Literature DB >> 10309366

National health expenditures: short-term outlook and long-term projections.

M S Freeland, C E Schendler.   

Abstract

This paper presents projections of national health expenditures by type of expenditure and source of funds for 1981, 1985, and 1990. Rapid growth in national health expenditures is projected to continue through 1990. National health expenditures increased 400 percent between 1965 and 1979, reaching $212 billion in 1979. As a proportion of the Gross National Product (GNP), health expenditures rose from 6.1 percent to 9.0 percent between 1965 and 1979. They are expected to continue to rise, reaching 10.8 percent by 1990. This study projects that, under current legislation, national health expenditures will research $279 billion in 1981, $462 billion in 1985, and $821 billion in 1990. Sources of payments for these expenditures are shifting. From 1965 to 1979, the percentage of total health expenditures financed by public funds increased 17 percentage points--from 26 to 43 percent. The Federal share of public funds during this same period grew rapidly, from 51 percent in 1965 to 67 percent in 1979. This study projects that in 1985 approximately 45 percent of total health spending will be financed from public funds, of which 68 percent will be paid for by the Federal government. Public funds will account for 46 percent of total national health expenditure by 1990.

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Year:  1981        PMID： 10309366      PMCID： PMC4191213     

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


National health expenditures grew at an average annual rate of 12.3 percent from 1965 to 1979, compared to a 9.2 percent growth rate for the GNP (Table 1). As health expenditures continue to consume a greater proportion of the GNP, national attention is focusing on finding ways to slow this growth. Strategies advanced to slow the rate of increase of health care expenditures include: pro-competition approaches, cost containment, area-wide budgeting, and voluntary efforts by the health care industry.
Table 1

Historical Estimates and Projections of Gross National Product, Real Gross National Product, Inflation, and Population, Selected Years, 1929-1990

Calendar YearGross National1 Product (billions)Real Gross National Product1 (1972 dollars) (billions)Implicit Price Deflator,1 Gross National Product (1972= 100.00)Consumer Price Index2—All Items, Wage Earners (1967= 100.00)Total Population3 (Thousands, July 1)
Historical Estimates
1929$103.4$314.632.951.3123,731
1940100.0343.329.142.0134,591
1950286.2533.553.672.1154,675
1955399.3654.861.080.2168,385
1960506.0736.868.788.7183,831
1965688.1925.974.394.5197,784
1966753.0981.076.897.2200,059
1967796.31,007.779.0100.0202,243
1968868.51,051.882.6104.2204,273
1969935.51,078.886.7109.8206,281
1970982.41,075.391.4116.3208,402
19711,063.41,107.596.0121.3210,546
19721,171.11,171.1100.0125.3212,338
19731,306.61,235.0105.8133.1213,941
19741,412.91,217.8116.0147.7215,696
19751,528.81,202.3127.2161.2217,452
19761,702.21,273.0133.7170.5219.318
19771,899.51,340.5141.7181.5221,104
19782,127.61,399.3152.1195.4223,107
19792,368.81,431.6165.5217.7225,041
Projections
19812,864.31,432.7200.0272.7229,110
19854,653.21,686.5276.0376.6237,470
19907,588.71,970.0385.2525.8248,104
Average Annual Percent Increases for Selected Periods
1950-556.9%4.2%2.6%2.2%1.7%
1955-604.92.42.42.01.8
1960-656.34.71.61.31.5
1965-707.43.04.24.31.1
1970-759.22.36.86.80.9
1975-7911.64.56.87.80.9
1979-8110.00.09.911.90.9
1981-8512.94.28.48.40.9
1985-9010.33.26.96.90.9
1965-799.23.25.96.10.9
1969-799.72.96.77.10.9
1979-8511.92.88.99.60.9
1979-90411.22.98.08.30.9

Historical estimates are reported in Economic Report of the President, January 1980. Projections are from the Board of Trustees, Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, 1980 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, June 17,1980. Alternative II (intermediate) economic assumptions were used.

The CPI is shown for comparison only. The implicit price deflator for GNP is used in the projection process to reflect cost pressures external to the health care industry.

