Literature DB >> 10180000

Hospital, employment, and price indicators for the health care industry: first quarter 1997.

A L Sensenig1, S K Heffler, C S Donham.   

Abstract

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Year:  1997        PMID： 10180000      PMCID： PMC4194495     

Source DB:  PubMed          Journal:  Health Care Financ Rev        ISSN： 0195-8631


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The adult occupancy rate at community hospitals increased 1.0 percent from the first quarter of 1996 to the first quarter of 1997, a change in the pattern of declining occupancy rates observed since 1992. Outpatient revenues continued to increase as a share of total patient revenues at community hospitals in the first quarter of 1997. The shift from inpatient to outpatient settings has accelerated in recent years. Assets held by the Medicare Hospital Insurance (HI) Trust Fund fell 3.3 percent in the first quarter of 1997, measured from the same period one year earlier. This was the sixth consecutive quarterly decline, measured from the same period of the previous year. The Medicare provisions in the Balanced Budget Act of 1997 P.L. 105-33) will help slow this decline and postpone the depletion of the trust fund to about 2010—9 years later than estimated prior to the new legislation. Despite the relatively strong growth in implied non-supervisory payrolls, the health sector trailed the non-farm private business sector as a whole in the first quarter of 1997. Consumer medical care prices, as measured by the Consumer Price Index (CPI), grew slower than consumer prices for all items except medical care in the first quarter of 1997, the first time this has occurred since the second quarter of 1981. The slow growth in prices for both hospitals and physicians' services accounts for much of the deceleration in the growth of overall medical prices in the first quarter of 1997.

Introduction

This article presents statistics on health care utilization, prices, expenses, employment, and work hours, as well as on national economic activity. These statistics provide an early indication of changes occurring in the health care sector and within the general economy. We rely on indicators such as these to anticipate and predict changes in health care sector expenditures for the most recent year. Other indicators help to identify specific reasons (e.g., increases in price inflation or declines in utilization) for health care expenditure change. The first nine of the accompanying tables report selected quarterly statistics and the calendar year (CY) aggregations of quarterly information for the past 4 years. Unless specifically noted, changes in quarterly statistics are shown from the same period one year earlier. For quarterly information, this calculation permits analysis of data to focus on the direction and magnitude of changes, without interference introduced by seasonal fluctuations. The last four tables in the report show base weights, annual index levels, and annual percent changes in the Input Price Indexes maintained by HCFA. The annual percent changes and the four-quarter moving average percent changes for input prices are calculated using the same procedure, namely averaging the four quarters ending with the fourth calendar quarter of the current year and dividing by the average of the four calendar quarters of the preceding year.

Community Hospital Statistics

Statistics from the American Hospital Association (AHA) for the first quarter of 1997, presented in Tables 1 and 2, show that many of the trends in community hospital operations noted in 1996 continued in the first quarter of 1997. Statistics on total admissions, inpatient hospital days, and the length of hospital stays show little change in trend as community hospitals entered the new year with gradually declining rates of inpatient utilization. Similarly, rates of increase for outpatient visits and surgical operations were little changed in the first quarter. The AHA statistics on hospital revenues show that inpatient revenues fell in the first quarter of 1997, measured from the same period one year earlier. This was the first time that quarterly inpatient revenues fell from the same period one year earlier since the AHA began collecting the panel survey data. Outpatient revenues, which represent an increasing share of total patient revenues, grew slightly faster in the first quarter of 1997 than in 1996 as a whole. In general, the gradual decline in inpatient utilization and the corollary increase in outpatient visits evident in the AHA statistics in 1996, continued as community hospitals entered the new year.
Table 1

Selected Community Hospital Statistics: 1993-97

ItemCalendar Year1994199419941994199519951995199519961996199619961997
1993199419951996Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
Utilization
All Ages
 Admissions in Thousands32,65232,93833,38933,2688,3688,1808,1548,2368,6348,2818,2138,2608,5118,2678,1598,3318,500
  Admissions Per 1,000 Population1122122122121124121121122127122120121124120119121123
 Inpatient Days in Thousands202,078196,117190,377183,49551,70948,64847,65748,10250,37747,29646,23946,46748,05145,53244,34945,56347,177
 Adult Length of Stay in Days6.26.05.75.56.25.95.85.85.85.75.65.65.65.55.45.55.5
65 Years of Age or Over
 Admissions in Thousands12,20912,45612,82012,8703,2113,0983,0223,1253,3793,1873,0713,1843,3243,2043,0903,2523,374
  Admissions Per 1,000 Population1366369375373382367357368397374359371387372358376389
 Inpatient Days in Thousands97,04294,87791,16486,43125,55123,49322,63123,20324,77822,82321,50722,05622,97221,44520,44821,56622,661
 Adult Length of Stay in Days7.97.67.16.78.07.67.57.47.37.27.06.96.96.76.66.66.7
Under 65 Years of Age
 Admissions in Thousands20,44320,48320,56920,3985,1585,0825,1325,1115,2555,0945,1435,0775,1875,0635,0705,0785,126
  Admissions Per 1,000 Population18787868588868786888686858784848485
 Inpatient Days in Thousands105,036101,24099,21397,06426,15825,15525,02724,89925,59824,47224,73224,41125,07824,08723,90223,99724,516
 Adult Length of Stay in Days5.14.94.84.85.15.04.94.94.94.84.84.84.84.84.74.74.8
Surgical Operations in Thousands22,71023,28623,73924,1655,6645,8645,8405,9186,0285,9655,8325,9155,9486,0876,0286,1026,047
Outpatient Visits in Thousands390,188417,684452,558481,29898,341104,079107,022108,241111,088113,699113,332114,438116,335119,874122,232122,857123,270
Adjusted Patient Days in Thousands2278,938276,209273,638270,02371,24468,77667,71168,36371,22668,14667,07967,10669,23267,39466,24767,08770,050
Beds in Thousands902891874854895893888886881877871867862859849844842
Adult Occupancy Rate361.460.359.758.764.259.858.359.063.559.357.758.261.258.356.858.762.3
Total Hospital Revenues in Millions4$295,035$309,354$324,961$338,118$76,480$76,829$77,069$78,976$81,793$81,020$80,307$81,842$84,280$84,396$83,449$85,993$86,941
 Total Patient Revenues in Millions280,414293,285307,228318,18372,70272,86873,01874,69777,47676,55775,95677,23879,71079,34978,46180,66481,998
  Inpatient Revenues in Millions203,167208,262213,771216,24252,76751,54351,39352,55954,79753,13352,35853,48355,32253,60952,52654,78455,223
  Outpatient Revenues in Millions77,24885,02393,457101,94119,93521,32521,62522,13822,67923,42423,59923,75524,38725,74025,93425,88026,774
Total Expenses
Total Hospital Expenses in Millions$278,880$292,801$308,411$320,789$71,677$72,618$73,468$75,039$76,259$76,751$76,808$78,594$79,361$79,958$79,593$81,877$82,092
 Labor in Millions149,733156,826163,842168,79638,42038,82839,40840,17040,52940,76840,85741,68841,87341,93541,92543,06342,888
 Non-Labor in Millions129,147135,975144,569151,99333,25733,79034,05934,86935,73035,98335,95136,90637,48838,02337,66838,81439,204
Inpatient Expense in Millions5$202,035$207,897$214,570$217,994$52,023$51,366$51,709$52,800$53,936$53,268$52,945$54,421$55,081$54,020$53,284$55,608$55,287
 Amount per Patient Day1,0001,0601,1271,1881,0061,0561,0851,0981,0711,1261,1451,1711,1461,1861,2011,2201,172
 Amount per Admission6,1886,3126,4266,5536,2176,2796,3416,4116,2476,4326,4466,5886,4726,5346,5306,6756,504
Outpatient Expense in Millions5$76,845$84,903$93,841$102,796$19,654$21,252$21,758$22,239$22,323$23,483$23,863$24,172$24,281$25,937$26,309$26,269$26,805
Amount per Outpatient Visit197203207214200204203205201207211211209216215214217

Admissions per 1,000 population is calculated using population estimates prepared by the Social Security Administration.

Adjusted patient days is an aggregate figure reflecting the number of days of inpatient care, plus an estimate of the volume of outpatient services, expressed in units equivalent to an inpatient day in terms of level of effort. It is derived by multiplying the number of outpatient visits by the ratio of outpatient revenue per outpatient visit to inpatient revenue per inpatient day, and adding the product to the number of inpatient days.

The adult occupancy rate is calculated by the Office of National Health Statistics. The AHA does not publish this statistic. Adult occupancy rate is the ratio of average daily census to average number of beds maintained during the reporting period.

Total hospital revenue is the sum of total patient revenue and all other operating revenue. Total patient revenue is the sum of inpatient revenue and outpatient revenue.

lnpatient Expense and Outpatient Expense are calculated by the Office of National Health Statistics. These statistics are calculated by applying the ratio of inpatient or outpatient revenue to total patient revenue multiplied by total hospital expenses.

NOTES: Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: American Hospital Association; Trend Analysis Group: National Hospital Panel Survey Reports. Chicago. Monthly reports for January 1993 March 1997.

Table 2

Percent Change in Selected Community Hospital Statistics: 1993-97

ItemCalendar Year1994Q11994Q21994Q31994Q41995Q11995Q21995Q31995Q41996Q11996Q21996Q31996Q41997Q1
1993199419951996
Percent Change From the Same Period of Previous Year
Utilization
All Ages
 Admissions in Thousands0.70.91.4-0.40.21.20.91.33.21.20.70.3-1.4-0.2-0.70.9-0.1
  Admissions Per 1,000 Population-0.3-0.10.5-1.3-0.70.2-0.10.32.20.3-0.2-0.6-2.3-1.1-1.5-0.1-1.0
 Inpatient Days in Thousands-2.1-2.9-2.9-3.6-2.9-3.0-2.9-3.0-2.6-2.8-3.0-3.4-4.6-3.7-4.1-1.9-1.8
 Adult Length of Stay in Days-2.8-3.8-4.2-3.3-3.1-4.1-3.8-4.3-5.6-4.0-3.7-3.7-3.2-3.6-3.5-2.8-1.7
65 Years of Age or Over
 Admissions in Thousands2.92.02.90.42.31.82.61.35.22.91.61.9-1.60.50.62.21.5
  Admissions Per 1,000 Population1.50.81.8-0.61.10.71.50.14.11.70.50.8-2.7-0.5-0.31.20.7
 Inpatient Days in Thousands-1.9-2.2-3.9-5.2-1.1-3.2-1.6-3.1-3.0-2.9-5.0-4.9-7.3-6.0-4.9-2.2-1.4
 Adult Length of Stay in Days-4.7-4.2-6.6-5.6-3.3-5.0-4.1-4.4-7.8-5.6-6.5-6.7-5.8-6.5-5.5-4.3-2.8
Under 65 Years of Age
 Admissions in Thousands-0.50.20.4-0.8-1.10.7-0.11.31.90.20.2-0.7-1.3-0.6-1.40.0-1.2
  Admissions Per 1,000 Population-1.5-0.7-0.5-1.7-2.0-0.2-1.00.41.0-0.6-0.7-1.5-2.2-1.5-2.3-0.9-2.1
 Inpatient Days in Thousands-2.3-3.6-2.0-2.2-4.6-2.8-4.1-2.9-2.1-2.7-1.2-2.0-2.0-1.6-3.4-1.7-2.2
 Adult Length of Stay in Days-1.8-3.8-2.4-1.3-3.5-3.5-4.0-4.2-4.0-3.0-1.4-1.3-0.7-1.0-2.0-1.7-1.1
Surgical Operations in Thousands1.12.51.91.80.32.52.94.56.41.7-0.1-0.1-1.32.13.43.21.7
Outpatient Visits in Thousands6.57.08.36.43.96.67.99.713.09.25.95.74.75.47.97.46.0
Adjusted Patient Days in Thousands-0.9-1.0-0.9-1.3-1.5-0.8-0.9-0.70.0-0.9-0.9-1.8-2.8-1.1-1.20.01.2
Beds in Thousands-0.7-1.2-1.8-2.4-1.2-1.2-1.4-1.2-1.5-1.8-1.9-2.1-2.1-2.1-2.6-2.6-2.4
Adult Occupancy Rate1-0.7-1.1-0.7-0.9-1.1-1.1-0.9-1.1-0.7-0.6-0.6-0.8-2.3-1.0-0.90.41.0
Total Hospital Revenues in Millions7.14.95.04.04.04.94.66.06.95.54.23.63.04.23.95.13.2
 Total Patient Revenues in Millions7.04.64.83.63.74.74.35.66.65.14.03.42.93.63.34.42.9
  Inpatient Revenues in Millions5.72.52.61.22.22.42.23.23.83.11.91.81.00.90.32.4-0.2
  Outpatient Revenues in Millions10.610.19.99.17.810.79.612.013.89.89.17.37.59.99.98.99.8
Operating Expenses
Total in Millions6.95.05.34.04.64.95.05.56.45.74.54.74.14.23.64.23.4
 Labor in Millions6.94.74.53.04.54.24.95.45.55.03.73.83.32.92.63.32.4
 Non-Labor in Millions6.85.36.35.14.85.65.05.77.46.55.65.84.95.74.85.24.6
Inpatient Expense in Millions5.62.93.21.63.12.62.93.13.73.72.43.12.11.40.62.20.4
 Amount per Patient Day7.86.06.35.46.25.75.96.36.46.75.56.77.15.34.94.22.2
 Amount per Admission4.82.01.82.02.91.42.01.80.52.41.72.83.61.61.31.30.5
Outpatient Expense10.410.510.59.58.710.910.311.913.610.59.78.78.810.510.28.710.4
 Amount per Outpatient Visit3.63.22.03.04.74.12.22.00.51.13.62.83.94.82.21.24.2

Change in rate, rather than percent change.

