281.4 9.9 97.4 9.5**** 26.0 5.3

France 289.5 23.4* _ 9.5 23.0 6.8

Germany 283.3 6.0* 79.4 12.9* 24.3* 6.9

Greece 203.0 6.8 _ 21.9* 38.6 8.6

Hungary 318.8 2.3 228.6 18.8* 30.1* 8.3

Italy 276.5 29.2 52.7* 8.0* 24.2* 6.7*

Japan 214.5 3.0 _ 3.2* 29.4 9.4

Mexico 147.3 45.3* 31.3 24.2**** 26.4** 9.1

Netherlands 283.0 12.1 39.8 10.9 30.0 5.4**

Poland 256.1 4.9 _ _ 27.6**** 5.1

Spain 243.4 43.0 51.9* 13.1* 28.1* 7.1

Sweden 264.7 7.5 54.6** 9.8 16.2 4.2

Switzerland 284.6 4.8 103.9 7.7** 26.8** 6.5

United Kingdom 273.6 14.1 63.3 23.0* 25.0

7.6*

United States 357.7 149.0 89.9 30.6** 17.0 8.1

Median 266.2 9.9 52.7* 12.9* 26.5 5.1

Risky behaviors vary significantly by country: the U.S. has higher rates of obesity and HIV;Western Europe has higher rates of smoking and in some countries, surgery.



45

Table 2.16Selected Indicators of Mortality by OECD Country, 2004

Median includes all OECD countries. *2003 data;**2002data;***2001data,****earlier dataSource: OECD Health Data 2006.

Cancer Mortality Rates, per 100,000

Suicide Rates for Total Population,

per 100,000

Homicide Rates for Total Population,

per 100,000

Homicide Rates forMales,

per 100,000

HIV Mortality Rates for Total Population Due to

HIV Infection,per 100,000

Australia 161.0 11.1** 1.4** 1.9*** 0.5**

Austria 161.4 14.5 0.7 0.7 0.5

Canada 173.2** 10.6** 1.5** 2.0** 1.0**

Denmark 212.5**** 11.3*** .8*** 1.1*** 0.5***

France 172.7** 15.1*** 0.8** .9** 1.4**

Germany 161.2 10.3 0.6 0.7 0.5

Greece 152.4* 2.9* 1.0* 1.5* 0.2*

Hungary 244.8* 22.6* 1.8* 2.2* 0.1*

Italy 167.3** 5.6** 0.9** 1.3** 0.0**

Japan 146.5** 20.3* 0.15* 0.6* 0.4*

Mexico 114.2**** _ 20.1**** 37.8**** _

Netherlands 182.2 7.9 1.1 1.6 0.4

Poland 202* 13.6* 1.4 2.0* 0.3*

Spain 158.* 6.7* 0.9* 1.4* 3.2*

Sweden 148.8** 11.4** 1.1** 1.1** 0.3**

Switzerland 144.1** 15.3** 0.9** 0.8** 1.1**

United Kingdom 181.8** 6.3** 1.2** 1.2** 0.3**

United States 166.3** 10.2** 6.2** 9.7** 4.2**

Median 166.0** 11.5** 1.2** 1.5** 0.35**

Causes of mortality differ: the U.S. and Mexico have high homicide rates, Japan and Europe have high suicide rates.



46

Section 3

Providers



47

443

10

335

227

183

529

24

193

114

123128

62

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

1980 1985 1990 1995 2000 2004

Num

ber o

f Hos

pita

ls

Table 3.1Number of Hospitals by Type, 1980-2004

*Includes specialty hospitals such as TB, Ob-Gyn; eye, ear, nose and throat; orthopedic and chronic disease.

Source: American Hospital Association, personal communication, 2006.

6,965

5,759

6,053

4,776

3,000

4,000

5,000

6,000

7,000

1980 1985 1990 1995 2000 2004

Nu

mb

er o

f H

osp

ital

s

General

All Hospitals

Psyc

hiat

ric

Fed General

Total Other*

Fed PsychRehabilitation Pediatric

Specialty Hospitals

The number of hospitals has declined with the exception of rehabilitation hospitals.



48

Table 3.2Number of Hospital Beds and Occupancy Rates

by Hospital Type, 1980-2004

The decline in the percentage of general hospital beds is greater than the percentage decline in occupancy rates in general hospitals.

Occupancy Rate

85% 85%

76%

67%

82%

78%

73%74%

73%

81%

50%

60%

70%

80%

90%

100%

1980 1985 1990 1995 2000 2004

Per

cen

t O

ccu

pan

cy

*Includes specialty hospitals such as TB, Ob-Gyn; eye, ear, nose and throat; orthopedic and chronic disease.

Source: American Hospital Association, personal communication, 2006.

1,364,516

1,066,836

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

1,500,000

1980 1985 1990 1995 2000 2004

Nu

mb

er o

f B

eds

955,768

815,589

General

All Hospitals

Psychiatric

General

Total Other*

Rehabilitation

Pediatric

Beds



49

Table 3.3Number of Hospital Beds per 1,000 Persons by State, 2004

Note: Per 1,000 population.

Source: 2004 AHA Annual Survey. Kaiser Family Foundation State Health Facts Online.

Medium (2.6-3.9)

High (4.0 - 6.5)

Low (1.8-2.5)

WA

OR

ID

MT ND

WY

NV

CA

UT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVT

NH

MA

RI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

National average is 3

The number of hospital beds varies by state, with the lowest concentration in the Western U.S.



50

Table 3.4Number of Nursing Home Beds and Total Residents, 1985-2003

Source: Health, United States, 2005, National Center for Health Statistics.

From 1985 to 1999 beds grew slightly more rapidly than residents, after 1999, resident counts fell more rapidly than the bed count.

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

1985 1995 1997 1999 2003

Year

Nu

mb

er

of

Be

ds

& R

es

ide

nts

Beds Current Residents



51

Table 3.5Number of Physicians per 100,000 Persons by State, 2004

Note: Includes non-federal physicians only.

Source: Physician Characteristics and Distribution in the U.S. 2004. American Medical Association. Kaiser Family Foundation State Health Facts Online.

Medium (241 - 290)

High (291 - 752)

Low (175-240)

WA

OR

ID

MT ND

WY

NV

CA

UT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVT

NH

MA

RICT

DE

DC

HI

CO

GAMS

OK

NJ

SD


Availability of Physicians varies substantially by state, with the highest concentration in the Northeast.



52

*Projection for 2000.Note: Includes all active physicians.Source: AMA data from the Bureau of Health Professions and Health, United States, 1993.

Since 1950, urban areas have seen much more rapid growth in physicians than rural areas.