Historical estimates of population are based on data for the Bureau of Census. Data for some years are unpublished. The estimates are reported in Robert M. Gibson, “National Health Expenditures, 1979,” Health Care Financing Review, Summer 1980, p. 16. Projected growth rates in population are from Office of the Actuary, Social Security Administration, United States Population Projections for OASDI Cost Estimates 1980, Actuarial Study No. 82, U.S. Department of Health and Human Services, June 1980. Alternative II (intermediate) assumptions for population growth were used.

Similar rates of growth in prices and the GNP have been projected by private consulting firms. For example, Data Resources, Inc. has projected that the GNP deflator will rise at an average annual rate of 8.3 percent and GNP will rise at an average annual rate of 11.0 percent between 1979 and 1990. See Data Resources, Inc. U.S. Long-Term Review, Fall 1980 (Forecast TRENDLONG2005)

The projection model outlined in this paper provides a framework which includes economic, actuarial, demographic, and judgmental factors. We developed a relatively simple and intuitive model, which is not econometric, to project trends and relationships for each type of expenditure such as: hospital care, physicians' services, and nursing home care; and for the sources of payment for these expenditures (for example, out-of-pocket expenses, the Federal government, and State and local governments) (Gibson, 1980).

Projection Assumptions

We based these projections on a set of assumptions relating to the medical care sector and to the economy as a whole. The fundamental assumption is that historical trends and relationships will continue into the future, (which includes 1980, as complete information is not yet available for that year). Further, it is assumed that: The health care delivery system will continue to evolve along patterns followed during the historical period (1965 through 1979). No Federal mandatory cost containment program will be in effect. No major, new, publicly-financed program of medical care, such as national health insurance, will be introduced. No major technological breakthrough in treatment of acute and chronic illnesses will occur that would significantly alter evolving patterns of morbidity and mortality. Use of medical care, including intensity of services per case, will continue to grow in accordance with historical relationships and trends. Medical care prices will vary with the implicit price deflator for the GNP, according to relationships established in the period studied. Population will grow as projected by the Office of the Actuary, Social Security Administration (Table 1 and Table 2).
Table 2

Proportions of the Total Population Aged 65+ and 75+, Selected Years, 1960-1990

YearProportion Aged 65+Proportion Aged 75+
Historical
19609.1%3.1%
19659.33.4
19709.73.8
197510.44.1
197911.04.3
Projections
198111.34.5
198511.94.9
199012.65.4

Office of the Actuary, Social Security Administration, United States Population Projections for OASDI Cost Estimates, 1980, Actuarial Study No. 82, U.S. Department of Health and Human Services, June 1980. Alternative II (intermediate) assumptions for population growth were used.

Health manpower will increase as projected by the Bureau of Health Professions (Table 3).
Table 3

Historical Estimates and Projections of the Number of Active Physicians and Dentists, Selected Years, 1950-1990

YearNumber of Active Physicians (as of Dec. 31)Number of Active Dentists (as of Dec. 31)
TotalM.D.sD.O.s
Historical
1950219,897208,99710,90079,190
1955240,153228,55311,60084,370
1960259,417247,25712,16090,120
1965289,824278,72411,100295,990
1970326,503314,16312,340102,220
1975384,160370,10014,060112,020
1979435,500419,10016,400123,500
Projections
1981461,400443,40018,000130,100
1985516,000494,00022,000142,500
1990582,800554,70028,100157,000
Average Annual Percent Increases for Selected Periods
1950-551.81.81.31.3
1955-601.61.60.91.3
1960-652.22.4(-1.8)21.3
1965-702.42.42.11.3
1970-753.33.32.61,8
1975-793.23.23.92.5
1979-812.92.94.82.6
1981-852.82.75.12.3
1985-902.52.35.02.0
1965-793.03.02.81.8
1979-852.92.85.02.4
1979-902.72.65.02.2

Division of Health Professions Analysis, Bureau of Health Professions, Health Resources Administration, Projections of Supply of Manpower in Selected Health Occupations: 1950-1990; U.S. Department of Health and Human Services, August 1980; and Division of Health Profession Analysis, Bureau of Health Professions, Health Resources Administration, “Projections of Active Physicians and Dentists, 1976-1990,” U.S. Department of Health and Human Services, unpublished, October 14, 1980. Some historical estimates are unpublished.