NOTES: Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: American Hospital Association; Trend Analysis Group: National Hospital Panel Survey Reports. Chicago. Monthly reports for January 1992-March 1997.

The trend in overall community hospital utilization was little changed in the first quarter of 1997. Most measures of inpatient utilization continued to decrease in the first quarter of 1997, but at slightly slower rates than observed in 1996. Total admissions fell 0.1 percent in the first quarter, measured from the same period one year earlier, compared with a decline of 0.4 percent for all of the previous year. Hospital admissions per 1,000 population, essentially the rate at which people are hospitalized, also continued to decline in the first quarter of 1997, falling 1.0 percent from the same period one year earlier. The number of inpatient hospital days fell 1.8 percent in the first quarter of 1997, compared with a decline of 3.6 percent for all of 1996. Finally, the adult length of stay also continued to decline in the first quarter of 1997, falling 1.7 percent from the same period one year earlier. This compares with a decline in the adult length of stay of 3.3 percent for all of 1996. Generally, inpatient utilization continued to decline, albeit at a slightly slower rate. The moderation in the decline in community hospital utilization is attributable to the change in the utilization patterns for the population age 65 years or older. There has been a slight pickup in hospital utilization for the aged-65-years-or-older cohort, as hospital admissions for this group increased 1.5 percent in the first quarter of 1997, measured from the same period of the previous year. Hospital admissions per 1,000 population also picked up for the 65-years-or-older group in the first quarter of 1997, as admissions per 1,000 population increased 0.7 percent. The number of inpatient days and length of hospital stays for the population aged 65 years and older continued to decline in the first quarter of 1997. However the rate of decline in these measures has slowed appreciably. In contrast, the decline in admissions, inpatient days, and length of hospital stays for the population under age 65 continued in the first quarter of 1997 at roughly the same rates observed throughout 1996. There were two notable breaks from previously established patterns of hospital operations in the first quarter of 1997. The first of these changes in trend can been seen in the statistics on the adult occupancy rate. This measure, the ratio of the average daily hospital census to the average number of staffed beds, had been declining since the fourth quarter of 1991 (Figure 1). In the first quarter of 1997, the adult occupancy rate increased to 62.3 percent, after 18 quarters of decline. This decline in the occupancy rate persisted from the fourth quarter of 1991 through the third quarter of 1996 despite the efforts of community hospitals to reduce capacity by cutting the number of staffed beds. The first quarter 1997 increase in the occupancy rate is attributable to the deceleration in the decline in inpatient days which can be related to the deceleration in the decline of admissions and in the adult length of stay. Whether the reversal in the adult occupancy rate represents a temporary aberration in the trend of declining occupancy rates or the beginning of a new pattern in inpatient utilization will become evident as data for the remaining quarters of 1997 become available.
Figure 1

Percent Change from the Same Period of Previous Year in Staffed Beds and Inpatient Days and Change in the Adult Occupancy Rate: 1990-97

The second break in established pattern is evident in the rate of growth in adjusted patient days, which is an aggregate figure intended to reflect the number of days of inpatient care plus an estimate of the volume of outpatient services, expressed in units equivalent to an inpatient day in terms of the level of effort. Adjusted patient days are derived by multiplying the number of outpatient visits by the ratio of outpatient revenue per visit, to inpatient revenue per inpatient day, and adding the product to the number of inpatient days. In the first quarter of 1997, adjusted patient days increased 1.2 percent, measured from the same period one year earlier (Figure 2). This increase is in contrast to the decreases posted from the second quarter of 1992 to the fourth quarter of 1996, and highlights the continuing shift from inpatient to outpatient settings.
Figure 2

Percent Change from Same Period of the Previous Year Inpatient Days, Outpatient Visits, and Adjusted Patient Days

Medicare Trust Funds Income and Outlays

Health Care Indicators includes statistics on the income and outlays of the Medicare trust funds in Table 3. Quarterly levels of the outlays and income of the HI and Supplementary Medical Insurance (SMI) trust funds fluctuate from quarter to quarter for many reasons. The variability in the quarterly trust fund data may be even greater than the quarterly variability in the other health care indicators discussed in this article (essentially price and utilization series) because of the effects of the timing of payments into and from the trust funds. The primary sources of variation in the level of outlays are the number of business days in a quarter, the timing of payments usually made the first of a month that are made early when the first day is on a weekend or legal holiday, and seasonal variation in health care utilization and costs. The sources of variation in income flows generally result from the timing of payments made to the trust funds. The timing of payroll tax withholding; settlements on self-employment taxes; and premium, interest, and general revenue payments to the funds are the primary sources of this variation.
Table 3

Hospital Insurance and Supplementary Medical Insurance Trust Fund Operations: 1993-97

IndicatorCalendar Year19931993199319931994199419941994199519951995199519961996199619961997
19921993199419951996Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
Total Medicare Outlays
 In Millions of Dollars$135,845$152,174$164,862$184,203$202,703$36,174$37,870$38,037$40,091$39,133$40,509$42,761$42,459$44,352$46,725$46,559$46,566$47,456$52,009$50,599$52,639$49,988
Hospital Insurance Trust Fund85,01594,391104,545117,604132,29522,13423,98223,51724,75825,45825,93726,61826,53328,63830,51329,19929,25431,28834,52632,61533,86633,312
Supplementary Medical Insurance Trust Fund50,83057,78360,31766,59970,40814,04113,88814,52015,33413,67614,57216,14315,92615,71416,21217,36117,31216,16817,48317,98418,77316,676
Hospital Insurance Trust Fund
 Operations:
 In Millions of Dollars
  Income$93,836$98,187$109,570$115,027$126,968$20,833$29,581$21,327$26,446$22,047$33,155$24,547$29,821$25,215$35,570$24,241$30,001$26,293$39,365$27,840$33,470$29,545
  Outlays85,01594,391104,545117,604132,29522,13423,98223,51724,75825,45825,93726,61826,53328,63830,51329,19929,25431,28834,52632,61533,86633,312
  Difference8,8213,7965,025(2,577)(5,327)(1,301)5,599(2,190)1,688(3,411)7,219(2,071)3,288(3,423)5,057(4,958)747(4,995)4,839(4,775)(396)(3,767)
Assets at End of Period 1124,022127,818132,844130,267124,940122,722128,320126,131127,818124,408131,626129,555132,844129,420134,477129,520130,267125,272130,111125,336124,940121,173
Supplementary Medical Insurance Trust Fund
 Operations: In Millions of Dollars
  Income$57,237$57,679$55,608$60,306$85,610$10,635$15,935$14,919$16,189$13,299$14,387$13,491$14,430$16,478$17,189$10,072$16,568$26,596$19,654$19,208$20,152$19,907
  Outlays50,83057,78360,31766,59970,40814,04113,88814,52015,33413,67614,57216,14315,92615,71416,21217,36117,31216,16817,48317,98418,77316,676
  Difference6,407(104)(4,709)(6,293)15,202(3,405)2,047399856(377)(185)(2,651)(1,496)764977(7,288)(745)10,4282,1711,2241,3793,231
Assets at End of Period124,23524,13119,42213,13028,33220,83022,87723,27624,13123,75523,57020,91919,42220,18621,16313,87413,13023,55825,72926,95328,33231,563
Annual Percent ChangePercent change from the same Period of Previous YearPercent Change From the Same Period of Previous Year
Total Medicare Outlays11.912.08.311.710.012.712.710.012.78.27.012.45.913.315.38.99.77.011.38.713.05.3
Hospital Insurance Trust Fund17.111.010.812.512.59.012.49.912.715.08.113.27.212.517.69.710.39.313.211.715.86.5
Supplementary Medical InsuranceTrust Fund4.013.74.410.45.719.113.210.312.7-2.64.911.23.914.911.37.58.72.97.83.68.43.1
Hospital Insurance Trust Fund
 Operations
  Income5.64.611.65.010.43.52.39.94.35.812.115.112.814.47.3-1.20.64.310.714.811.612.4
  Outlays17.111.010.812.512.59.012.49.912.715.08.113.27.212.517.69.710.39.313.211.715.86.5
Assets at End of Period7.73.13.9-1.9-4.16.74.64.63.11.42.62.73.94.02.20.0-1.9-3.2-3.2-3.2-4.1-3.3
Supplementary Medical Insurance Trust Fund
 Operations
  Income11.70.8-3.68.542.0-16.517.428.5-16.225.0-9.7-9.6-10.923.919.5-25.314.861.414.390.721.6-25.2
  Outlays4.013.74.410.45.719.113.210.312.7-2.64.911.23.914.911.37.58.72.97.83.68.43.1
Assets at End of Period35.9-0.4-19.5-32.4115.810.913.925.6-0.414.03.0-10.1-19.5-15.0-10.2-33.7-32.416.721.694.3115.834.0

As shown in the Monthly Treasury Statement. Excludes undisbursed balance.

NOTES: Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCES: Monthly Treasury Statement of Receipts and Outlays of the United States Government. Financial Management Service, U.S. Department of the Treasury. 1997 Annual Reports of the Board of Trustees of the HI and SMI Trust Funds. Office of the Actuary, Health Care Financing Administration.

Total Medicare outlays, the sum of Part A and Part B, were $50 billion in the first quarter of 1997. This 5.3-percent increase, measured from the same quarter of the previous year, signals a slight deceleration in total Medicare outlays in early 1997. In comparison, total Medicare outlays increased 13.0 percent in the fourth quarter of 1996, and 8.7 percent in the third quarter, both measured over the same period one year earlier. Outlays for Medicare Part A increased 6.5 percent in the first quarter of 1997, significantly less than the 15.8-percent increase registered in the fourth quarter of 1996. Figure 3 depicts the quarterly changes in the income and outlays of the Medicare HI Trust Fund, as well as the percent change in the assets held by the fund at the end of each quarter. Generally, the growth in outlays, or benefits paid, has exceeded the growth in trust fund income in 15 of the last 21 quarters. The quarterly percent change in HI trust fund assets held, measured from the same period in the previous year, reflects the declining asset balance beginning in the third quarter of 1995 and continuing through the first quarter of 1997. The decline in the HI trust-fund assets balance had been expected and was reported in recent annual reports of the Trustees of the HI Trust Fund. The 1997 Trustees Report projects that in calendar year 1997, HI trust fund income will increase 2.2 percent, with an increase in outlays of 7.9 percent. The projected change in the HI trust asset balance for CY 1997 is -$12.8 billion, a decrease of 10 percent. Estimates based on the law in effect prior to the Balanced Budget Act of 1997 (P.L. 105-33) and using the intermediate assumptions detailed in the 1997 Trustees Report, indicated that the HI trust fund would be depleted in 2001. Recent estimates of the impact of Balanced Budget Act show that depletion of the HI trust fund is now expected to occur in 2010.
Figure 3

Percent Change from the Same Period of Previous Year in Medicare Hospital Insurance (Part A) Trust Fund Income, Outlays, and Assets: 1992-97

Outlays for Part B increased 3.1 percent in the first quarter of 1997, measured from the same period one year earlier, after increasing 8.4 percent in the fourth quarter of 1996. Medicare volume performance standards (MVPS) were incorporated into the physician fee schedule in 1992. These standards, designed to control growth in Medicare physician and other professional services, use performance in preceding years to set standards for the coming year. As a result, price updates for services covered by the physician fee schedule were somewhat constrained for 1997. Although the volume of services, as well as outlays for Part B benefits not covered by the physician fee schedule, will also affect Part B outlays for the rest of 1997, the price constraints imposed by the MVPS should act as a brake on Part B outlays for the remaining three quarters of the year.