141157

108

7884

61

140151

110

7584

57

156175

124

7792

52

197

234

172

99

124

62

234

268

204

113

149

72

271

308

247

132

185

85

0

50

100

150

200

250

300

350

Rural (no city of10,000); adjacentand not adj. To

metro area)

Rural (city>10,000; not adj.to metro area)

Rural (city>10,000; adj. to

metro area)

Small Metro(<1,000,000)

Large Metro(>1,000,000)

Active Physiciansper 100,000

Persons (nationalaverage)

Ph

ys

icia

ns

pe

r 1

00

,00

0 P

ers

on

s

1950 1960 1970 1980 1990 1998

*

Table 3.6Distribution of Active Physicians, 1950-1998



53

Table 3.7Percentage of Physicians in Differing Practice Arrangements, 1987-2001

Source: AMA Socioeconomic Monitoring System and 2001 Patient Care Physician Surveys, American Medical Association

Declines in solo practice physicians are offset by increases in salaried physicians and group practices.

32.0% 25.7% 23.3%

40.4%

38.4%33.8%32.1%

33.1%

9.8%9.2% 8.2%

5.3%

30.1%31.3%26.1%21.3%

1987 1993 1999 2001

Self Employed in Solo Practice Owner of Group Practice

Employee in Group Practice Other Employee



54

Table 3.8Physician Revenue by Payer, 1986-2004

The share of physician and clinical services revenue paid by patients out-of-pocket has declined substantially since 1986. Private health insurance continues as the largest source

of physician and clinical services revenue.

19.1 18.9

7.2%6.8%6.7%4.5%4.0%

20.4%20.8%19.4%

6.9%5.9% 5.6%7.0%6.4%

48.5%47.7%48.6%43.0%

35.9%

6.9%7.5%8.0%7.2%

8.2%

10%11.6%11.9%19.3%27.4%

0

20

40

60

80

100

1986 1990 1995 2000 2004

Calendar Year

Pe

rce

nt

Total Private

Total Public

$99.5 billion

Other PublicMedicareTotal Medicaid, SCHIP expansion and SCHIP

Out-of-PocketOther PrivatePrivate Health Insurance

$157.5 billion $220.5 billion $286.4 billion


$399.9 billion



55

Table 3.9Physician Participation in Managed Care, 1988-2001

Note: Managed care contracts include HMOs, IPA, and PPOs. Data from the American Medical Association.

Source: Trends and Indicators in the Changing Health Care Marketplace, 2005, Kaiser Family Foundation.

Most physician practices have managed care contracts and receive a significant share of revenue from them.

88

41

23%

61%

44%

92%

49%

91%

0

10

20

30

40

50

60

70

80

90

100

% of Physicians in a Practice With atLeast One Managed Care Contract

Average Share of Total PracticeRevenue Derived from Managed Care

1988 1997 1999 2001

%

%



56

Table 3.10Physician Managed Care Payment Arrangements, 2001

Note: Physicians may receive payment in multiple ways, so the payment methods do not add to 100%.


Fee-for-Service is the predominant payment arrangement for physicians.

25%23%

84%74%

6%3%

42%

63%

0

10

20

30

40

50

60

70

80

90

Primary Care Physicians Specialty Care Physicians

Pe

rce

nt

Relative Value Scale Fee-for-Service Salary Capitation



57

Table 3.11Hospital Participation in HMOs and PPOs, 1987-2004

Source: American Hospital Association, personal communication.

A steady rise in the number of hospitals participating in both Health Maintenance and Preferred Provider Organizations has leveled off in recent years.

2681

2290

3173

2488

0

1000

2000

3000

4000

1987 1990 1995 2000 2004

Nu

mb

er

of

Co

mm

un

ity

Ho

sp

ita

ls

HMO PPO



58

Table 3.12Hospital Managed Care Payment Arrangements, 2001


Most hospitals receive per diem and fee-for-service payments, a much smaller numberalso receive capitated payments.

89%

71%

62%

19%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Per Diem Rate Fee-for-Service Diagnosis RelatedGroups

Capitation



59

Table 3.13Hospital Profit Margins for All Payers and Medicare, 1997-2004

Source: CMS, Office of the Actuary. Medicare cost report data.

For both rural and urban hospitals, overall and Medicare inpatient hospital profit margins have declined. Total margins remain positive.

Total Margins Medicare Inpatient Margins

9.6%

16.9%16%

6.2%5.9%5.9%

2.4%

12.3%

10.9%

4.4%3.6%3.7%

-2.2%

-0.7%-0.9%

5.3%4.1%4.3%

-4

-2

0

2

4

6

8

10

12

14

16

18

20

All Hospitals Urban Rural All Hospitals Urban Rural

1997 2000 2004



60

Table 3.14Hospital Payment to Cost Ratios for Medicare, Medicaid, and

Private Payers, 1985-2002

Source: American Hospital Association Annual Survey. Chapter 4. Trends in Hospital Financing

Private Payers continue to pay a larger share of hospital costs than Medicare and Medicaid but less so than in the late eighties and early nineties..

70%

80%

90%

100%

110%

120%

130%

140%

Year

Pa

ym

en

t-C

os

t R

ati

o

Medicare Medicaid Private Payers

Private Payers119%

Medicare97.9%

Medicaid96.1%



61

Table 3.15Change in Nursing Home Institutionalization Rate for the Elderly,

1985-1999

Source: Health, United States, 2005, National Center for Health Statistics.

While the absolute number of elderly in nursing homes continues to rise, the number of residents per 1,000 elderly has declined.

1.46 million1.42 million

1.31 million

1,000,000

1,200,000

1,400,000

1,600,000

1985 1995 1999

43.345.954

0

20

40

60

80

100

120

140

160

1985 1995 1999

Total Number of Elderly in Nursing

Homes

Rate of Elderly in Nursing Homes per

1,000 Elderly



62

Table 3.16Nursing Home Resident Rate by State, 2003

Note: Number of nursing homes residents (all ages) per 1,000 resident population 85 years of age and over.

Source: Health, United States, 2005. Table 116.

Medium (300 - 400)

High (400+)

Low (131 - 299)

WA

OR

ID

MT ND

WY

NV

CA

UT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVT

NH

MA

RI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD


The Western U.S. houses the smallest share of nursing home residents.



63

Table 3.17Number of Hospital Discharges and Average Length of Stay,

1980-2004

Note: Non-Federal short-stay hospitals.

Source: Center for Disease Control and Prevention, National Center for Health Statistics.

Hospital discharges and length of stay have generally declined over the last two decades.

0

1

2

3

4

5

6

7

8

1980 1985 1990 1996 2001 2004

Av

era

ge

Le

nth

of

Sta

y

110

115

120

125

130

135

140

145

150

155

160

165

170

175

Dis

ch

arg

es

pe

r 1

,00

0 P

op

ula

tio

n

Average Length of Stay Discharges



64

Table 3.18Number of Physician Visits per 1,000 Persons, 1990-2000

Source: Center for Disease Control and Prevention, National Center for Health Statistics.

While there was a drop in the overall number of physician visits during the early nineties, by 1996-97, visits steadily increased.