The decline in the number of active D.O.s between 1960 and 1965 reflects the granting of approximately 2,400 M.D. degrees to osteopathic physicians who had graduated from the University of California College of Medicine at Irvine. These physicians are included with active M.D.s, beginning in 1962.

The implicit price deflator for the Gross National Product and the GNP will grow as projected in Alternative II (intermediate) economic assumptions incorporated in the 1980 Annual Report of the Board of Trustees of the Federal Old Age and Survivors Insurance and Disability Insurance Trust Funds (Table 1). Benefit outlays for Medicare and total community hospital inpatient expenses will grow as projected in the 1980 Annual Report of the Board of Trustees of the Federal Hospital Insurance Trust Fund and the 1980 Annual Report of the Federal Supplementary Medical Insurance Trust Fund. (See Technical Note comment on community hospital inpatient care.) It is difficult to project how a regulated sector[1] such as the health care industry will evolve during a decade when competing forces are, at the same time, tending toward both deregulation and increased regulation and planning (American Medical News, 1980). The projection assumptions relate to only one scenario, the evolution of current trends and relationships. Projections could also be made for alternative scenarios, such as the effects of: significant deregulation of the health care industry; the advent of national health insurance (Trapnell, 1976); cost containment; and area-wide budgeting. However, a reasonable and useful baseline assumption is that historical trends and relationships will continue. The rationale for this assumption is developed later in this paper. This baseline projection is given, instead of a range of projections, for two reasons. First, a range of projections can be difficult to present in a manner that is not confusing. Second, a range of projections could imply that the projections are less subject to error than they really are, by suggesting that actual expenditures will be within the range. A baseline projection does not imply precision. Inherent difficuties in making short run forecasts and long-term projections of national health expenditures should not be underestimated.

Methodology

The projection model uses as givens the projections included in the 1980 Board of Trustees Federal Insurance Funds report (population, implicit price deflator for GNP, Gross National Product, Medicare outlays by type of service and community hospital inpatient expenses and use). In addition, we took the health manpower projections made by the Bureau of Health Professions (Health Resources Administration) as givens and incorporated them into our projections of national health expenditures. We developed all other assumptions and projections based on historical time-series data and on special condition assumptions applicable for particular sectors of the health care industry. The projection model has three components: (1) a five-factor module for specific types of expenditures[2] which reflects the implicit underlying interplay between demand factors (such as deductibles, and real income) and supply-side factors (such as fee-for-service reimbursement systems);[3] (2) supply variables (for example, the number of physicians and the number of nursing home beds), and (3) a channel of finance module for six sources of funds. Interaction and consistency among these three components are essential features of the projection process. We produced a matrix which provides sources of funds by type of expenditures. Expenditures and sources of funds for each type of expenditure are aggregated to produce total national health expenditures. We used an equation with five factors to project types of expenditures. The five factors are: total population; use per capita (visits, patient days); the GNP deflator; medical care prices relative to the GNP deflator; and a residual category, real expense per unit of service. This last factor reflects use per unit of service. (See the Technical Note.)