Trends in Health Sector Employment and Earnings

The health sector labor force indicators consist of employment, non-supervisory employment, average weekly hours, average hourly earnings, and implied non-supervisory payrolls (the product of non-supervisory employment, average weekly hours, and average hourly earnings). These statistics are presented in Tables 4, 5, and 6. By comparing the changes in the health sector labor indicators with changes in the aggregate indicators for the private non-farm business sector, we can assess the relative strength of employment and earnings growth in health services.
Table 4

Employment, Hours, and Earnings in Private Sector Health Service Establishments, by Selected Type of Establishment: 1993-97

Type of EstablishmentCalendar Year1994Q11994Q21994Q31994Q41995Q11995Q21995Q31995Q41996Q11996Q21996Q31996Q41997Q11997Q1
1993199419951996
Total Employment (in Thousands)
Non-Farm Private Sector91,88995,03697,885100,07692,09594,80196,32396,92595,64797,83898,90799,14897,534100,021101,246101,50599,932102,455
 Health Services8,7568,9929,2309,4698,8788,9659,0429,0839,1199,1959,2749,3349,3649,4469,5099,5569,5809,660
  Offices and Clinics of Physicians1,5061,5451,6091,6781,5191,5361,5571,5681,5771,5991,6211,6391,6491,6721,6921,7011,7131,734
  Offices and Clinics of Dentists556574592609565573576581584591596599601608612616618622
  Nursing Homes1,5851,6491,6911,7321,6261,6421,6611,6661,6711,6821,7011,7121,7131,7261,7421,7481,7461,758
  Private Hospitals3,7793,7633,7723,8143,7623,7623,7693,7593,7583,7683,7793,7843,7943,8073,8213,8333,8423,863
  Home Health Care Services469559629665523553571591603620638653654666667675674683
Non-Supervisory Employment (in Thousands)
Non-Farm Private Sector74,77777,60780,12581,99874,88077,41678,79079,34378,04780,09081,07381,28979,66781,97783,05883,29181,70784,007
 Health Services7,7707,9668,1788,3967,8697,9498,0078,0418,0758,1488,2188,2728,3038,3778,4318,4748,4878,563
  Offices and Clinics of Physicians1,2311,2621,3141,3771,2421,2561,2701,2781,2871,3051,3251,3411,3511,3721,3891,3961,4041,425
  Offices and Clinics of Dentists487501517534495501503507510515520523527534536540541545
  Nursing Homes1,4311,4871,5261,5601,4651,4811,4981,5021,5061,5171,5351,5441,5431,5551,5691,5731,5711,581
  Private Hospitals3,4643,4413,4503,4913,4413,4423,4443,4353,4353,4463,4563,4623,4713,4853,4983,5103,5183,538
  Home Health Care Services435518582615485512528546558575591604605616616624622630
Average Weekly Hours
Nonfarm Private Sector34.534.734.534.434.334.734.934.834.334.434.734.533.934.434.834.634.334.6
 Health Services32.832.832.832.732.832.832.832.832.832.732.832.732.532.632.832.832.933.0
  Offices and Clinics of Physicians32.232.432.532.932.432.332.332.632.432.432.532.732.632.832.933.233.233.1
  Offices and Clinics of Dentists28.328.128.028.128.228.228.028.228.028.027.828.127.928.228.228.428.428.5
  Nursing Homes32.232.332.532.432.132.232.532.432.332.332.832.632.232.332.732.332.332.2
  Private Hospitals34.634.734.534.434.734.634.734.634.734.634.534.434.434.334.334.434.634.8
  Home Health Care Services27.828.228.628.128.028.228.228.528.728.728.728.127.727.828.328.328.628.9
Average Hourly Earnings
Non-Farm Private Sector10.8311.1211.4311.8111.0511.0611.1011.2711.3511.3511.4311.5911.6911.7411.8112.0012.1412.17
 Health Services11.7812.1012.4512.8512.0012.0212.1312.2512.3612.3612.4612.6212.7412.7812.8713.0113.1213.17
  Offices and Clinics of Physicians11.8912.2612.5413.1712.1612.2212.2912.3612.4512.4512.5212.7412.9513.0813.2113.4313.6013.65
  Offices and Clinics of Dentists11.4411.9712.4012.8811.7811.9212.0112.1712.2512.3512.4212.6012.6912.7712.9213.1613.4613.57
  Nursing Homes8.178.508.779.008.408.448.538.618.718.748.798.858.958.959.029.109.209.26
  Private Hospitals13.4613.8314.3014.7013.7013.7013.8914.0414.1714.1614.3414.5214.6214.6314.7314.8114.9014.93
  Home Health Care Services10.4110.6710.9111.1710.5810.6210.7110.7510.8410.8410.9211.0311.1111.1211.2111.2611.3311.27
Addenda: Hospital Employment (in Thousands)
 Total5,1005,0775,0695,0825,0805,0775,0835,0685,0655,0685,0765,0685,0685,0765,0875,0985,1043,413
 Private3,7793,7633,7723,8143,7623,7623,7693,7593,7583,7683,7793,7843,7943,8073,8213,8333,8423,863
 Federal234234233231236234234232230232237233234233230227222221
 State414407395377409408406405404397392389385379374372371370
 Local673673669660673672675672673671668662656657662666669673

Excludes hospitals, clinics, and other health-related establishments run by all governments.

NOTES: Data presented here conform to the 1987 Standard Industrial Classification. Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for January 1993 - March 1997.

Table 5

Percent Change in Employment, Hours, and Earnings in Private Sector Health Service Establishments, by Selected Type of Establishment: 1993-97

Type of EstablishmentCalendar Year1994Q11994Q21994Q31994Q41995Q11995Q21995Q31995Q41996Q11996Q21996Q31996Q41997Q1
1993199419951996
Annual Percent ChangePercent Change From the Same Period of Previous Year
Total Employment (in Thousands)
Non-Farm Private Sector2.13.43.02.22.93.43.63.83.93.22.72.32.02.22.42.42.5
 Health Services3.12.72.72.62.82.82.72.62.72.62.62.82.72.72.52.42.3
  Offices and Clinics of Physicians2.92.64.14.32.02.22.73.43.84.14.14.54.54.64.43.83.9
  Offices and Clinics of Dentists2.93.13.32.83.13.33.13.13.33.23.43.12.92.92.72.82.9
  Nursing Homes3.44.02.62.44.74.44.03.02.82.42.42.82.52.62.42.12.0
  Private Hospitals0.8-0.40.21.1-0.4-0.5-0.5-0.3-0.10.10.30.70.91.01.11.31.3
  Home Health Care Services17.919.312.45.821.020.718.916.915.312.211.710.68.67.44.43.33.1
Non-Supervisory Employment (in Thousands)
Non-Farm Private Sector2.53.83.22.33.23.84.04.24.23.52.92.52.12.42.42.52.6
 Health Services3.02.52.72.72.62.62.52.52.62.52.62.92.82.82.62.42.2
  Offices and Clinics of Physicians2.42.54.24.81.92.22.63.43.63.94.34.95.05.14.84.23.9
  Offices and Clinics of Dentists2.83.03.23.33.13.32.82.93.12.93.43.33.33.53.23.22.7
  Nursing Homes3.33.92.62.34.54.23.93.02.82.52.52.82.52.52.21.91.8
  Private Hospitals0.6-0.70.31.2-0.7-0.8-0.8-0.5-0.20.10.30.81.11.11.21.41.3
  Home Health Care Services17.919.112.35.821.320.718.416.615.012.111.910.68.67.24.43.32.7
Average Weekly Hours
Non-Farm Private Sector0.30.5-0.6-0.10.70.60.30.60.0-1.0-0.5-0.9-1.10.20.10.41.3
 Health Services0.10.1-0.2-0.30.10.0-0.10.20.1-0.2-0.1-0.4-0.8-0.3-0.10.21.1
  Offices and Clinics of Physicians0.20.50.21.30.70.40.10.90.20.10.40.10.61.21.41.71.7
  Offices and Clinics of Dentists-0.3-0.5-0.60.60.1-0.7-0.8-0.5-0.5-0.9-0.8-0.1-0.60.71.40.81.9
  Nursing Homes-0.30.30.5-0.30.20.0-0.21.00.60.30.70.5-0.20.2-0.2-0.90.2
  Private Hospitals0.50.2-0.3-0.50.50.20.1-0.1-0.1-0.1-0.6-0.5-0.9-0.9-0.50.10.7
  Home Health Care Services1.41.71.2-1.81.71.61.12.42.61.91.7-1.4-3.4-3.2-1.20.73.2
Average Hourly Earnings
Non-Farm Private Sector2.52.72.83.32.62.52.62.82.72.63.02.93.03.43.43.63.9
 Health Services3.42.72.93.22.72.62.92.83.02.82.73.03.13.43.33.13.0
  Offices and Clinics of Physicians4.23.12.35.03.83.13.22.42.41.81.93.14.05.15.65.45.0
  Offices and Clinics of Dentists3.84.63.63.94.75.04.84.13.93.63.43.63.63.44.04.46.1
  Nursing Homes4.04.03.22.74.24.14.03.63.73.53.02.82.72.42.62.82.8
  Private Hospitals3.32.73.42.82.42.52.93.13.53.33.33.43.13.32.72.02.0
  Home Health Care Services4.12.52.32.42.62.72.32.32.52.12.02.62.42.62.72.12.0
Addenda: Hospital Employment (in Thousands)
 Total0.6-0.5-0.10.3-0.3-0.5-0.6-0.5-0.3-0.2-0.10.00.10.20.20.60.7
 Private0.8-0.40.21.1-0.4-0.5-0.5-0.3-0.10.10.30.70.91.01.11.31.3
 Federal-0.40.0-0.2-1.01.70.6-0.8-1.5-2.2-0.81.50.61.70.1-3.0-2.6-5.0
 State-1.2-1.6-2.9-4.5-1.5-1.4-1.9-1.6-1.3-2.8-3.5-4.0-4.6-4.4-4.6-4.4-3.7
 Local1.30.0-0.6-1.30.50.0-0.4-0.30.0-0.2-0.9-1.4-2.6-2.1-0.90.52.0

Excludes hospitals, clinics, and other health-related establishments run by all governments.

NOTES: Data presented here conform to the 1987 Standard Industrial Classification.

Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for January 1992 - March 1997.

Table 6

Percent Change in Implied Non-Supervisory Payrolls, Employment, Average Weekly Hours, and Average Hourly Earnings in Private Health Service Establishments by Selected Type of Establishment: 1993-97.

Type of Establishment1994199419941994199519951995199519961996199619961997
1993199419951996Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
Annual Percent ChangePercent Change From the Same Period of Previous Year
Health Services
Payrolls6.65.45.55.75.55.35.35.65.85.25.35.65.16.05.95.86.4
 Employment3.02.52.72.72.62.62.52.52.62.52.62.92.82.82.62.42.2
 Average Weekly Hours0.10.1-0.2-0.30.10.0-0.10.20.1-0.2-0.1-0.4-0.8-0.3-0.10.21.1
 Average Hourly Earnings3.42.72.93.22.72.62.92.83.02.82.73.03.13.43.33.13.0
Offices and Clinics of Physicians
Payrolls6.96.36.811.46.55.85.96.96.35.96.78.29.811.812.211.711.1
 Employment2.42.54.24.81.92.22.63.43.63.94.34.95.05.14.84.23.9
 Average Weekly Hours0.20.50.21.30.70.40.10.90.20.10.40.10.61.21.41.71.7
 Average Hourly Earnings4.23.12.35.03.83.13.22.42.41.81.93.14.05.15.65.45.0
Offices and Clinics of Dentists
Payrolls6.57.36.38.08.17.76.86.66.75.66.16.96.37.88.98.711.1
 Employment2.83.03.23.33.13.32.82.93.12.93.43.33.33.53.23.22.7
 Average Weekly Hours-0.3-0.5-0.60.60.1-0.7-0.8-0.5-0.5-0.9-0.8-0.1-0.60.71.40.81.9
 Average Hourly Earnings3.84.63.63.94.75.04.84.13.93.63.43.63.63.44.04.46.1
Nursing Homes
Payrolls7.18.36.54.79.18.47.87.87.26.46.36.25.05.24.73.84.9
 Employment3.33.92.62.34.54.23.93.02.82.52.52.82.52.52.21.91.8
 Average Weekly Hours-0.30.30.5-0.30.20.0-0.21.00.60.30.70.5-0.20.2-0.2-0.90.2
 Average Hourly Earnings4.04.03.22.74.24.14.03.63.73.53.02.82.72.42.62.82.8
Private Hospitals
Payrolls4.52.23.33.52.21.92.22.53.23.33.03.73.33.63.43.64.0
 Employment0.6-0.70.31.2-0.7-0.8-0.8-0.5-0.20.10.30.81.11.11.21.41.3
 Average Weekly Hours0.50.2-0.3-0.50.50.20.1-0.1-0.1-0.1-0.6-0.5-0.9-0.9-0.50.10.7
 Average Hourly Earnings3.32.73.42.82.42.52.93.13.53.33.33.43.13.32.72.02.0
Home Health Care Services
Payrolls24.424.116.26.526.525.922.422.121.016.616.011.97.56.45.96.28.1
 Employment17.919.112.35.821.320.718.416.615.012.111.910.68.67.24.43.32.7
 Average Weekly Hours1.41.71.2-1.81.71.61.12.42.61.91.7-1.4-3.4-3.2-1.20.73.2
 Average Hourly Earnings4.12.52.32.42.62.72.32.52.52.12.02.62.42.62.72.12.0
Nonfarm Private Sector
Payrolls5.47.15.55.76.77.07.07.77.05.15.44.54.06.06.06.57.9
 Employment2.53.83.22.33.23.84.04.24.23.52.92.52.12.42.42.52.6
 Average Weekly Hours0.30.5-0.6-0.10.70.60.30.60.0-1.0-0.5-0.9-1.10.20.10.41.3
 Average Hourly Earnings2.52.72.83.32.62.52.62.82.72.63.02.93.03.43.43.63.9

Excludes hospitals, clinics, and other health-related establishments run by all governments.

NOTES: Data presented here conform to the 1987 Standard Industrial Classification.

Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for January 1992 - March 1997.