2865

2931

3004

2643

2925

2777

2400

2500

2600

2700

2800

2900

3000

3100

1990-91 1992-93 1994-95 1996-97 1998-99 2000

Vis

its

pe

r 1

,00

0 P

eo

ple



65

Section 4

Public Programs



66

Table 4.1Public Payers’ Share of National Health Spending, 1980-2010

The share of national spending by public payers has increased slightly over the last two decades, driven by faster growth in Medicare and Medicaid spending.

Note: Total public includes Medicare, Medicaid, other federal (not shown) and state and local spending.*2010 is a projection.


42.740.6

45.2 45.146.3

15.2 15.817.3 16.4

18.6

10.6 10.6

15.6 15.6 15.613.6 12.9 13.5

6.8 6.2

0

5

10

15

20

25

30

35

40

45

50

1980 1990 2000 2004 2010*

Pe

rce

nt

Total Public Medicare Medicaid Other State & Local



67

Total personal health care spending in 2004 was $1.56 trillion; Medicare accounted for over 19%.

0 50 100 150 200 250 300 350 400 450 500

Medical Durables

Other Medical Nondurables

Home Health

Other Personal Health Care

Other Professionals

Dental Services

Nursing Home

Prescription Drugs

Physician and Clinical Services

Hospital Care

Personal Health Spending (Billions of Dollars)

Medicare Spending Other Payers

$570.8 BillionMedicare pays 28.6%






$53.3 BillionMedicare pays 0%



$23 BillionMedicare pays 28.3%

1 Medicare payments are mostly from managed care plans, since fee-for-service Medicare did not generally cover outpatient prescription drugs in 2004.


1

Table 4.2Personal Health Care Expenditures by Type of Service

and Percent Medicare Paid, 2004



68

Table 4.3Personal Health Care Expenditures by Type of Service

and Percent Medicare Paid, 1980Total personal health spending in 1980 was $214.6 billion;

Medicare accounted for 17%

$13 BillionMedicare pays 0%













69

Table 4.4Where the Medicare Dollar Went: 1980 and 2005

5%

68%

1%

24%

2%

1 Other services include other professional services and ambulance services.Note: Data do not sum due to rounding. Spending includes benefit dollars only.

Source: CMS, Office of the Actuary, Trustees Report 2006

Outpatient Hospitaland Other

Outpatient Facility1

SNF

Physician

Inpatient Hospital

HHA

Total = $336 Billion

Medicare spending has moved from inpatient hospital services to all other settings. Managed care has grown while the physician share declined.

Total = $37 Billion

20051980

43%

6%4%

17%

14%

14%2%

Inpatient Hospital

SNFHome Health Care

Physician

Managed Care

Other

Administrative Expenses



70

Table 4.5Medicare Trustee’s Report: Part A Income and Expenses, 1970-2015

.Source: CMS, Office of the Actuary.Trustees Report, 2006.

$0$25$50$75

$100$125$150$175$200$225$250$275$300$325$350$375$400

1970 1980 1990 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Calendar Year

Do

llars

in B

illio

ns

Actual Income Actual Expenditures

Projected Income Projected Expenditures

Actual Projected

Projected Expenditures First Exceed Projected Income in 2011



71

Table 4.6Number of Medicare Beneficiaries, 1970-2040

.

Source: Medicare Trustees Report 2006

Enrollment in the Medicare Program is projected to nearly double in the next 30 years.

20.428.4

34.239.7 42.5

46.5

61.6

78.686.4

0

10

20

30

40

50

60

70

80

90

100

1970 1980 1990 2000 2005 2010 2020 2030 2040

Year

En

rollm

ent

(mill

ion

s)

Actual Projected



72

Table 4.7Medicare Beneficiaries as a Share of the U.S. Population, 1970-2030

The U.S. population will age rapidly through 2030, when 22 percent of the populationwill be eligible for Medicare.

Source: Social Security Administration, Office of the Actuary.

0

5

10

15

20

25

1970 1980 1990 2000 2010 2020 2030

Pe

rce

nt

of

Po

pu

lati

on

65 & Over Disabled

12.1%

9.5%

13.1%13.9%

15.0%

18.5%

22.0%

10.89.5 11.9 12.0 12.6 15.8 19.5

1.31.2 1.9 2.4

2.7

2.4

Total Number of Medicare Beneficiaries:

(millions)20.4 28.4 34.3 39.6 46.5 61.6 78.6



73

$5,000 or Less4%

$5,001 - $10,00025%

$10,001 - $15,00017%$15,001 - $25,000

24%

$25,001 - $40,000

16%

$40,001 or More14%

About seventy percent of Medicare expenditures are on behalf of individuals withannual incomes of $25,000 or less.

Note: Data may not sum due to rounding.

Source: CMS, Office of Research, Development, and Information: Data From the Medicare Current Beneficiary Survey (MCBS) 2003 Access to Care File.

Table 4.8Medicare Spending for Fee-for-Service Beneficiaries by Income, 2003



74

Source: CMS, Office of Research, Development, and Information: Data from the Medicare Current Beneficiary Survey (MCBS) 2003 Access to Care File.

Among the nearly 30 percent of beneficiaries living alone, a large proportion are women and have low incomes.

Live with Spouse49%

Live in LTC Facility

5%

Live with Children/Others

17%

Live Alone29%

52% have an income<$15,000

70% are women

16% are over the age of 85

$$

85+85+

Table 4.9Living Arrangements of Medicare Beneficiaries, 2003



75

56%

46%

41%

29%

The proportion of women increases among those 85 and older.

Table 4.10Age and Gender of the Medicare Population, 2003

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

Under 65 65-74 75-84 85+

Females

Males

53%

47%

54%

46%

58%

42%

31%

69%

Note: Fifty-three percent (23.7 million) of all Medicare beneficiaries are female; 44% (18.6 million) are males. Data reflect Medicare beneficiaries ever enrolled in the program during the year.

Source: CMS, Office of Research, Development, and Information: data from the Medicare Current Beneficiary Survey (MCBS) 2003 Access to Care File.

18.2 million

6.1 million

13.1 million

4.9 million

En

roll

ee

s (

mil

lio

ns

)



76

Rx Drugs13.6%

($66.7 B)

Note: Premium payments are excluded. LTC is long-term care. SNF is skilled nursing facility.

Source: CMS, Office of Research, Development, and Information: Data from the Medicare Current Beneficiary Survey (MCBS) 2003 Cost and Use File.

Table 4.11Total Health Care Expenditures for Medicare Beneficiaries, 2003

Total Health Care Expenditures = $491 Billion

LTC15.6%

($76.6 B)

Home Health2.7%

($13.4 B)

Dental2.4%

($12.0 B)Medical Provider

25.3%($124.3 B)

Hospital35.4%

($173.7 B)

SNF3.6%

($17.8 B)Hospice

1.2%($6.0 B)



77

*Beneficiary out-of-pocket spending does not include their payments for Medicare Part B premiums, private insurance premiums, or HMO premiums. Note: Data are for all beneficiaries, both fee-for-service and Medicare+Choice enrollees.

Source: CMS, Office of Research, Development, and Information: Data From the Medicare Current Beneficiary Survey (MCBS) 2003 Cost and Use File.

Medicare pays a little more than half of the total cost of beneficiaries’ medical care.

Overall Medical Expenses per Medicare Beneficiary = $12,512

Private Insurance

13%($1,600)

Medicaid11%

($1,321)Medicare

52%($6,553)

Other Sources6%

($688)

Direct Out-of-Pocket*

18%($2,350)

Table 4.12Sources of Payment for Medicare Beneficiaries’ Medical Services, 2003



78

Table 4.13Sources of Payment for Medicare Beneficiaries by Type of Service, 2003

83.378.0 78.0

66.361.9

46.7

3.6

14.8

50.0

20.6 24.6

11.0

50.0

9.0

5.010.7

37.731.6

40.5

0.50

84.6

4.7

1.2 1.8

3.1 3.1

2.12.8

9.26.1 11.2 11.2

10.98.8 7.7 7.7

0

0.2

0.4

0.6

0.8

1

InpatientHospital

HomeHealth

IndependentLabs

SkilledNursingFacility

MedicalProvider

OutpatientHospital

OtherMedical

PrescribedMedicines

Long-TermCare

Pe

rce

nt

of

Co

ve

red

Ex

pe

nd

itu

re b

y P

ay

er

OOP

Other

Medicaid

Medicare

1 OOP is out-of-pocket.2 Other Medical includes things such as hospice and durable medical equipment.

Note: Medicare did not generally cover outpatient prescription drugs in 2003.Source: CMS, Office of Research, Development, and Information: Data from the Medicare Current Beneficiary Survey (MCBS), 2003 Cost and Use File.

100

80

60

40

20

0

Pe

rce

nt

of

Ex

pe

nd

itu

re b

y P

ay

er

Medicare pays a large proportion of the total expenses of services it covers.

1

2



79

Table 4.14Types of Supplemental Health Insurance held by Fee-for-Service

Medicare Beneficiaries, 2003

13.5%

Note: Medicaid (shown above) includes both Qualified Medicare Beneficiaries (QMBs) and Specified Low-Income Medicare Beneficiaries (SLMBs).

Source: CMS, Office of Research, Development, and Information: Data From the Medicare Current Beneficiary Survey (MCBS) 2003 Access to Care File.

Most beneficiaries using fee-for-service Medicare have private, supplemental health plans.

No Supplemental Insurance

16%

Medicaid18%

Individual Medigap

26%

Other2%

Employer-Sponsored

33%

Medigap &Employer-Sponsored

Insurance5%



80

Physician/Supplier 23%

Private Health Insurance Premium

23%

Medicare Part B Premium

15%

Direct Out-of-Pocket

62%

Home Health* 1%

Dental 9%

Outpatient Services 5%

Prescription Drugs22%

Long Term Care31%

Inpatient Hospital/SNF7%

Table 4.15Medicare Beneficiary Out-of-Pocket Spending, 2003

*These are for home health services not covered by Medicare.

Note: 1) Data are for all beneficiaries, both fee-for-service and Medicare+Choice enrollees. 2) Total per capita direct out-of-pocket spending is $3,765

Source: CMS Office of Research, Development and Information, Medicare Current Beneficiary Survey (MCBS) 2003 Cost and Use file

Total Out-of-Pocket Expenses Direct Out-of-Pocket$159 billion $99 billion

The majority of beneficiary out-of-pocket spending is for Medicare cost-sharing and payment for non-covered services.

MedicareCost-

Sharing35%

OutsideMedicare

BenefitPackage

63%



81

Table 4.16Per Capita Out-of-Pocket Expenses for Medicare Beneficiaries

by Type of Insurance Coverage, 1993 and 2003

$4,673

$4,324

$3,950 $3,957

$2,776$2,977

$1,433

$1,922

$2,268

$2,691$2,406

$2,862

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

Medicare FFSOnly

Medigap Other EmployerSponsored

Plan

Medicaid Medicare RiskHMO

Pe

r C

ap

ita

Do

llars

1993 2003

Note: Premium payments are included.

Source: CMS, Office of Research, Development, and Information: Data from the Medicare Current Beneficiary Survey (MCBS), 1993 and 2003 Cost and Use Files.

Beneficiaries without supplemental insurance and those with Medigap coverage have higher out-of-pocket spending than other groups.

Percent Change,1993 to 2003 63.3% 79.7% 46.8% 74.5% 44.4% 107.7%



82

Note: ADLs are activities of daily living (e.g., eating, bathing); IADLs are instrumental activities of daily living (e.g., shopping, use of phone, cleaning).

Source: CMS, Office of Research, Development, and Information: Data from Medicare Current Beneficiary Survey (MCBS) 2003 Cost and Use File.

More than one-third of the Medicare population needs assistance with at leastone “activity of daily living.”

21 %

54%

50%

25 %

13 %

30%

19 %20 %

22 %

13 %

0%

10%

20%

30%

40%

50%

60%

All Elderly Disabled

Pe

rce

nt

of

Po

pu

lati

on

No ADL or IADL Limitations

IADLs Only

1-2 ADLs

3-6 ADLs

Table 4.17Distribution of Medicare Enrollees by Functional Status, 2003

15% 14 %



83

Table 4.18Beneficiaries with Poor Health and Functional Limitations by

Insurance Status, 2003

Medicare beneficiaries in poor health or with functional limitations are more likely to receive Medicaid or to have no supplemental insurance.

Source: CMS, Office of Research, Development, and Information: Data from the Medicare Current Beneficiary Survey (MCBS) 2003 Access to Care File.



84

Table 4.19Medicare Managed Care Enrollment, 1990-2005

Source: CMS, Office of the Actuary.

Managed care enrollment grew through 2000, then declined, and is now on the upswing.

1.822.25

2.52.8

3.5

4.4

5.4

6.4

6.9 6.8

6.2

5.3 5.45.8

5.5

2.0

0

2

4

6

8

En

rollm

en

t in

Mill

ion

s



85

About three-quarters of Medicare beneficiaries had prescription drugcoverage at some point in 2003.

Table 4.20Percent of Medicare Beneficiaries with Prescription Drug Coverage,

1992-2003

57%61% 62%

65%69%

73% 73%76% 78% 76% 77% 78%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Pe

rce

nt

of

Be

ne

fic

iari

es

Wit

h C

ov

era

ge

Note: This includes beneficiaries who had some type of drug coverage at any point during the year. Does not include beneficiaries in facility care.

Source: CMS, Office of Research, Development, and Information: Data from the Medicare Current Beneficiary Survey (MCBS) 1992-2003 Cost and Use Files.



86

Table 4.21Total Spending for Prescription Drugs for All Medicare Beneficiaries,

1996-2003

$253$463 $276

$548$325

$546$352

$617$395

$732$448

$763 $690$894

$542$822

$516 $601 $674 $779$942

$1,146

$1,592

$1,429

$0

$500

$1,000

$1,500

$2,000

$2,500

Do

lla

rs

Out-of-Pocket Other Payer

1996 1997 19991998

Total spending for drugs was higher for beneficiaries with drug coverage than without; however, non-covered beneficiaries pay substantially more out-of-pocket costs.