Private sector health care payrolls registered the strongest growth in several years during the first quarter of 1997. Implied non-supervisory payrolls for health services grew 6.4 percent in the first quarter of 1997, measured from the same period of the previous year. This was the strongest growth in implied payrolls since the second quarter of 1993. The acceleration in the growth of implied payrolls was more than accounted for by the acceleration in the growth of average weekly hours, which increased 1.1 percent from the same period of the previous year. Average weekly hours for health sector workers fell throughout 1995 and 1996. The relative strength in this component of payrolls may reflect the tightness in the labor market, as establishments, reluctant or unable to hire new workers, lengthen the work week to increase production. Despite the relatively strong growth in implied non-supervisory payrolls, the health sector trailed the non-farm private business sector as a whole in the first quarter of 1997. As shown in Figure 4, payroll growth for the private sector outpaced the health sector for the third consecutive quarter. In the first quarter of 1997, all three components of implied non-supervisory payrolls, non-supervisory employment, average weekly hours, and average hourly earnings, grew more rapidly in the private non-farm business sector as a whole than in the health sector. Significantly, average hourly earnings have grown more slowly in the health sector than in the private non-farm business sector in each of the last three quarters. This development parallels the change in the prices measured in the CPI for all urban families (CPI-U) and the prices of medical services measured in the CPI. Developments in the CPI measures in medical prices are discussed in the following Medical Prices section.
Figure 4

Percent Change from the Same Period of the Previous Year in Implied Nonsupervisory Payrolls for the Private Nonfarm Business Sector and the Health Services Sector: 1990-1997

Medical Sector Prices

The first quarter of 1997 marks the first period since the second quarter of 1981 in which the CPI for medical care grew more slowly than consumer prices for all items except medical care. As shown in Figure 5, the 1980-81 period was marked by the fastest growth in U.S. history since World War II in overall prices, mostly because of surges in energy price growth. Recently, the convergence between medical and overall consumer prices, which began in the first quarter of 1992 when overall prices grew three times faster than medical prices, is the result of slower growth in medical prices. During this period, overall prices have increased between 2.2 and 3.1 percent over the same quarter from the previous year, with average growth of 2.7 percent. Growth in consumer medical prices, on the other hand, has decelerated rapidly, falling from 7.9 percent in the first quarter of 1992 to 2.9 percent in the first quarter of 1997.
Figure 5

Percent Change in Consumer Price Indexes From the Same Period of Previous Year: 1961-97

A similar trend has also occurred in the Producer Price Index (PPI) data. Growth in the PPI for health services, which has data available only since the first quarter of 1996, has decelerated from 2.5 percent in the first quarter of 1996 to 1.6 percent in the first quarter of 1997. During this same period, growth in the PPI for finished consumer goods has increased from 2.3 percent to 2.6 percent. A direct comparison between growth rates in the CPI and the PPI cannot be made because in some instances the CPI measures consumer list price changes for household out-of-pocket expenditures whereas the PPI measures transaction price changes from out-of-pocket, Medicare, Medicaid, and other third-party payers. However, the trends in the growth rates of the two surveys can be compared. The recent deceleration in medical prices is attributable in large part to slowdowns in price growth for both hospital and physician services, as measured by both the CPI and the PPI. The CPI for hospital and related services grew at 3.8 percent between the first quarter of 1996 and the first quarter of 1997, the first time since the series began in 1978 that it has grown below 4.0 percent. In fact, the CPI for hospital and related services has grown at an all-time low rate in each of the last two quarters, as indicated in Figure 6. Because of revisions to the CPI for hospital services that took effect in January 1997, detailed hospital component data will not be available until the first quarter of 1998 when a full year's worth of data is available.
Figure 6

Percent Change in Hospital Price indexes From the Same Period of Previous Year: 1987-97

Producer prices for hospitals, however, can provide insight into where the recent slowdown in hospital price growth has occurred. The PPI for hospitals grew just 1.2 percent in the first quarter of 1997, its slowest growth since the series began in December 1992. Both inpatient and outpatient treatment producer prices continued to decelerate in the first quarter of 1997. The deceleration was led in part by declines in the growth rates of prices paid by patients other than Medicare and Medicaid, and slowing Medicare inpatient price growth resulting from a lower Medicare hospital prospective payment system (PPS) update in fiscal year (FY) 1997 than in FY 1996. As shown in Figure 7, the slower growth in medical prices was also the result of the continued pattern of decelerating growth in physician prices. The CPI for physicians' services grew at 3.0 percent in the first quarter of 1997, its lowest rate of increase since the first quarter of 1973. This trend is similar to the trend in the PPI for non-Medicare treatments in offices and clinics of doctors of medicine, where growth has decelerated from 4.5 percent in the first quarter of 1995 (the first available data point) to 1.6 percent in the first quarter of 1997. Price growth in Medicare treatments in offices and clinics of doctors of medicine accelerated to 1.3 percent in the first quarter of 1997 from 0.8 percent in the fourth quarter of 1996 as a result of higher Medicare Physician Fee Schedule updates for CY 1997 as compared with CY 1996. However, the 1.3-percent growth is consistent with the low growth rate for health services producer prices, which increased 1.6 percent in the first quarter of 1997.
Figure 7

Percent Change in Physician Price Indexes From the Same Period of Previous Year: 1987-97

Given the continued deceleration in medical prices, where may medical prices be headed over the next few quarters? Some forecasters have projected price growth to accelerate slightly through 1997. However, many inputs into these services point to a continuation of a slow and steady growth trend. As explained previously in the section on trends in health sector employment and earnings, the growth in payrolls for health services has accelerated from increases in average weekly hours; average hourly earnings growth has remained virtually steady at 3.0 percent during the past 2 years. If much of the pressures from apparently tight labor markets can be absorbed in 1997 by increasing the number of hours worked per week, the lack of upward pressures on hourly wages could stabilize medical price growth for the rest of 1997. Evidence also suggests steady price growth for Medicare services in the near future. As shown in Table 10, the major inputs into the PPS Hospital input price index, such as wages, benefits, and other expenses, are all showing steady or decelerating price growth. This is also the case with the HCFA skilled nursing facility (SNF) input price index (Table 11), the home health agency (HHA) input price index (Table 12), and the Medicare economic index (MEI) (Table 13), the index used to update physician payments under Medicare. Both the HHA index and MEI, however, have recently shown slight acceleration on wage price growth, a trend to watch through 1997. There also is not much indication that health care commodity prices will accelerate in 1997 as both the CPI and PPI show steady or decelerating growth in drug and medical equipment prices. The combination of these factors suggests that medical price growth may not accelerate for the remainder of 1997.
Table 10

Quarterly Index Levels and Four-Quarter Moving Average Percent Change in the Prospective Payment System (PPS) Hospital Input Price Index by Expense Category: 1995-99

Expense Category1Price/Wage VariableBase Year Weights FY 9221995Q21995Q31995Q41996Q11996Q21996Q31996Q41997Q1Forecast
1997Q21997Q31997Q41998Q11998Q21998Q31998Q41999Q1
Index Levels:
Total-100.000109.8110.4110.8111.6112.4113.1113.5114.1114.8115.7116.3117.2118.0119.0119.6120.6
 Compensation-61.390110.1110.8111.5112.5113.2114.0114.5115.2116.2117.3118.2119.0119.8120.9121.8122.8
  Wages and SalariesHCFA Occupational Wage Index450.244109.3110.0110.8111.9112.6113.5114.0114.8115.8117.0118.0118.8119.6120.7121.6122.6
  Employee BenefitsHCFA Occupational Benefits Index411.146113.7114.2114.6115.4116.0116.5116.7116.9117.7118.6119.1120.0120.7121.8122.5124.0
 Other Professional FeesECI-W/S: Professional/Technical (Private)2.127110.8111.6112.1113.5114.4115.0115.4116.1117.1118.5119.2120.2120.8122.1122.8124.1
 Energy and Utilities3-2.470104.1106.0101.8103.9107.7110.5108.3110.3109.1111.3106.1105.4107.4110.5106.1105.6
 Professional Liability InsuranceHCFA-Professional Liability Premium1.18998.798.398.298.798.698.497.997.196.796.596.596.696.697.097.698.6
 All Other-32.825109.9110.5110.6110.9111.5111.9112.4112.9113.2113.5114.0115.2116.0116.6117.1118.2
  Other Products3-24.033109.8110.4110.3110.2110.7111.0111.0111.3111.4111.5111.7112.6113.3113.9114.1115.0
   PharmaceuticalsPPI-Prescription Drugs4.162112.0112.7114.6114.9116.0116.8116.9118.9120.1120.7121.1123.2124.7125.3125.7128.0
   Food: Direct PurchasePPI-Processed Foods2.363102.7104.4106.3106.8108.7111.2110.8109.7111.0111.3111.1112.0112.6113.1112.9113.9
   Food: Contract ServiceCPI-Food Away From Home1.096106.0106.6107.2107.7108.4109.3110.3111.0111.7112.8113.8115.0116.2117.3118.4119.7
   ChemicalsPPI-Industrial Chemicals3.795120.3118.8115.0114.6116.8116.7116.9117.5116.1114.9114.2115.3115.6116.7116.7117.7
   Medical InstrumentsPPI-Medical Instruments/Equipment3.128104.4105.0104.9106.3106.1105.8106.1106.2106.5106.6106.8107.4107.8108.1108.4109.1
   Rubber and PlasticsPPI-Rubber/Plastic Products4.868108.5109.1108.6107.8107.7108.1107.7107.4107.5107.8107.8107.7107.7108.1107.9107.7
   Paper ProductsPPI-Converted Paper and Paperboard2.062116.1119.6119.9117.6114.4112.1111.8111.0109.7110.5112.6114.2115.5115.8116.7117.6
  Other Services3-8.792110.3110.7111.3112.7113.5114.5116.1117.3118.1119.0120.2122.2123.2124.2125.3126.9
   Business ServicesECI-W/S: Business Services3.823110.8111.1111.7114.0114.2115.1116.5117.9118.6119.3120.7122.8123.7124.2125.4127.6
   Computer ServicesAHE-Data Processing Services1.927112.9113.2114.2115.6117.3119.4122.1124.2125.5127.2128.4130.5132.6134.4135.8137.4
4-Quarter Moving-Average Percent Change:
Total-100.0003.13.23.13.02.72.52.42.42.32.32.32.42.62.72.82.9
 Compensation-61.3902.92.72.62.62.72.82.82.72.72.62.83.03.13.23.13.1
  Wages and SalariesHCFA Occupational Wage Index450.2442.82.72.62.72.82.93.02.92.92.93.03.23.33.33.23.2
  Employee BenefitsHCFA Occupational Benefits Index411.1463.22.72.42.42.22.12.01.81.71.61.72.02.32.52.72.9
 Other Professional FeesECI-W/S: Professional/Technical (Private)2.1272.92.62.42.62.83.03.12.92.72.62.73.13.33.33.23.1
 Energy and Utilities3-2.4700.30.0-0.20.00.72.13.95.14.53.61.5-1.1-1.8-2.2-1.7-0.6
 Professional Liability InsuranceHCFA-Professional Liability Premium1.189-3.0-3.3-3.2-2.6-1.8-0.9-0.3-0.5-0.9-1.4-1.7-1.5-1.0-0.40.30.9
 All Other-32.8254.04.74.74.13.02.11.61.51.61.61.51.61.82.22.52.6
  Other Products3-24.0334.45.35.44.53.11.81.00.70.70.70.70.71.01.41.82.0
   PharmaceuticalsPPI-Prescription Drugs4.1622.42.52.83.33.73.83.33.23.13.13.53.53.63.73.83.8
   Food: Direct PurchasePPI-Processed Foods2.363-0.20.11.22.23.85.05.04.83.92.31.31.11.01.41.71.6
   Food: Contract ServiceCPI-Food Away From Home1.0961.92.12.32.32.32.32.52.72.93.13.13.33.53.73.94.0
   ChemicalsPPI-Industrial Chemicals3.79513.114.712.47.42.2-1.0-1.3-0.20.40.5-0.5-1.6-1.5-0.70.41.4
   Medical InstrumentsPPI-Medical Instruments/Equipment3.1280.91.11.31.51.61.41.40.80.50.50.40.70.91.11.31.4
   Rubber and PlasticsPPI-Rubber/Plastic Products4.8684.35.65.74.42.50.7-0.4-0.7-0.6-0.4-0.20.00.10.20.20.2
   Paper ProductsPPI-Converted Paper and Paperboard2.0629.513.414.913.18.52.5-2.3-5.0-5.7-4.6-2.7-0.51.83.44.14.2
 Other Services3-8.7923.13.02.92.92.83.03.43.74.04.13.93.94.04.14.34.2
   Business ServicesECI-W/S: Business Services3.8233.12.92.72.93.03.23.63.63.83.83.63.83.94.04.14.0
   Computer ServicesAHE-Data Processing Services1.9273.83.63.53.53.54.04.95.96.77.06.55.95.65.45.55.6

For data sources used to estimate the input price index relative weights and choice of price proxies, see the August 29, 1997 Federal Register. For the most recent PPS update for payment rates, see the August 29, 1997 Federal Register.

Category weights may not sum to total or subtotals because of detail not included.

Represents a subtotal. Detailed categories not shown are listed below by subtotal, detailed category, and base year weight: Energy and Utilities: Fuel Oil, Coal, and Other Fuel (0.345), Electricity (1.349), Natural Gas (0.670), and Water and Sewage (0.106) Other Products: Photographic Supplies (0.399), Apparel (0.875), Machinery and Equipment (0.211), and Miscellaneous Products (1.074). Other Services: Transportation and Shipping (0.188), Telephone (0.531), Postage (0.272), Other—Labor Intensive (1.707), and Other—Non-Labor Intensive (0.344).

The HCFA Occupational Wage and Occupational Benefit Indexes are computed as the weighted-average of 10 ECI categories (ECI for Hospital workers and 9 ECI occupational categories) indicated by the column heading is computed by summing the index level for that quarter and the prior 3 quarters and dividing by 4.

NOTES: A dash (-) in the Price/Wage Variable column denotes a total or subtotal produced by adding 2 or more categories. ECI represents Employment Cost Index, PPI represents Producer Price Index, and AHE represents Average Hourly Earnings. HCFA is Health Care Financing Administration. W/S is wages and salaries. FY is fiscal year. Q designates quarter of year. The 4 quarter moving-average index level for the quarter indicated by the column heading is computed by summing the index level for that quarter and the prior 3 quarters and dividing by 4. The process is repeated to compute the 4-quarter moving-average index level for the same quarter 1 year ago. The average index level for the quarter indicated by the column heading is divided by the average index level of the same quarter 1 year ago and the quotient is subtracted from 1 and multiplied by 100 to determine the 4-quarter moving-average percent change in the index.

SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Second quarter 1997 forecasts were produced under contract to HCFA by Data Resources, Inc./ McGraw-Hill.

Table 11

Quarterly Index Levels and Four-Quarter Moving-Average Percent Change in the Skilled Nursing Facility Input Price Index, by Expense Category: 1995-99

Expense Category1Price/Wage VariableBase Year Weights CY 7721995Q21995Q31995Q41996Q11996Q21996Q31996Q41997Q1Forecast
1997Q21997Q31997Q41998Q11998Q21998Q31998Q41999Q1
Index Levels
Total-100.000263.9265.5267.1269.6270.9272.7275.3277.8279.3281.4283.8287.0289.1291.1293.5296.9
 Compensation-70.620270.0271.6273.1275.5276.0277.8280.2283.1284.9287.5290.4294.2296.4298.5301.2305.1
  Wages and SalariesAHE-Nursing Facilities63.020267.2268.7270.3273.0273.3275.1277.7280.6282.3285.0287.9291.9294.1296.1298.9302.7
  Employee BenefitsBEA-Supplement to Wages/Salaries per Worker7.600293.4295.2296.3296.5298.3299.8301.5303.7306.0308.0310.5313.6315.4317.9320.5325.2
 Fuel and Other Energy-4.270231.9232.4231.6239.9245.3243.4253.4257.4249.9246.5244.7244.0243.9244.3244.1244.9
  Fuel Oil and CoalIPD-Fuel Oil and Coal1.660204.2204.9201.4219.5226.5219.1240.8241.7223.2219.3217.6215.6213.7211.6209.3208.7
  ElectricityIPD-Electricity1.210225.1227.9230.0229.3229.9232.0232.2232.3232.5232.3232.1231.9231.7231.8231.8232.1
  Natural GasIPD-Natural Gas0.910239.4234.9233.9237.7245.5249.5255.5271.2267.9255.0247.9245.6245.6247.0248.7250.2
  Water and Sewage MaintenanceCPI(U)-Water and Sewage0.490328.4331.8333.4339.6347.0342.9344.8347.2349.6357.8361.9367.2372.9380.9383.8389.2
 Food-9.740197.3199.1201.6202.5205.3208.8209.9209.3211.0212.3213.6214.6215.6216.8218.1219.4
  Direct PurchasePPI-Processed Foods4.930169.4171.9175.4176.2179.3183.0182.5181.1182.9183.3184.1184.8185.6186.4187.1188.0
  Contract ServiceCPI(U)-Food and Beverages4.810225.8227.0228.6229.6232.0235.3238.0238.2239.9242.1243.9245.1246.4248.0249.8251.6
 All Other-15.370287.1288.9291.0293.3296.1298.1300.0302.6304.9307.1309.0311.6314.6317.1319.3322.3
  PharmaceuticalsPPI-Prescription Drugs1.500389.2391.8398.3399.4403.3405.9406.2413.2417.3419.6421.0428.1433.4435.4436.8445.0
  SuppliesCPI(U)-All Items3.280251.1252.2253.4255.7258.3259.6261.5263.3265.0266.9268.3269.8272.3274.4276.1277.8
 Health ServicesCPI(U)-Physicians' Services1.210355.8359.1361.5366.3368.8371.1373.2377.4380.5384.5387.7391.7396.0399.6403.1407.7
 Other Business ServicesCPI(U)-Services4.590298.9301.2303.4305.5308.3311.2313.6315.9318.3320.6323.1326.0328.9331.8334.8337.9
 Miscellaneous CostsCPI(U)-All Items4.790251.1252.2253.4255.7258.3259.6261.5263.3265.0266.9268.3269.8272.3274.4276.1277.8
4-Quarter Moving-Average Percent Change
Total-100.0003.13.02.92.72.72.62.72.93.03.13.13.23.33.33.43.4
 Compensation-70.6203.43.23.02.72.52.42.42.52.73.03.33.63.83.83.93.8
  Wages and SalariesAHE-Nursing Facilities63.0203.73.43.12.82.62.42.52.62.83.13.33.63.93.94.03.9
  Employee BenefitsBEA-Supplement to Wages/Salaries per Worker7.6001.81.92.22.12.11.91.61.82.12.42.72.93.03.13.23.3
 Fuel and Other Energy-4.270-0.4-0.3-0.30.92.43.55.96.85.84.91.7-1.5-2.5-3.0-2.2-0.8
  Fuel Oil and CoalIPD-Fuel Oil and Coal1.660-1.6-0.8-0.62.35.16.611.611.88.56.8-0.4-5.6-6.3-7.2-5.7-3.7
  ElectricityIPD-Electricity1.2100.91.62.22.32.32.21.71.51.30.90.60.2-0.1-0.2-0.2-0.1
  Natural GasIPD-Natural Gas0.910-3.2-4.4-5.1-4.6-2.60.33.98.09.78.65.4-0.5-4.8-6.0-5.3-2.4
  Water and Sewage MaintenanceCPI(U)-Water and Sewage0.4904.03.53.13.23.83.94.13.62.42.73.14.05.46.06.26.3
 Food-9.7401.51.62.12.53.13.84.04.13.83.02.42.22.02.12.22.2
  Direct PurchasePPI-Processed Foods4.930-0.20.11.22.23.85.05.04.83.82.21.41.31.11.51.71.6
  Contract ServiceCPI(U)-Food and Beverages4.8102.92.82.82.72.62.93.33.63.73.53.12.92.72.62.62.6
 All Other-15.3703.13.13.23.23.23.23.13.13.13.13.03.03.13.13.23.3
  PharmaceuticalsPPI-Prescription Drugs1.5002.42.52.83.33.73.83.33.23.13.13.53.53.63.73.83.8
  SuppliesCPI(U)-All Items3.2802.92.82.82.82.72.82.93.02.92.92.72.62.72.72.72.9
  Health ServicesCPI(U)-Physicians' Services1.2104.44.54.54.54.33.93.63.33.23.33.43.63.83.93.94.0
  Other Business ServicesCPI(U)-Services4.5903.33.33.43.43.33.33.33.33.33.23.23.13.23.33.43.5
  Miscellaneous CostsCPI(U)-All Items4.7902.92.82.82.82.72.82.93.02.92.92.72.62.72.72.72.9

For data sources used to estimate the input price index relative weights and choice of price proxies, see the October 7, 1992, Federal Register.

Category weights may not sum to total because of rounding.

NOTES: A dash (-) in the Price/Wage Variable column denotes a total or subtotal produced by adding 2 or more categories.

AHE represents Average Hourly Earnings, BEA represents Bureau of Economic Analysis, IPD represents Implicit Price Deflator from the Department of Commerce, CPI(U) represents Consumer Price Index for all urban consumers, and PPI represents Producer Price Index. CY is calendar year. Q designates quarter of year. An example of how a percent change is calculated is shown in the Notes at the end of Table 10.

SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Second quarter 1997 forecasts were produced under contract to HCFA by Data Resources, Inc./McGraw-Hill.

Table 12

Quarterly Index Levels and Four-Quarter Moving-Average Percent Change of the Home Health Agency (HHA) Input Price Index by Expense Category: 1995-99

Expense Category1Price/Wage VariableBase Year Weights FY9341995Q21995Q31995Q41996Q11996Q21996Q31996Q41997Q1Forecast
1997Q21997Q31997Q41998Q11998Q21998Q31998Q41999Q1
Index Levels
Total-100.000106.2106.9107.5108.4109.1109.8110.5111.3112.0113.0113.9114.9115.7116.8117.6118.6
 Compensation2-77.668106.1106.7107.4108.2108.9109.7110.4111.1112.0113.0113.9114.9115.5116.6117.4118.5
  Wages and Salaries2HHA Occupational Wage Index564.226105.8106.6107.3108.2108.9109.8110.5111.4112.2113.3114.3115.2115.9117.0117.9118.9
  Employee Benefits2HHA Occupational Benefits Index513.442107.1107.5107.8108.4108.9109.2109.6110.0110.6111.5112.0113.1113.4114.4115.1116.7
 Operations and MaintenanceCPI(U)-Fuel and Other Utilities0.832102.2103.9102.5103.7105.3107.4106.9108.4109.3110.9108.9110.0110.8112.5110.9112.3
 Administrative and General3-9.569107.1108.2108.8109.7110.4111.4111.8112.8113.4114.3114.8116.8117.6118.7119.2120.4
  TelephoneCPI(U)-Telephone Services0.725102.5102.8103.0103.5103.6104.8105.3105.8106.0106.1106.0106.9107.8108.4108.7109.8
  Paper and PrintingCPI(U)-Household Paper Products0.529105.9109.6112.4113.8114.4113.3113.8114.2113.5112.9112.8113.3114.1114.8115.5116.1
  PostageCPI(U)-Postage0.724110.3110.3110.3110.3110.3110.3110.3110.3110.3110.3110.3122.3122.3122.3122.3122.3
  Other Administrative Costs3CPI(U)-Services7.591107.4108.5108.9110.0110.8112.0112.5113.6114.3115.6116.2117.4118.3119.6120.2121.5
 TransportationCPI(U)-Private Transportation3.405108.1107.5107.5108.5111.1110.4111.3111.7112.0112.0113.4113.8116.5117.2118.6118.7
 Capital-Related-3.204105.9106.5107.2107.7108.0108.8109.4109.9110.5111.8112.8113.7114.5115.4116.1116.9
  InsuranceCPI(U)-Household Insurance0.560108.3108.6108.3109.0109.9111.5112.3112.2113.2114.5115.6116.4117.5118.6119.3120.1
  Fixed CapitalCPI(U)-Owner's Equivalent Rent1.764106.9108.0109.1109.9110.4111.3112.2113.1113.8115.3116.7117.7118.6119.7120.5121.5
  Movable CapitalPPI-Machinery and Equipment0.880102.1102.2102.6102.7102.1102.0101.9102.0102.4102.8103.2103.8104.3104.8105.2105.8
 Other Expenses3CPI(U)-All Items Less Food and Energy5.322106.5107.0107.8108.7109.3109.8110.6111.4112.3113.2114.4115.1116.2117.3118.6119.5
4-Quarter Moving-Average Percent Change
Total-100.0002.92.82.72.72.62.72.72.72.72.82.83.03.13.33.33.3
 Compensation2-77.6682.82.72.62.52.52.62.72.72.82.82.93.13.23.23.23.2
  Wages and Salaries2HHA Occupational Wage Index564.2262.82.72.62.62.72.82.93.03.03.13.13.33.33.43.33.2
  Employee Benefits2HHA Occupational Benefits Index513.4422.92.52.22.11.91.81.71.61.61.71.82.22.42.62.72.8
 Operations and MaintenanceCPI(U)-Fuel and Other Utilities0.8320.40.50.71.11.72.43.13.84.04.03.42.62.01.51.51.7
 Administrative and General3-9.5693.23.53.93.83.63.33.02.92.82.72.72.93.13.43.83.6
  TelephoneCPI(U)-Telephone Services0.7251.00.80.80.70.81.21.51.82.22.01.61.31.21.41.92.3
  Paper and PrintingCPI(U)-Household Paper Products0.5291.93.96.58.69.47.95.63.11.00.1-0.4-0.7-0.40.11.01.8
  PostageCPI(U)-Postage0.7245.27.710.37.54.92.40.00.00.00.00.02.75.48.110.97.9
  Other Administrative Costs3CPI(U)-Services7.5913.33.33.43.43.33.33.23.23.33.23.23.33.33.43.53.5
 TransportationCPI(U)-Private Transportation3.4054.84.43.72.92.32.32.83.02.52.21.71.52.33.13.84.4
 Capital-Related-3.2042.92.82.82.62.42.32.22.12.12.32.52.93.23.33.33.2
  InsuranceCPI(U)-Household Insurance0.5604.23.93.32.51.81.82.32.73.13.12.93.13.33.53.63.4
  Fixed CapitalCPI(U)-Owner's Equivalent Rent1.7643.33.43.33.43.43.33.23.03.03.13.43.74.04.03.83.6
  Movable CapitalPPI-Machinery and Equipment0.8801.01.01.21.10.80.50.0-0.4-0.3-0.10.41.01.41.71.91.9
 Other Expenses3CPI(U)-All Items less Food and Energy5.3222.92.93.03.02.92.82.72.62.62.72.93.13.33.53.63.7

For data sources used to estimate the input price index relative weights and choice of price proxies, see the July 1, 1996, Federal Register.

Includes allocated Contract Services' Labor.

Includes allocated Contract Services' Non-Labor.

Category weights may not sum to total because of rounding.

The HHA Occupational Wage and Occupational Benefit Indexes are computed as weighted-averages of 5 ECI categories (ECI for Civilian Hospital Workers and 4 ECI occupational categories).

NOTES: A dash (-) in the Price/Wage Variable column denotes a total or subtotal produced by adding 2 or more categories. CPI(U) represents Consumer Price Index for all urban consumers. CY is calendar year. Q designates quarter of year. An example of how a percent change is calculated is shown in the Notes at end of Table 10.

SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics, Division of Health Cost Analysis. Second quarter 1997 forecasts were produced under contract to HCFA by Data Resources, Inc./McGraw-Hill.