Note: Does not include beneficiaries in facility care. Does not adjust for underreporting of prescription drugs.

Source: CMS, Office of Research, Development, and Information: Data from the Medicare Current Beneficiary Survey (MCBS) 1996-2003 Cost and Use Files.

2000

2001 2002 2003



87

Table 4.22Medicare Beneficiaries With Drug Coverage by Primary Source of

Supplemental Coverage, 1995 and 2003

Note: Data are based on the non-institutionalized beneficiaries. Percentages shown in bars are Medicare beneficiaries with drug coverage as a percent of total Medicare beneficiaries. Beneficiaries do not necessarily get drug coverage from their primary sources of supplemental insurance.

Source: CMS/Office of Research, Development and Information. Data are from the Medicare Current Beneficiary Survey.

4%11%

11%

30%

32%

12%

14%8%

9%

12%

0%

20%

40%

60%

80%

100%

1995 2003

Pe

rce

nt

of

To

tal M

ed

ica

re B

en

efi

cia

rie

s**

65% of Medicare Beneficiaries Have

Drug Coverage

78% of Medicare Beneficiaries Have

Drug Coverage

Medicare + ChoicePlans

Medicaid

Employer-Sponsored

Individually Purchased

Other

Employer-sponsored retiree coverage is the largest source of coverage for drug spending.



88

Table 4.23Personal Health Expenditures by Type of Service and

Percent Medicaid Paid, 2004Total personal health spending in 2004 was $1,560,241,000,000;

Medicaid accounted for 17%

$81.5 BillionMedicaid pays 5%













89

Table 4.24Personal Health Expenditures by Type of Service and

Percent Medicaid Paid, 1980Total personal health spending in 1980 was $214.6 billion;

Medicaid accounted for 12%.

$13 BillionMedicaid pays 4%













90

Table 4.25Medicaid Enrollment by Eligibility Group, 2003

Payments for the elderly, blind and disabled account for 69 percent of total payments.

Note: Expenditure distribution based on Congressional Budget Office data that includes only federal spending on services and excludes DSH payments, supplemental provider payments, vaccines for children, administration, and the temporary Federal Medicaid Assistance Percentage Increase..

Source: Kaiser Family Foundation, Trends and Indicators in the Changing Health Care Marketplace Chartbook 2004.

Blind & Disabled 43%

Children

19%

Adults 12%

Elderly 26%

Children

48%

Adults 27%

Elderly 9%

Blind & Disabled 16%

Total Enrollees = 52.4 million

Total Expenditures = $235 billion



91

Table 4.26Average Medicaid Payments per Person Served by Eligibility Group,

1985-2003

Source: CMS, CMSO, HCFA-2802 reports; Medicaid Statistical Information System.

Per capita payments for the elderly, blind and individuals with disabilities continue to be significantly higher than payments for other groups.

-$1,000

$1,000

$3,000

$5,000

$7,000

$9,000

$11,000

$13,000

$15,000

Fiscal Year

Rea

l Per

Cap

ita P

aym

ents

Aged 65 and OlderBlind & DisabledChildren Under 21Adults

$2,292

$13,303

$13,677

200319981995199019881985

$1,606



92

Table 4.27 Medicaid Enrollees and Beneficiaries by Eligibility Group, 1975-2003

Medicaid “enrollees” are those who are enrolled in Medicaid at any time during the fiscal period. “Beneficiaries” are those for whom services have been reimbursed during the fiscal period.

*Note: (1) In 1998, a large increase occurred in the number of persons served which is mainly the result of a new reporting methodology of classifying payments to managed care organizations; FY 1998 was the first year capitation payments were counted as a service for purposes of the HCFA 2082 reporting, and thus all managed care enrollees were counted as individuals receiving services; this new methodology probably has the greatest effect on the reported number of children; (2) the term “adults” as used above refers to non-elderly, non-disabled adults; (3) disabled children are included in the blind & disabled category shown above. **The Other category was dropped in 1999.

Source: CMS, CMSO, Medicaid Statistical Information System.

Children historically represent the largest group of Medicaid enrollees.

0

10

20

30

40

50

1975 1980 1985 1990 1995 1999 2000 2001 2003

Fiscal Year

Per

son

s S

erve

d (i

n m

illio

ns)

Adults14.3 million enrollees

11.7 m beneficiaries

Children Under 2127.3 million enrollees

24.8 million beneficiaries

Blind & Disabled8.4 million enrollees

7.7 million beneficiaries

Age 65 & Older5.2 million enrollees

4 million beneficiaries

Other**

2003 Total =55.2 million Enrollees



93

Table 4.28Total Medicaid Expenditures by Type of Service, FY 2005

Source: CMS, Office of the Actuary.FY 2005

Expenditure (In Billions)

Hospital $76

Collections -$5

Medicare Premiums $8

Dental $3.4

Prescription Drugs $30.7

Other $15

Long Term Care $95.3

Outpatient $23.9

Inpatient (General) $42

Inpatient (Mental) $4.7

Outpatient Hospital $12.3

DSH Hospital Payments $17.1

Nursing Homes $46.4

Intermediate Care Facility-MR $12.5

Community Based Long Term Care $36.4

Capitation Payments $50.6

Targeted Case Management $3

EPSDT $1.1

Lab & Radiology $1.3Clinic Services $9.1Physician Services $12.4

25%

1%10%

32%

5%8%3%

Total Medicaid Expenditures in FY 2005 were $300.7 billion

1%

16%



94

Table 4.29Total State Spending and Federal Funds Provided to States, 2004

Source: National Association of State Budget Officers, 2004 State Expenditure Report.

Over twenty-two percent of state total spending and over forty-four percent of federalfunds provided to states were spent on Medicaid.

Total State Spending Federal Funds Provided to States

Higher Education

10.9%Elementary &

Secondary Education

21.4%

Transportation8.0%

All Other31.7%

Medicaid22.3%

Corrections3.5%

Public Assistance

2.1%

Higher Education

5.6%

Elementary & Secondary Education

11.4%

Transportation8.0%

All Other26.3%

Medicaid44.5%

Corrections0.6%

Public Assistance

3.6%



95

Table 4.30Medicaid Spending for Long-Term Care, 1999-2003

Notes: The share of Medicaid spending on long term care devoted to home and community based settings increased from 25% of the total in FY1999, 26% in FY2000, 29% in FY2001, 32% in FY2002, to 34% of the total in FY2003. Institutional spending includes SNF’s, ICF’s, ICF-MR, and Psychiatric Hospitals.

Sources: CMS, Center for Medicaid and State Operations, MSIS data.

Home and community-based services are a growing share of Medicaid’slong term care spending.