Table 13

Quarterly Index Levels and Four-Quarter Moving-Average Percent Change in the HCFA Medicare Economic Index with DRI Forecast Assumptions, by Expense Category: 1995-99

Expense Category1Price/Wage VariableBase Year Weights CY 8921995Q21995Q31995Q41996Q11996Q21996Q31996Q41997Q1Forecast
1997Q21997Q31997Q41998Q11998Q21998Q31998Q41999Q1
Index Levels
Total-100.000114.9115.4116.3117.0117.5118.0118.9119.8120.3120.9122.0122.9123.5124.1125.1126.0
 Physician Earnings-54.155112.8113.2114.4115.1115.4115.9117.3118.2118.6119.0120.4121.2121.5121.9123.1124.0
  Wages and SalariesAHE-Private345.342110.3110.8112.1112.8113.1113.7115.3116.311.6117.0118.6119.4119.7120.0121.4122.1
  BenefitsECI-Benefits, Private38.813125.8126.0126.0126.5127.0127.4127.6128.1128.6129.1129.4130.5131.1131.7132.1133.8
 Practice Expenses-45.845117.5118.0118.5119.4120.0120.6120.8121.7122.4123.3123.9124.8125.8126.8127.5128.5
Non-Physician Compensation-16.296116.4116.9117.3118.3118.9119.8120.2121.1121.9122.7123.4124.3124.9125.7126.3127.3
 Wages and Salaries-13.786114.5115.0115.6116.7117.3118.2118.6119.6120.4121.3122.0122.9123.4124.4125.0125.9
  Professional/TechnicalECI-W/S: Professional/Technical33.790115.6116.2116.7118.0118.8119.3119.3120.1121.0122.3123.0123.7124.2125.3125.8126.5
  ManagersECI-W/S: Administrative Managerial32.620114.3114.9115.6116.8117.4119.2119.3120.6121.5122.5123.1124.0124.7125.7126.3127.1
  ClericalECI-W/S: Clerical35.074115.0115.5116.2117.2117.7118.6119.0120.1120.9121.8122.4123.4123.9124.7125.3126.4
  CraftECI-W/S: Craft30.069112.0112.7112.9113.6114.6114.9115.5115.9116.8117.9118.5119.1119.9120.7121.1121.8
  ServicesECI-W/S: Service Occupations32.233111.7112.2112.6113.1113.7114.5115.7116.3116.7117.3118.5119.4119.7120.5121.4122.1
  Employee BenefitsECI-Benefits, Private White Collar32.510126.7127.0126.8127.5127.9128.7128.7129.5130.2130.6130.9132.0132.7133.3133.7135.5
 Office ExpensesCPI(U)-Housing10.280120.2121.5121.6122.9123.7125.1125.2126.5127.3129.0129.4130.5131.6133.3133.6134.5
 Medical Materials/SuppliesPPI-Drugs/PPI-Surgical/CPI-Medical Supplies5.251128.1128.2130.1130.8131.6131.5131.2132.6133.9134.3134.7136.2137.8138.4139.0140.7
 Professional Liability InsuranceHCFA-Professional Liability Premiums4.78097.797.096.796.495.995.294.794.594.694.694.795.095.596.396.997.5
 Medical EquipmentPPI-Medical Instruments/Equipment2.348110.4111.1111.0112.4112.2111.9112.2112.5112.8112.9113.1113.8114.1114.5114.9115.6
 Other Professional Expenses-6.890124.0124.4125.2126.2127.4127.7128.6129.5130.3131.2132.6133.4135.1136.2137.8138.6
  AutomobileCPI(U)-Private Transportation1.400121.5120.8120.9122.0124.9124.1125.1125.5125.9125.9127.4127.9130.9131.7133.3133.5
  All OtherCPI(U)-All Items Less Food/Energy5.490124.7125.3126.3127.3128.0128.6129.5130.5131.5132.5133.9134.8136.1137.4138.9139.9
4-Quarter Moving-Average Percent Change
Total-100.0002.12.12.02.02.02.12.22.32.32.42.52.52.62.62.62.6
 Physician Earnings-54.1551.81.81.81.92.02.12.32.52.62.72.72.62.62.52.42.4
  Wages and salariesAHE-Private345.3421.71.81.92.02.22.42.62.82.93.03.02.92.82.72.52.4
  BenefitsECI-Benefits, Private38.8132.31.81.51.21.01.01.01.21.21.31.31.51.61.82.02.1
 Practice Expenses-45.8452.52.32.22.12.02.12.12.02.02.02.22.42.52.72.82.8
Non-Physician Compensation-16.2962.22.12.01.92.02.12.32.42.42.42.52.62.62.62.52.4
 Wages & Salaries-13.7862.01.91.91.92.12.32.52.62.62.62.72.72.72.72.62.5
  Professional/TechnicalECI-W/S: Professional/Technical33.7901.81.71.61.82.12.42.62.42.22.12.32.62.82.82.62.4
  ManagersECI-W/S: Administrative/Managerial32.6202.22.12.22.22.42.83.03.23.43.23.23.02.82.82.72.6
  ClericalECI-W/S: Clerical35.0742.22.12.12.02.12.32.42.52.62.62.72.72.72.62.52.4
  CraftECI-W/S: Craft30.0692.01.91.92.02.12.12.22.22.02.22.32.52.62.62.52.4
  ServicesECI-W/S: Service Occupations32.2331.71.81.61.61.61.62.02.32.62.72.62.52.52.62.62.5
  Employee BenefitsECI-Benefits, Private White Collar32.5103.02.62.11.71.41.31.21.41.51.61.61.71.81.92.02.2
  Office ExpensesCPI(U)-Housing10.2802.42.42.52.72.82.92.92.92.93.03.13.13.33.33.33.3
 Medical Materials/SuppliesPPI-Drugs/PPI-Surgical/CPI-Medical Supplies5.2512.82.32.12.22.22.62.21.91.61.52.02.32.62.83.03.1
 Professional Liability InsuranceHCFA-Professional Liability Premiums4.7802.92.00.9-0.2-1.1-1.6-1.8-1.9-1.8-1.5-1.0-0.40.20.81.41.9
 Medical EquipmentPPI-Medical Instruments/Equipment2.3480.91.11.31.51.61.41.40.90.60.60.60.81.01.21.31.4
 Other Professional Expenses-6.8903.33.23.13.02.82.72.72.72.62.62.72.83.13.43.63.8
  AutomobileCPI(U)-Private Transportation1.4004.84.43.72.92.32.32.83.02.52.21.71.52.33.13.84.4
  All OtherCPI(U)-All Items less Food/Energy5.4902.92.93.03.02.92.82.72.62.62.72.93.13.33.53.63.7

For data sources used to estimate the index relative weights and choice of price proxies, see the November 25, 1992, Federal Register.

Category weights may not sum to total because of rounding.

Series are adjusted for productivity using 10-year moving average of output per hour for the non-farm business sector.

All series in the compensation portion of the MEI are adjusted for productivity so both economy-wide productivity and physician practice and productivity are not included in the update.

NOTES: A dash (-) in the Price/Wage Variable column denotes a total or subtotal produced by adding 2 or more categories Q designates quarter of year. AHE represents Average Hourly Earnings, ECI represents Employment Cost Index. CPI(U) represents Consumer Price Index for all urban consumers, and PPI represents Producer Price Index. An example of how a percent change is calculated is shown in the NOTES at end of Table 10.

SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the Office of National Health Statistics Division of Health Cost Analysis. Second quarter 1997 forecasts were produced under contract to HCFA by Data Resources Inc./McGraw-Hill.

Background Information on Data Sources and Methods

Community Hospital Statistics

Since 1963, the American Hospital Association (AHA), in cooperation with member hospitals, has been collecting data on the operation of community hospitals through its National Hospital Panel Survey. Community hospitals, which comprised more than 80 percent of all hospital facilities in the United States in 1996, include all non-Federal, short-term general, and other special hospitals open to the public. They exclude hospital units of institutions; psychiatric facilities; tuberculosis, other respiratory, and chronic disease hospitals; institutions for the mentally retarded; and alcohol and chemical dependency hospitals. The survey samples approximately one-third of all U.S. community hospitals. The sample is designed to produce estimates of community hospital indicators by bed size and region (American Hospital Association, 1963-96). In Tables 1 and 2, statistics covering expenses, utilization, beds, and personnel depict trends in the operation of community hospitals annually for 1988-96 and quarterly for 1994 forward. For purposes of national health expenditures (NHE), survey statistics on revenues are analyzed in estimating the growth in the largest component of health care costs—community hospital expenditures. This one segment of NHE accounted for 35 percent of all health spending in 1995 (Levit et al., 1997). The survey also identifies important factors influencing expenditure growth patterns, such as changes in the number of beds in operation, numbers of admissions, length of stay, use of outpatient facilities, and number of surgeries.

Medicare Trust Fund Operations

Separate trust funds finance the operations of the two parts of the Medicare program. The HI program, or Medicare Part A, helps pay for inpatient hospital, home health, skilled nursing facility, and hospice care for the aged and disabled. The HI program is financed primarily by payroll taxes paid by workers and employers. The taxes paid each year are used mainly to pay benefits for current beneficiaries. The SMI program, or Medicare Part B, pays for physician, outpatient hospital, and other services for the aged and disabled. The SMI program is financed primarily by transfers from the general fund of the U.S. Treasury and by monthly premiums paid by beneficiaries. For both Medicare programs, income not currently needed to pay benefits and related expenses is held in the HI and SMI trust funds and invested in U.S. Treasury securities. (Annual Report of the Board of Trustees of the Federal Hospital Insurance Trust Fund, 1997;Annual Report of the Board of Trustees of the Federal Supplementary Medical Insurance Trust Funds, 1997). Data on the financial operations of the Medicare trust funds, the HI trust fund and the SMI trust fund are available from two sources. The monthly statistics on trust fund operations are published in the Monthly Treasury Statement of Receipts and Outlays of the United States Government (U.S. Department of the Treasury, 1997). The trust fund operating statistics are presented in Table 8: Trust Fund Impact on Budget Results and Investment Holding. The 1997 Annual Reports of the Board of Trustees of the HI and SMI Trust Funds (Board of Trustees) contain a detailed accounting of all financial operations for the prior fiscal year. The reports also contain actuarial analysis of the expected operations of the trust funds in future years and analysis of the actuarial status of the funds.
Table 8

Index Levels of Medical Prices: 1993-97

IndicatorCalendar Year1994199419941994199519951995199519961996199619961997
1993199419951996Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
Consumer Price Indexes, All Urban Consumers1
Medical Care Services2202.9213.4224.2232.4209.5212.0214.6217.5221.0223.0225.4227.4230.1231.5233.3234.7237.0
 Professional Services184.7192.5201.0208.3189.3191.8193.5195.5198.3200.2202.0203.4205.9207.5209.2210.7213.2
Physicians' Services191.3199.8208.8216.4196.7199.2200.7202.4205.6208.1210.1211.5214.3215.8217.1218.3220.8
Dental Services188.1197.1206.8216.5193.0196.1198.3201.1204.0205.8207.8209.8212.5215.1218.0220.5223.4
 Hospital and Related Services3231.9245.6257.8269.5241.3243.4247.2250.6254.2255.6259.1262.2266.1267.7271.0273.1276.3
Hospital Room226.4239.2251.2261.0235.3237.2240.9243.5247.8249.4252.6255.1257.9259.0262.3264.7*
Other Inpatient Services (1986=100)185.7197.1206.8216.9193.5195.4198.2201.2204.0205.2207.8210.3214.3215.5218.1219.6*
Outpatient Services (1986=100)184.3195.0204.6215.1191.5192.9196.3199.4201.5202.3205.5208.9211.7213.9216.5218.1*
Medical Care Commodities195.0200.7204.5210.4198.5200.1201.6202.6203.4203.6204.6206.2208.4209.9211.1212.1213.8
 Prescription Drugs223.0230.6235.0242.9228.0230.5231.0232.8233.4233.9235.4237.4240.1242.3243.7245.3247.6
 Non-Prescription Drugs and Medical Supplies (1986=100)135.5138.1140.5143.1136.7136.8-139.4140.5140.0140.4141.2142.5142.9143.6143.6144.5
Internal and Respitory Over-the-Counter Drugs163.5165.9167.0170.2165.2165.5166.6166.4167.1166.0167.4167.3169.3169.5170.6171.3172.4
Non-Prescription Medical Equipment and Supplies155.9160.0166.3169.1156.7156.7163.1163.6165.8166.3165.2167.8168.7169.3169.8168.8169.7
Producer Price Indexes4
Industry Groupings:5
 Health Services (12/94=100)--102.4104.6----101.6101.9102.5103.4104.1104.4104.7105.2105.8
Offices and Clinics of Doctors of Medicine (12/93=100)-102.8106.8107.6101.8102.4102.9104.0106.3106.8107.1107.0107.4107.5107.5107.9108.7
 Medicare Treatments (12/93=100)-104.7109.6105.5104.7104.7104.7104.7109.6109.6109.6109.6105.5105.5105.5105.5105.8
 Non-Medicare Treatments (12/93=100)-102.3105.9107.8101.0101.8102.4103.8105.5106.1106.1106.0107.5107.7107.8108.2109.2
Hospitals (12/92=100)102.5106.2110.0112.6105.0105.4106.7107.7109.2109.3110.0111.4112.2112.3112.7113.4113.5
 General Medical and Surgical Hospitals (12/92=100)102.4106.0109.9112.5104.8105.2106.5107.5109.0109.2109.9111.5112.2112.2112.5113.2113.4
  Inpatient Treatments (12/92=100)102.5106.0109.2111.8104.9105.2106.4107.5108.5108.6109.1110.9111.5111.6111.6112.4112.5
   Medicare Patients (12/92=100)100.6102.6104.7108.1102.3102.3102.3103.6103.6103.6103.6107.8107.8107.8107.8109.1109.1
   Medicaid Patients (12/92=100)102.3107.1109.8112.2105.3106.0108.1108.9109.5109.6109.3110.6111.7112.5111.9112.5110.7
   All Other Patients (12/92=100)103.5107.7111.7113.7106.3106.7108.4109.4111.0111.1112.0112.6113.6113.4113.6114.2114.8
  Outpatient Treatments (12/92=100)102.5106.7113.3116.2105.0105.8107.6108.2111.9112.5114.0114.8115.6115.8116.6117.0117.4
   Medicare Patients (12/92=100)103.7107.0111.2113.1105.5106.0107.5108.8110.2111.1111.8111.8112.3112.5113.4114.4115.3
   Medicaid Patients (12/92=100)101.6103.3106.4106.1101.8101.2105.1105.1105.7105.9105.8108.0107.1107.1105.9104.4104.8
   All Other Patients (12/92=100)102.4106.9114.2117.7105.2106.2107.8108.4112.7113.2115.1115.8116.9117.1118.1118.6119.0
Skilled and Intermediate Care Facilities (12/94=100)--103.6110.0----101.9102.8104.2105.6108.2109.5110.7111.6113.3
 Public Payors (12/94=100)--103.8110.5----101.8102.7104.4106.2108.6110.1111.2112.1113.7
 Private Payors (12/94=100)--103.6109.8----102.1103.2104.2105.1108.2109.1110.4111.4113.3
Medical Laboratories (6/94=100)--104.0105.3--100.099.9101.6103.4106.0105.0105.3105.2105.3105.3105.8
Commodity Groupings:
 Drugs and Pharmaceuticals200.9206.0210.9214.7204.6205.9206.3207.0208.5210.3211.2213.4213.8214.6215.2215.2218.1
  Ethical (Prescription) Preparations242.2250.0257.0265.4248.3250.1250.0251.4252.7255.8257.6261.8262.5265.1266.8267.0271.0
  Proprietary (Over-the-Counter) Preparations180.0183.2186.6185.1181.4182.6184.4184.5185.5186.6186.6187.5188.3184.5183.3184.2186.1
 Medical, Surgical, and Personal Aid Devices137.8140.4141.3143.1140.1140.3140.6140.5140.7140.8141.5142.1143.5143.4142.6142.7142.9
  Personal Aid Equipment122.3130.1133.7139.3127.8130.8130.9130.9131.2131.8135.1136.7136.8139.8140.2140.3140.3
  Medical Instruments and Equipment (6/82=100)126.0126.7128.3130.1126.4126.5126.8126.9127.8128.0128.8128.7130.3130.1129.7130.1127.8
  Surgical Appliances and Supplies (6/83=100)151.0155.7154.8156.9155.4155.7156.1155.4154.3154.1154.5156.2157.4158.1156.3155.8158.5
  Ophthalmic Goods (12/83=100)119.0119.6122.2120.3120.0119.4119.4119.8121.7121.8122.9122.6122.2119.7119.8119.5120.4
  Dental Equipment and Supplies (6/85=100)131.5135.2137.5141.0134.2135.0136.0135.7136.4137.9137.1138.7140.7140.7141.0141.7145.9