$14 $15 $19 $23 $26

$41 $44$47

$50 $51

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

1999 2000 2001 2002 2003

Selected Fiscal Year

Re

al S

pe

nd

ing

in B

illio

ns

Home and Community Care Spending Institutional Care Spending

$55b$59b

$66b$73b

$77b



96

32.0% to 39.9%

48% to 55.9%

40.0% to 47.9%

Less than 32%

Table 4.31Births Financed by Medicaid as a Percent of Total Births by State, 2005

Source: Kaiser Family Foundation, State Health Facts, http://www.statehealthfacts.org

WA

OR

ID

MT ND

WY

NV

CA

UT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVT

NH

MA

RI

CT

DE

DC

AK

CO

GAMS

OK

NJ

SD

Medicaid pays for about 41% of the nation’s births.

Above 56.0%

HI



97

Table 4.32Medicaid Enrollment by Age, Sex, and Ethnicity, 2003

Source: MSIS State Summary for 2003.

2%

4%

50%26%

10%

4%4%

60%40%

Native Hawaiian/

Pacific Islander

1%

Hispanic21%

Multiple Races/ Other 7%

21-44

MaleFemale

Asian3%

American Indian/ Native

Alaskan1%

African American

23%

White44%

19-20

85+75-84

65-74

45-64

There were 55.2 million Medicaid enrollees in 2003.

Age EthnicitySex

0-18



98

Table 4.33Medicaid Managed Care Enrollment, 1996-2004

Note: The unduplicated managed care enrollment figures include enrollees receiving comprehensive benefits and limited benefits. This table also provides unduplicated national figures for the Total Medicaid population and Other population. The statistics also include individuals enrolled in State health care reform programs that expand eligibility beyond traditional Medicaid eligibility standards.

Source: CMS, Center for Medicaid and State Operations: National Summary of Medicaid Managed Care Programs and Enrollment June 30, 2001. CMS, Medicaid Managed Care Enrollment Data, 2002-2004.

Medicaid managed care enrollment grew rapidly over the last decade.

13.3

15.316.6

17.818.8

20.8

23.6

26.327.4

-2

1

4

7

10

13

16

19

22

25

28

1996 1997 1998 1999 2000 2001 2002 2003 2004

Num

ber

of P

eopl

e (in

Mill

ions

)

Managed Care 40% 48% 54% 56% 56% 57% 57% 60% 61%% Enrolled in



99

Table 4.34Health Insurance Coverage of Children, 1988-2005

*Other includes private non-group and other public insurance. A change in the census questionnaire allowed this category to be separately identified starting in 2000. see also Table 6.6Notes: About 23% of children below poverty (or 4.1 million kids) had no health insurance in 2004.


The percentage of children without health insurance has declined since SCHIP was Implemented in 1998.

1624 23 20 20 22 26 26

13

14 14 15 1212 12

6462 63

62 60 57 56

6 6 6 6

12

57

0%

20%

40%

60%

80%

100%

1988 1993 1995 1998 2000 2001 2003 2005

Selected Calendar Year

Pe

rce

nt

of

All

Ch

ildre

n

Other*

Employer-Based

Uninsured

Medicaid andSCHIP



100

Table 4.35State Children’s Health Insurance Program

Spending and Enrollment, 1998-2004

*Note: Ever enrolled in SCHIP during the year, not a point in time estimate.

Source: Center for Medicaid and State Operations

Spending Enrollment*

$5.4$6.1 $6.6

$3.8

$2.8

$1.3

$0.20.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

FY98FY99

FY2000

FY2001

FY2002

FY2003

FY2004

Do

llar

s in

Bil

lio

ns

6.1 million5.9 million

5.4 million

1.0 million

2.0 million

3.3 million

4.6 million

0

1

2

3

4

5

6

7

CY98 FY99 FY2000 FY2001 FY2002 FY2003 FY2004

The SCHIP program covers a growing number of uninsured low-income children.



101

Table 4.36State Children’s Health Insurance Program Plan Type by State, 2006

WA*

OR+ ID

NV

MT

WY

UT CO+

AZ+ NM +

ND

SD

NE

KS

OK

TX#*

MN*

MO

AR*

LAGA

SC

NCTN#

IL*+

WI

MI*+

IN OH

KY VA

PA

NY

FL

VTNH

MA*

CT#NJ +

MDDE

RI*CA+*

ME

IA

WV

MS# AL#

Separate State Child Health Plans: 18 States

Medicaid Expansions: 17 States & D.C

Combination Programs: 21 States

Puerto Rico

HI

AK

Key* Approved Unborn State Plan Amendments: 9 (AR, CA, IL, MA, MI, MN, RI, TX, WA) ^ Approved SCHIP 1115 Demonstrations: 6 (AK, MN, NM, NJ, RI, WI)+ Approved HIFA Demonstrations: 13 (AZ, AR, CA, CO, ID, IL, MI, NJ, NV, NM, OR, UT, VA)# State no longer has a Medicaid expansion program as of September 30, 2002, due to the aging out of the children phased into the Medicaid program under OBRA’90. Summary Information (in order of submission/approval):Number of Approved Separate State Child Health Plans: 18 (CO, PA, OR, NV, UT, MT, GA, AZ, KS, VT, WA, WY, WV, AL, MS, TX, CT, NY)Number of Approved Medicaid Expansions: 17 (SC, OH, MO, OK, WI, PR, DC, NE, NM, VI, LA, AK, HI, GU, AS, CNMI, TN)Number of Approved Combination Plans: 21 (FL, MA, NJ, ME, NH, KY, MI, IA, NC, ND, IN, IL, MD, SD, VA, CA, RI, MN, DE, AR, ID)Total Number of Amendments Approved: 272Number of Amendments Under Review: 13 (TN,VA-6th amend, IL-6th amend, IL-7th amend, CA-11th amend, WI-4th amend.)WV-6th-amend; FL-17th amend; PA-7th amend.; DE-3rd amend, WA-8th amend.Source: CMS Center for Medicaid andState Operations.



102

High (16.9% - 20.5%)

Low (9.5% - 13.1%)

Table 4.37

State Health Spending as a Percent of Gross State Product 2004

Note: Data are for personal health care by state of provider.Source: CMS, Office of the Actuary, National Health Statistics Group.

WA

OR

ID

MT ND

WY

NV

CA

UT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVT

NH

MA

RI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

Proportion of state output devoted to personal healthcare varies by state.National average is 13.4%

Medium (13.2% -16.8%)



103

Medium 32%-39%

High 40%-51.1%

Low 26% - 32%

Table 4.38Share of State Health Spending Financed by Both Medicare and

Medicaid, 2004


WA

OR

ID

MT ND

WY

NV

CA

UT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVT

NH

MA

RI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

Medicare and Medicaid finance varying proportions of State health spending.

National average is 36.6%



104

Medium 15.6%-21.8% High 21.9%-28.1%Low 7.4%-15.5%

Table 4.39Share of State Health Spending Financed by Medicare, 2004


WA

OR

ID

MT ND

WY

NV

CA

UT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVT

NH

MA

RI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

Medicare finances a varying share of State health spending.




105

Medium 16.7%-24.0% High 24.1%–31.6%Low 9.1%-16.6%

Table 4.40Share of State Health Spending Financed by Medicaid, 2004


WA

OR

ID

MT ND

WY

NV

CA

UT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVT

NH

MA

RI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

Medicaid finances a varying share of State health spending.




106

Section 5

Private Health Insurance



107

Table 5.1National Health Spending From Out-of-Pocket and Private Health

Insurance, 1980-2010

Over the last 25 years, the share of national health spending from out-of-pocket sources has declined, while that from private health insurance has increased.

*Projected

Note: The remainder of national health spending is from public sources. This chart is a subset off Table 1.3Source: CMS, Office of the Actuary, National Health Statistics Group.

10.9%12.6%

15%

19.7%

23.7%

35.2%35.1%34.2%33.5%

27.8%

7.3%7.2%5.7%6.1%5.9%

0

5

10

15

20

25

30

35

40

1980 1990 2000 2004 2010*

Pe

rce

nt

of

Na

tio

na

l He

alt

h S

pe

nd

ing

Out of Pocket Private Health Insurance Other Private



108

Table 5.2Changes in Employer Health Insurance Premiums, Overall Inflation,

and Workers’ Earnings, 1989-2005

The rate of increase in employer health insurance premiums is slowing.

Source: Health Insurance Premiums from personal communication of data from KFF/HRET Employer Health Benefits Surveys from 1999, 2000, 2001, 2005: KPMG Survey of Employer-Sponsored Health Benefits: 1993, 1996; HIAA Employer-Sponsored Health Insurance Survey; 1989. Workers’ Earnings from Bureau of Labor Statistics Current Employment Statistics Survey (April-April), 1988-2001. Overall Inflation from Bureau of Labor Statistics, CPI estimates (April-April), 1988-2001, at www.bls.gov. Trends and Indicators in the Changing Health Care Marketplace, 2002 – Chartbook.



109

Table 5.3Annual Change in Health Insurance Premiums by Firm Size, 2005

29%

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2005.

Small firms face higher premium growth than larger firms.

8.9%

9.8%

9.2%

0% 2% 4% 6% 8% 10% 12% 14%

Jumbo (5,000+ Workers)

Large (1,000-4,999 Workers)

Midsize (200-999 Workers)

All Large Firms (200 or More Workers)

(50-199 Workers)

(25-49 Workers)

(3-24 Workers)

All Small Firms (3-199 Workers)

All Firms



110

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2000, 2001, 2003, 2005; KPMG Survey of Employer-

Sponsored Health Benefits: 1988, 1993, 1996.

Table 5.4Employee Contributions to Health Insurance Premiums, 1988-2005

Employees are paying a higher dollar value, but smaller share of theirhealth insurance premiums.

Percentage of Premium Paid by Employees, 1988-2005

Average Monthly Employee Contribution, 1988-2005



111


Average premiums vary by plan type.

Table 5.5Average Annual Premium Costs by Plan Type, 2005

$10,801

$11,090

$10,456

$9,979

$10,880

$3,914

$4,150

$3,767

$3,782

$4,024

$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000

Single

Family

All Plans

Conventional FFS

HMO

PPO

POS



112

Table 5.6Changes in Employee Benefit Packages, 1980-2004

Note: Coverage for selected services offered by medium and large establishments, displayed by % of employees that have each benefit available to them.**Not available. 2004 data available only for physical exams and well baby exams.Sources: Dept. of Labor, Bureau of Labor Statistics. Report by Sophie Korczyk, “Trends in Employer-Provided Health Care Coverage: 1980-1997, Final Report March, 2000. 2004 data from Employer Health Benefits 2004 Annual Survey, Kaiser Family Foundation.

72%

28%

96% 97%

58%56%

21%

97%

80%

55%

30%

36%

30%

24%

81%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

ExtendedCare Facility

Home HealthCare

Hospice Care OutpatientPrescription

Drugs

Dental Care Vision Care Hearing Care PhysicalExam

Well-BabyCare

Immunizationand

Inoculation

Per

cen

t o

f E

mp

loye

es

1980 1991 2004

** **

**

********

Employees were offered more generous benefit packages in recent years.



113

Table 5.7Firms Offering Health Insurance Coverage by Firm Size, 1996-2005

Source: Employer Health Benefits, 2005 Annual Survey, The Kaiser Family Foundation, and Health Research and Educational Trust.

Larger firms are more likely to offer health insurance than smaller firms.

53

78

90

99

79

99

93

97

87

60

98

93

87

72

47

0

20

40

60

80

100

3-9 Workers 10-24 Workers 25-49 Workers 50-199Workers

All Large Firms(200+ Workers)

Per

cen

t

1996

2000

2005



114

Table 5.8Number of Health Plans Offered by Firm Size, 2005Large firms are more likely to offer employees a choice of plans.

Source: Employer Health Benefits, 2005 Annual Survey, The Kaiser Family Foundation, and Health Research and Educational Trust.

80 81

48

2717

14 14

27

24

18

25

49

65

56

0%

20%

40%

60%

80%

100%

All Firms Small (3-199

Workers)

Midsize(200-999Workers)

Large(1,000-4,999

Workers)

Jumbo(5,000+

Workers)

3 or More Plans

2 Plans

1 Plan



115

Table 5.9Private Health Insurance Enrollment by Plan Type, 1988-2005

Source: Employer Health Benefits, 2001-2005 Annual Survey, The Kaiser Family Foundation and Health Research and Educational Trust. Trends and Indicators in the Changing Health Care Marketplace, 2002 – Chartbook.

Since 1988, Conventional Fee-for-Service plans have almost disappeared, while PPOs have grown significantly.

4

5

5

3

27

24

25

21

52

54

55

61

18

17

15

15

73%

46%

27%

14%

9%

8%

7% 23%

29%

28%

27%

31%

21%

16%

35%

38%

41%

48%

28%

26%

11%

24%

25%

22%

22%

14%

7%

0% 20% 40% 60% 80% 100%

1988

1993

1996

1998

1999

2000

2001

2002

2003

2004

2005

Conventional FFS HMO PPO POS



116

Table 5.10Employees With a Choice of Health Plans, 1988-2005

^ Information was not obtained for POS plans in 1988.Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 2000-2005; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996.

In recent years, fewer employees have a choice of conventional FFS plans. A growing share have a choice of PPOs and POS plans.

14

50

12

44

82

2830

18

46

90

45

64

52

34

74

0

10

20

30

40

50

60

70

80

90

100

Conventional FFS HMO PPO POS

Per

cen

t of E

mp

loye

es

1988 1996 2002 2005

^



117


Not all eligible employees enroll in an employer’s health plan.