Unless otherwise noted, base year is 1982-84 = 100

Includes the net cost of private health insurance, not shown separately.

The hospital services component of the CPI was revised effective January 1997. Hospital Room, Other Inpatient Services and Outpatient Services are no longer shown as separate strata of the Hospital Services index.

Unless otherwise noted, base year is 1982 = 100. Producer price indexes are classified by industry (price changes received for the industry's output sold outside the industry) and commodity (price changes by similarity of end use or material composition).

Further detail for Producer Price Industry groupings, such as types of physician practices, hospital DRG groupings, etc., are available from BLS.

indicates discontinued series

NOTES: Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: CPI Detailed Report. Washington. U.S. Government Printing Office. Monthly reports for January 1993 -March 1997; U.S. Department of Labor, Bureau of Labor Statistics: Producer Price Indexes. Washington. U.S. Government Printing Office. Monthly reports for January 1993 -March 1997.

Private Health Sector: Employment, Hours, and Earnings

The Bureau of Labor Statistics (BLS) collects monthly information on employment for all workers, and employment, earnings, and work hours for non-supervisory workers in a sample of approximately 340,000 establishments. Data are collected through cooperative agreements with State agencies that also use this information to create State and local area statistics. The survey is designed to collect industry-specific information on wage and salary jobs in non-agricultural industries. It excludes statistics on self-employed persons and on those employed in the military (U.S. Department of Labor, 1997a). Employment in this survey is defined as number of jobs. Persons holding multiple jobs would be counted multiple times. Approximately 5 percent of the population hold more than one job at any one time. (Other surveys that are household-based, such as the Current Population Survey [CPS], also record employment. In the CPS, however, each person's employment status is counted only once, as either employed, unemployed, or not in the labor force.) Once each year, monthly establishment-based employment statistics are adjusted to benchmarks created from annual establishment census information, resulting in revisions to previously published employment estimates. Tables 4, 5, and 6 present statistics on employment, non-supervisory employment, average weekly hours and average hourly earnings for the private non-farm business sector and industries in health services.

National Economic Indicators

National economic indicators provide a context for understanding health-specific indicators and how change in the health sector relates to change in the economy as a whole. Table 7 presents national indicators of output and inflation.
Table 7

Selected National Economic Indicators: 1993-97.

IndicatorCalendar Year1994199419941994199519951995199519961996199619961997
1993199419951996Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
Gross Domestic Product
Billions of Dollars6,5586,9477,2657,6366,7946,9116,9877,0967,1697,2107,3017,3827,4687,6087,6767,7937,934
Billions of 1992 Chain Weighted Dollars6,3906,6116,7426,9286,5256,6006,6306,6896,7046,7096,7596,7976,8266,9266,9447,0177,102
Implicit Price Deflator (1992 = 100.0)102.6105.1107.8110.2104.1104.7105.4106.1106.9107.5108.0108.6109.4109.8110.5111.1111.7
Personal Income
Personal Income in Billions5,5195,7926,1516,4955,6165,7675,8385,9466,0536,1156,1796,2566,3596,4616,5426,6186,746
Disposable Income in Billions4,8295,0535,3565,6084,9035,0165,0985,1935,2875,3205,3805,4365,5195,5745,6455,6965,791
Prices1
Consumer Price Index, All Items144.5148.2152.4156.9146.7147.6148.9149.6150.9152.2152.9153.6155.0156.5157.4158.5159.6
 All Items Less Medical Care141.2144.7148.6152.8143.3144.1145.4146.0147.1148.4149.0149.7151.0152.5153.3154.4155.5
  Energy104.2104.6105.2110.1101.7103.5107.8105.4103.7106.5107.2103.5105.3112.0111.9111.3112.5
  Food and Beverages141.6144.9148.9153.7143.9144.1145.2146.2147.9148.7149.0150.0151.6152.8154.3156.2157.0
 Medical Care201.4211.0220.5228.2207.5209.8212.2214.7217.6219.3221.5223.4226.0227.4229.1230.4232.6
Producer Price Index,2 Finished
  Consumer Goods123.0123.3125.6129.5122.4123.0123.9123.7124.5125.7125.9126.4127.4129.3130.2131.2130.7
  Energy78.077.078.183.274.476.780.276.976.780.079.476.478.884.284.785.184.9
  Food125.6126.8129.0133.6127.1126.5126.4127.2128.3128.0129.1130.7131.1132.1134.9136.1134.4
  Finished Goods Except Food and Energy138.5139.0141.9144.3138.6138.7138.7139.8140.8141.6141.7143.7144.0144.2144.0145.0145.2
Annual Percent ChangePercent Change From the Same Period of Previous Year
Gross Domestic Product
Billions of Dollars5.05.94.65.15.46.26.35.85.54.34.54.04.25.55.15.66.2
Billions of 1992 Chain Weighted Dollars2.33.52.02.83.13.83.73.32.71.62.01.61.83.22.73.34.0
Implicit Price Deflator (1992 = 100.0)2.62.42.52.32.32.32.52.52.72.62.52.42.32.22.32.22.1
Personal Income
Personal Income in Billions4.64.96.25.64.64.85.35.17.86.05.85.25.15.75.95.86.1
Disposable Income in Billions4.44.66.04.74.24.15.15.17.86.15.54.74.44.84.94.84.9
Prices1
Consumer Price Index, All Items3.02.62.82.92.52.42.92.72.83.12.62.72.72.82.93.22.9
 All Items Less Medical Care2.72.52.72.92.42.22.72.52.73.02.52.52.72.82.93.13.0
  Energy1.10.50.64.6-0.9-1.12.31.51.92.9-0.6-1.81.65.24.47.56.8
  Food and Beverages2.12.32.83.32.31.92.72.52.73.22.62.62.52.83.64.23.5
 Medical Care6.04.84.53.55.04.74.64.84.94.64.44.13.83.73.43.12.9
Producer Price Index,2 Finished
  Consumer Goods1.10.21.93.1-0.3-1.00.91.21.72.21.62.22.32.93.43.82.6
  Energy0.3-1.21.46.5-3.4-3.51.01.13.04.3-1.0-0.72.85.26.611.57.7
  Food1.90.91.83.52.00.20.80.61.01.22.22.72.23.24.54.12.5
  Finished Goods Except Food and Energy0.90.32.11.7-0.5-0.81.01.61.62.02.22.82.31.81.60.90.8

Base Period = 1982-84, unless noted.

Formerly called the Wholesale Price Index.

Notes: Q designates quarter of year. Unlike tables 1-5 quarterly data on GDP, personal income, and disposable personal income, are seasonally adjusted at annual rates.

SOURCES: U.S. Department of Commerce, Bureau of Economic Analysis: Survey of Current Business. Washington. U.S. Government Printing Office. Monthly reports for January 1993 - March 1997; U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington. U.S. Government Printing Office. Monthly reports for January 1993 - March 1997.

Gross domestic product (GDP) measures the output of U.S. economy as the market value of goods and services produced within the geographic boundaries of the United States by U.S. or foreign citizens or companies. Constant dollar or “real” GDP removes the effects of price changes from the valuation of goods and services produced, so that the growth of real GDP reflects changes in the physical quantity of the output of the economy. In the most recent comprehensive revision of the National Income and Product Accounts the method for removing the effects of price changes was altered. The GDP estimates are now deflated using “chain-weighted” price indexes. This method replaces the previous fixed-weighted method of deflating the GDP estimates (U.S. Department of Commerce, 1996).

Prices

Consumer Price Indexes

The BLS publishes monthly information on changes in prices paid by consumers for a fixed market basket of goods and services. Tables 7, 8, and 9 present information on the CPI-U that measures changes in prices faced by 80 percent of the non-institutionalized population in the United States. (The more restrictive wage-earner CPI gauges prices faced by wage earners and clerical workers. These workers account for approximately 32 percent of the non-institutionalized population [U.S. Department of Labor, 1997b].)
Table 9