Table 5.11Covered Employees in Firms That Offer Health Benefits, 2005

81%

79%

65%

Percentage of Workers Eligible for Employer Health Benefits

Small Firms(3-199 Workers)

Large Firms(200+ Workers

67%

Percentage of Workers Covered by Their Employers’ Health Benefits



118

Section 6

The Uninsured



119

Table 6.1Out-of-Pocket Spending by the Under 65 Population by

Insurance Status by Income, 2001 and 2003

The percent of health spending from out-of-pocket sources by the uninsured is significantly higher than for those with insurance.

Note: Insured includes all types of insurance coverage.

Source: Actuarial Research Corporation tabulations of Medical Expenditure Panel Survey.

36%

43%

52%

42%

51%

45%

35%

62%

55% 55%

0%

10%

20%

30%

40%

50%

60%

70%

2001 2003

Negative or Poor (LT 100% POV Line)

Near Poor (100%-124%)

Low Income (125%-199%)

Middle Income (200%-399%)

High Income (GE 400% POV Line)

13% 11%12% 13%17% 15%

18% 18%22% 22%

0%

10%

20%

30%

40%

50%

60%

70%

2001 2003

Negative or Poor (LT 100% POV Line)

Near Poor (100%-124%)

Low Income (125%-199%)

Middle Income (200%-399%)

High Income (GE 400% POV Line)

Uninsured Insured



120

Table 6.2Out-of-Pocket Spending by the Under 65 Population by

Insurance Status by Type of Service, 2001 and 2003

Note: Insured includes all types of insurance coverage. Uninsured individuals may have some of their care financed in part by charity or providers as uncompensated care.

Source: Actuarial Research Corporation tabulations of Medical Expenditure Panel Survey.

Uninsured Insured

47%

25%

32%

50%

50%

19%

31%

85%

0%

95%

45%

88%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

All Office-Based Visits

All OPD Visits - Facility

All OPD Visits - Dr

Emergency Room - Facility

Emergency Room - Dr

IP Hospital Stay - Facility

IP Hospital Stay - Dr

All Dental Care

Home Health Agency

Home Health Non-Agency

Glasses/Contact Lenses

Other Equip/Supplies

RX

2003

18%

6%

8%

9%

9%

2%

4%

42%

3%

70%

39%

38%

69%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

All Office-Based Visits

All OPD Visits - Facility

All OPD Visits - Dr

Emergency Room - Facility

Emergency Room - Dr

IP Hospital Stay - Facility

IP Hospital Stay - Dr

All Dental Care

Home Health Agency

Home Health Non-Agency

Glasses/Contact Lenses

Other Equip/Supplies

RX

2003

Total 2001 43% of health spending out-of-pocket

2003 52%Total 2001 19% of health spending out-of-pocket

2003 18%

In 2003, the insured paid about 18% of their health expenses out-of-pocket, compared to about 52% for the uninsured.



121

Table 6.3The Percent Uninsured Within Age Categories, 1987-2005

11%12%

22%

14%14%

9%

18%

13%

0

5

10

15

20

25

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

Pe

rce

nt

of

Ag

e G

rou

p W

ith

ou

t In

su

ran

ce

<18

18-54

55-64

Total

Note: Under 65 population.


Adults age 18-54 have twice the percentage uninsured as children in 2005 .



122

Table 6.4Percent Uninsured Within Income Category, 1987-2005

Lower-income groups are more likely to be uninsured than higher-income groups.

34%

31%30%

25%

12%

6%

18%

13%

0

5

10

15

20

25

30

35

40

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

Pe

rce

nt

of

Inc

om

e G

rou

p U

nin

su

red

<100%

100-200%

200+%

Total

Note: Under 65 population. Colored lines represent income as a percentage of the poverty line.




123

Table 6.5Percent Uninsured by Ethnicity, 1987-2005

About half of the uninsured are white, and the other half are racial or ethnic minorities.

29%

34%

9%

13%

19% 21%

23%23%

12%

19%

13%18%

0

5

10

15

20

25

30

35

40

Per

cent

of G

roup

With

out I

nsur

ance



Non-Hispanic Black

Non-Hispanic American Indian

TotalNon-Hispanic

Asian

Other

Hispanic

Non-Hispanic Black


Total

Non-Hispanic Asian

Other

Hispanic



124

Table 6.6The Uninsured by Age, 1987-2005

A growing majority of the uninsured are adults 18-54.

28 27 27 26 25 23 25 25 24 25 24 25 23 22 21 20 19 18 18

65 66 66 67 68 70 67 67 69 67 67 67 69 70 71 72 73 73 73

7 7 7 8 7 7 8 8 8 8 8 8 8 8 8 8 8 9 9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Pe

rce

nt

of

Un

ins

ure

d

55-64

18-54

<18

Note: Under 65 population. See also table 4.34




125

Table 6.7The Uninsured by Income, 1987-2005



The share of the uninsured with incomes above 200% of poverty is growing.

33 31 30 29 30 29 30 29 29 29 28 27 26 24 25 25 25 25 25

3433 34 34 34 34 34 33 33 33 32

29 3028 29 29 30 28 29

33 36 36 37 36 37 36 38 38 39 40 44 44 48 46 46 46 46 46

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

Pe

rce

nt

of

Un

ins

ure

d

200+%

100-200%

<100%



126

Table 6.8The Uninsured by Ethnicity, 1987-2005

About half of the uninsured are white, nearly one-third are Hispanic.

22 22 23 23 22 22 22 24 24 24 25 26 29 30 30 29 29 30 30

55 55 55 55 55 56 57 55 53 52 53 51 47 47 47 48 48 48 48

19 18 17 18 18 17 17 17 17 17 16 17 17 16 16 16 15 15 15

1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 23 4 4 4 4 4 4 3 5 5 5 5 6 5 5 5 5 5 5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

Pe

rce

nt

of

Un

ins

ure

d

Non-Hispanic Asian


Non-Hispanic Black

Non-Hispanic White

Hispanic





127

Table 6.9The Uninsured by State, 2005

The South and West have higher rates of uninsured than the Mid-west and East.

Medium (14% - 17.9%)

High (18%+)

Low (7% - 13.9%)

WA

OR

ID

MT ND

WY

NV

CA

UT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SC

TNNC

FL

OH

MI

WV

PA

NY

AK

MD

MEVT

NH

MA

RI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

National average is 16%

VAKY

*Other includes private non-group and other public insurance (mostly Medicare and military-related). Medicaid includes CHIP.

Source: Census Bureau, March Current Population Survey.



128

Table 6.10Impact on Non-Elderly Adults of Being Uninsured, 2006

The uninsured face financial and other barriers to health care.

Note: Among adults under age 65.

Source: Kaiser Foundation, The Uninsured: A Primer, Jan. 2006.

8%

9%

13%

9%

15%

23%

23%

35%

37%

42%

47%

0 10 20 30 40 50

Ever Contacted by a CollectionAgency About Medical Bills

Medical Bills had Major Impact on Life

Needed Care but Did Not Get It

Did not Fill Prescription Due to Cost

No Regular Source of Care

Postponed Care Due to Cost

Percent

Uninsured

Insured

9%

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