Percent Change in Medical Prices From the Same Period 1 Year Ago: 1993-97

IndicatorCalendar Year1994199419941994199519951995199519961996199619961997
1993199419951996Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
Annual Percent ChangePercent Change From the Same Period of Previous Year
Consumer Price Indexes, All Urban Consumers1
Medical Care Services26.55.25.03.75.45.15.05.25.55.25.04.54.13.83.53.23.0
 Professional Services5.14.34.43.74.34.24.14.54.74.44.44.03.83.73.53.63.6
  Physicians' Services5.64.44.53.64.84.54.24.34.54.54.64.54.23.73.33.23.0
  Dental Services5.34.84.94.74.44.54.85.45.74.94.84.34.24.64.95.15.2
 Hospital and Related Services38.45.95.04.56.75.85.75.45.35.04.84.64.74.74.64.23.8
  Hospital Room8.55.75.03.96.65.65.55.05.35.14.94.84.13.93.83.8*
  Other Inpatient Services (1986=100)7.86.15.04.96.86.35.95.75.55.04.84.55.05.05.04.4*
Outpatient Services (1986=100)9.35.84.95.16.55.45.75.75.24.94.74.85.05.75.44.4*
Medical Care Commodities3.72.91.92.92.93.02.83.02.51.71.51.82.43.13.22.92.6
 Prescription Drugs3.93.41.93.33.04.03.23.42.41.51.92.02.93.63.53.33.1
 Non-Prescription Drugs and Medical Supplies (1986=100)3.31.91.81.92.60.92.02.12.82.30.71.21.52.02.31.71.4
  Internal and Respitory Over-the-Counter Drugs3.31.50.61.93.01.30.80.91.10.30.50.61.32.11.92.41.8
  Non-Prescription Medical Equipment and Supplies3.32.73.91.71.90.14.24.45.86.11.32.51.71.82.80.60.6
Producer Price Indexes4
Industry Groupings:5
 Health Services (12/94=100)---2.2--------2.52.42.11.81.6
  Offices and Clinics of Doctors of medicine (12/93=100)--3.90.7----4.54.34.02.91.00.70.40.81.3
   Medicare Treatments (12/93=100)--4.7-3.7----4.74.74.74.7-3.7-3.7-3.7-3.70.3
   Non-Medicare Treatments (12/93=100)--3.61.8----4.54.33.62.11.91.51.62.01.6
  Hospitals (12/92=100)-3.63.52.43.83.63.63.54.03.73.13.42.72.72.51.81.2
   General Medical and Surgical Hospitals (12/92=100)-3.53.72.43.53.53.53.44.03.83.23.72.92.82.31.51.1
    Inpatient Treatments (12/92=100)-3.53.12.33.73.63.53.13.43.22.53.12.82.82.31.40.8
     Medicare Patients (12/92=100)-2.02.03.32.32.32.31.31.31.31.34.14.14.14.11.21.2
     Medicaid Patients (12/92=100)-4.62.52.24.34.75.04.54.03.41.11.62.12.62.41.7-0.9
     All Other Patients (12/92=100)-4.03.71.84.34.13.83.94.44.23.33.02.32.01.41.41.1
    Outpatient Treatments (12/92=100)4.16.22.63.43.74.44.76.66.36.06.13.32.92.21.91.6
     Medicare Patients (12/92=100)-3.14.01.72.32.63.04.64.54.84.02.71.91.31.42.32.7
     Medicaid Patients (12/92=100)-1.72.9-0.21.1-0.32.73.13.84.60.62.81.31.20.1-3.4-2.1
     All Other Patients (12/92=100)-4.46.93.03.84.34.84.87.26.76.86.93.73.42.62.41.8
 Skilled and Intermediate Care Facilities (12/94=100)---6.1--------6.16.56.25.74.7
  Public Payors (12/94=100)---6.5--------6.67.26.55.54.7
  Private Payors (12/94=100)---5.9--------5.95.86.06.04.7
 Medical Laboratories (6/94=100)---1.3------5.95.13.71.8-0.60.30.5
Commodity Groupings:
 Drugs and Pharmaceuticals4.52.52.41.83.02.62.12.31.92.22.43.12.52.01.90.82.0
  Ethical (Prescription) Preparations4.53.22.83.33.93.42.72.81.82.33.04.23.93.63.62.03.2
  Proprietary (Over-the-Counter) Preparations3.71.81.8-0.82.21.81.61.62.32.21.21.61.5-1.1-1.8-1.8-1.2
 Medical, Surgical, and Personal Aid Devices3.01.80.71.32.11.62.01.60.50.40.61.22.01.80.80.4-0.4
  Personal Aid Equipment1.76.42.74.24.36.77.47.42.60.73.24.44.36.13.82.62.6
  Medical Instruments and Equipment (6/82=100)2.10.51.31.40.80.10.80.61.11.11.61.42.01.60.81.1-1.9
  Surgical Appliances and Supplies (6/83=100)4.13.1-0.61.43.63.13.32.4-0.8-1.0-1.00.62.02.61.1-0.30.7
  Ophthalmic Goods (12/83=100)0.90.62.2-1.61.40.50.10.31.42.12.92.30.4-1.8-2.5-2.5-1.5
  Dental Equipment and Supplies (6/85=100)3.82.91.72.52.92.43.03.11.62.20.82.23.22.02.82.23.6

indicates discontinued series

Unless otherwise noted, base year is 1982-84 = 100

Includes the net cost of private health insurance, not shown separately.

The hospital services component of the CPI was revised effective January 1997. Hospital Room, Other Inpatient Services and Outpatient Services are no longer shown as separate strata of the Hospital Services Index.

Unless otherwise noted, base year is 1982 = 100. Producer price indexes are classified by industry (price changes received for the industry's out-putsold outside the industry) and commodity (price changes by similarity of end use or material composition).

Further detail for Producer Price Industry groupings, such as types of physician practices, hospital DRG groupings, etc., are available from the Bureau of Labor Statistics.

NOTES: Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: CPI Detailed Report. Washington. U.S. Government Printing Office. Monthly reports for January 1992 -March 1997; U.S. Department of Labor, Bureau of Labor Statistics: Producer Price Indexes. Washington. U.S. Government Printing Office. Monthly reports for January 1992-March 1997.

The index reflects changes in prices charged for the same quality and quantity of goods or services purchased in the base period. For most items, the base period of 1982-84 is used to define the share of consumer expenditures purchasing specific services and products. Those shares or weights remain constant in all years, even though consumption patterns of the household may change over time. This type of index is called a fixed weight or Laspeyres index. CPIs for health care goods and services depict list price changes for out-of-pocket expenditures. The CPI for medical care services also includes an indirect measure of price change for health insurance coverage purchased directly by consumers. The composite CPI for medical care weights together product-specific or service-specific CPIs in proportion to household out-of-pocket expenditures for these items. In addition, some medical care sector indexes measure changes in list or charged prices, rather than in prices actually received by providers after discounts are deducted. In several health care areas, received or transaction prices are difficult to capture, although BLS is making advances in this area. In the NHE, a combination of CPIs for selected medical care items, input price indexes for nursing homes, and the PPI for hospitals are used as measures of inflation for the health industry. The indexes are used to develop a chain-weighted price index for personal health care to depict price changes affecting the entire health care industry more accurately than does the overall CPI medical care index (Levit et. al, 1995).

Producer Price Indexes

The BLS produces monthly information on average changes in selling prices received by domestic producers for their output. These prices are presented in Tables 7, 8, and 9 as the PPI. The index is designed to measure transaction prices, and is different from the CPI, which in some cases measures list or full charge prices. The PPI is a fixed-weight or Laspeyres index, with base period weights determined by values of receipts. The base period varies among series. The PPI consists of indexes in several major classification structures, including the industry and commodity classifications that are included in the Health Care Indicators. The PPI by industry classification measures price changes received for the industry's output sold outside the industry. PPI changes for an industry are determined by price changes for products primarily made by establishments in that industry. The industry into which an establishment is classified is determined by those products accounting for the largest share of its total value of shipments. The PPI by commodity classification measures price changes of the end product (end use or material composition). The classification system for PPI commodity groups is unique to the PPI, and is divided into fifteen major commodity groupings. Although PPIs for medical commodities have existed for many years, PPIs for health service industries are relatively new. Most index series began in 1994; the index series for the composite health services industry did not begin until December 1994. However, the PPI for hospitals began in December 1992, providing enough data for a useful time series. The PPI for hospitals is a measure of transaction prices, or net prices received by the producer from out-of-pocket, Medicare, Medicaid, and private third-party payor sources. The PPI for hospitals should not be compared with the CPI for hospital and related services. Although other PPI and CPI series are somewhat comparable (for example, the PPI-Offices and Clinics of Doctors of Medicine and the CPI-Physicians' Services), the PPI and CPI for hospitals have important differences in survey scope and methodology. The PPI for hospitals measures price changes for the entire treatment path, measures net transaction price, includes Medicare and Medicaid, samples both urban and rural hospitals, and reflects total hospital revenue from all sources in its index weights. On the other hand, the CPI for hospitals measures price changes for a discrete sample of hospital services singly, measures published charges, excludes Medicare and Medicaid, samples only urban hospitals, and reflects only consumer out-of-pocket expenses and household health insurance premium payments in its index weights. These differences make a direct comparison between the PPI and CPI hospital services indexes inappropriate. The PPI for the health services industry is available by detailed industry groupings. For example, general medical and surgical hospitals consist of inpatient and outpatient treatments, which in turn consist of Medicare, Medicaid, and all other patients. These patient categories consist of more detail, such as DRG groupings for Medicare. Although most of the data used to measure PPI price changes for health services are collected through a sample, there are specific instances where data are collected from both a sample and from price changes in Federal regulation. This is the case for Medicare hospital inpatient services and Medicare offices and clinics of doctors of medicine. The producer price changes in Medicare hospital inpatient services are computed from a combination of a national sample of DRGs in hospitals, DRG relative weights from the PPS final rules published in the current and historical year, and other adjustments. The producer price changes in Medicare offices of doctors of medicine are computed from a combination of a geographic area sample of payments under the HCFA Common Procedure Coding System (HCPCS), HCPCS updates from the November 22, 1996, Federal Register, and other adjustments. Because of different methodologies, these two Medicare PPIs are not comparable with the national updates computed by HCFA and published in the Federal Register.

Input Price Indexes

In 1979, HCFA developed the Medicare hospital input price index (hospital market basket) which was designed to measure the pure price changes associated with expenditure changes for hospital services. In the early 1980s, the skilled SNF and HHA input price indexes, often referred to as market baskets, were developed to price a consistent set of goods and services over time. Also in the early 1980s, the original Medicare hospital input price index was revised for use in updating payment rates for routine costs of Medicare inpatient services. All of these indexes have played an important role in helping to set Medicare payment percent increases, and in understanding the contribution of input price increases to growing health expenditures. The input price indexes, or market baskets, are Laspeyres or fixed-weight indexes that are constructed in two steps. First, a base period is selected. For example, for the PPS hospital input price index, the base period is 1992. Cost categories, such as food, fuel, and labor, are identified and their 1992 expenditure amounts determined. The proportion or share of total expenditures included in specific spending categories is calculated. These proportions are called cost or expenditure weights. There are 26 expenditure categories in the 1992-based PPS hospital input price index. Second, a price proxy is selected to match each expenditure category. Its purpose is to measure the rate of price increases of the goods or services in that category. The price proxy index for each spending category is multiplied by the expenditure weight for the category. The sum of these products (weights multiplied by the price index) over all cost categories yields the composite input price index for any given time period, usually a fiscal year or a calendar year. The percent change in the input price index is an estimate of price change over time for a fixed quantity of goods and services purchased by a provider. The input price indexes are estimated on a historical basis and forecasted out several years. The HCFA-chosen price proxies are forecasted under contract with Data Resources, Inc./McGraw Hill (DRI). Following every calendar year quarter, in March, June, September, and December, DRI updates its macroeconomic forecasts of wages and prices based on updated historical information and revised forecast assumptions. Some of the data in Tables 10 through 12 are forecasted and are expected to change as more recent historical data become available and subsequent quarterly forecasts are revised. The methodology and price proxy definitions used in the input price indexes are described in the Federal Register notices that accompany the revisions of the PPS, HHA, and SNF cost limits. A description of the current structure of the PPS input price index and the most recent PPS update for payment rates was published in the August 29, 1997, Federal Register. The latest HHA regulatory input price index was published in the July 1, 1996, Federal Register, and the latest SNF input price index was published in the October 7, 1992, Federal Register (also see the June 6, 1994, Federal Register). Periodically, the input price indexes are revised to a new base year so that cost weights will reflect changes in the mix of goods and services that are purchased. Each revision allows for new base weights, a new base year, and changes to certain price variables used for price proxies. Each input price index is presented in a table with both an index level and a 4-quarter moving-average percent change. The hospital input price index for PPS is in Table 10, the SNF input price index is in Table 11, and the HHA input price index is in Table 12.

Medicare Economic Index

In 1972, Congress mandated the development of the MEI to measure the changes in costs of physicians' time and operating expenses. The input price change measured by the MEI is considered in connection with the update factor for the Medicare Part B physician fee schedule under the Resource-Based Relative Value Scale (RBRVS, November 22, 1996, Federal Register), or is used as an advisory indicator by Congress in updating the fee schedule. The MEI is a fixed-weighted sum of annual price changes for various inputs needed to produce physicians' services with an offset for productivity increases. Like a traditional Laspeyres index, the MEI is constructed in two steps. First, a base period is selected (1989 for the MEI), cost categories are identified, and the 1989 expenditure shares by cost category are determined. Second, price proxies are selected to match each relative expenditure category. These proxies are weighted by the category weight determined from expenditure amounts, and summed to produce the composite MEI. Unlike a traditional Laspeyres index, the compensation portion of the MEI is adjusted for productivity so both economy-wide productivity and physician practice productivity are not both included in the update, resulting in a double counting of productivity. Forecasts of the MEI are made periodically throughout the fiscal year by DRI/McGraw-Hill for HCFA using several different sets of economic assumptions. DRI/McGraw-Hill produces 4 main forecasts of the MEI: a Presidential budget forecast in December and the Mid-session Review in June based on assumptions for the Federal budget exercises, the Medicare Trustees Report forecast in February based on assumptions by the Medicare Trustees, and the Medicare Premium Promulgation forecast in August based on baseline assumptions by DRI/McGraw-Hill. DRI/McGraw-Hill also produces forecasts of the MEI using their own economic assumptions forecast. The forecasts based on DRI/McGraw-Hill assumptions are presented in “Health Care Indicators”. Much of the forecasted data changes as more recent historical data becomes available and the assumptions change. The methodology, weights, and price proxy definitions used in the MEI are described in the November 25, 1992, Federal Register. The MEI data are presented in Table 13 as index levels and 4-quarter moving average percent changes.
  6 in total

1.  Medicare program; physician fee schedule update for calendar year 1997 and physician volume performance standard rates of increase for Federal fiscal year 1997--HCFA. Final notice.

Authors: 
Journal:  Fed Regist       Date:  1996-11-22

2.  Medicare program; changes to the hospital inpatient prospective payment systems and fiscal year 1998 rates--HCFA. Final rule with comment period.

Authors: 
Journal:  Fed Regist       Date:  1997-08-29

3.  Medicare program: schedule of limits for skilled nursing facility inpatient routine service costs--HCFA. Final notice with comment period.

Authors: 
Journal:  Fed Regist       Date:  1994-01-06

4.  Medicare program; schedule of limits for skilled nursing facility inpatient routine service costs--HCFA. Final notice with comment period.

Authors: 
Journal:  Fed Regist       Date:  1992-10-07

5.  Medicare program; revision of the Medicare Economic Index--HCFA. Final rule.

Authors: 
Journal:  Fed Regist       Date:  1992-11-25

6.  National health expenditures, 1996.

Authors:  K R Levit; H C Lazenby; B R Braden; C A Cowan; A L Sensenig; P A McDonnell; J M Stiller; D K Won; A B Martin; M L Sivarajan; C S Donham; A M Long; M W Stewart
Journal:  Health Care Financ Rev       Date:  1997
  6 in total

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