Five-Factor Module for Projecting Expenditure Types

The Five-Factor Module for expenditure types can be expressed as an equation that is sequentially solved for each year, 1980 to 1990: Eit is the projected level of health expenditure of type “i” in year “t” (for example, the level of expenditures for physicians' services in 1980, the first year of projected values). Eit-1 is the level of health expenditure of type “i” for year “t-1.” This is an historical value for calendar 1979 and a projected value thereafter. Historical expenditures are from the Health Care Financing Administration. (See Technical Note.) PO̊Pt is the projected annual percent change, divided by 100, of total population for year “t” compared to year “t-1.” For example, population was projected to grow from 225,041 (in thousands) in 1979 to 227,066 (in thousands) in 1980, an increase of 0.90 percent. (227,066/225,041 = 1.009). POP1980 is .009 and the first term in parentheses of the five-factor equation for E1980 is 1.009. Shifts in the demographic mix (for example, toward more aged persons) that affect utilization growth rates are factored into the next variable, growth in use per capita. is the projected annual percent change, divided by 100, of per capita use of medical service type “i” in year “t,” where use is measured by patient visits per capita or patient days per capita. PG̊NPt is the projected annual percent change, divided by 100, of the implicit price deflator for GNP for year “t.” Growth in the GNP deflator reflects economy-wide cost pressures that are external to the health care industry. is the projected annual percent change, divided by 100, of medical care price for service type “i” in year “t” deflated by the implicit price deflator for GNP for year “t.” This measures change in medical care prices relative to overall prices in the economy. It captures the implicit underlying interplay of (1) demand-pull inflationary forces (such as changes in deductibles and coinsurance); (2) cost pressures specific to the industry; (3) supply-side pricing behavior; (4) supply-side productivity behavior, and so on. R̊Uit is the projected annual percent change, divided by 100, of the residual category of “RU” for service type “i” for year “t.” This factor can be interpreted as the percent changes in real expenditures per unit of service, such as per physician visit or per hospital day. This factor includes changes in the number of diagnostic and therapeutic procedures provided per visit or inpatient day, and changes in the mix of services. Changes in regulations that impact on the quantity and quality of resources used to produce a visit or patient day are also included in this category. For example, growth in hours per patient day used for administrative services and for medical records is contained in this category. Like all residuals, it is an amalgamation of effects that cannot be individually measured or broken down into separate parts. Since the measures of price used are imperfect, this category should be interpreted with caution. Growth in real expense per unit of service appears to be sensitive to demand factors (such as deductibles, coinsurance rates, real income, and greater faith in the efficacy of new and additional diagnostic and therapeutic procedures and services). Growth in real expense per unit of service also appears to be sensitive to supply-side factors, such as our fee-for-service and retrospective cost-based reimbursement systems, which reward providers who supply larger quantities and more costly service with more revenues. For a chart presentation of how the five factors accounted for growth in expenditures for physicians' services for the last decade, see Figure 1B.
Figure 1

Factors Accounting for Growth in Expenditures for Selected Services 1969-1979

While the general model accounts for five factors, due to irrelevance or lack of data, models for some types of expenditure have four factors. In these instances, growth rates for use per capita and real expense per unit of service are combined into one residual category, growth in real expenditures per capita (see Technical Note). The combined effects of the five factors are multiplied to obtain a composite annual rate of expenditure growth for each type of expenditure for each year, 1980 to 1990.

Projection of Growth Rates for the Five Factor Module

The numerous data sources that were used to factor individual types of expenditures into the three components specific to the health sector (use per capita, medical care prices relative to overall prices in the economy, and real expenses per unit of service) are listed in the Technical Note at the end of this paper. Growth rates from 1980 to 1990 for these factors are based on historical relationships and trends. We studied annual percent changes and average annual growth rates for selected sub-periods between 1965 and 1979. We considered certain sub-periods irrelevant, because they were affected by unique forces not expected to be repeated. For example, the initial impact of Medicare on prices and use of services was not considered relevant in making baseline expenditure projections for 1980 to 1990. Other sub-periods were combined when one offset the other. The Economic Stabilization Program (ESP) period, for example (which covered August 1971 through April 1974), is combined with the post-ESP bulge period to average a possible offset related to prices and use. To determine the growth rates of medical care prices relative to the GNP deflator, we paid particular attention to the growth in this variable during the initial implementation of Medicare, the Economic Stabilization Program (ESP), the post-ESP bulge, and the current “Voluntary Effort” period. We also noted atypical movements in the GNP deflator since during periods of high growth in energy prices, interest rates, and commodity prices, the relationship of medical care prices to the GNP deflator usually shifts, with medical care prices growing at relatively slower rates. Growth rates in use per capita and real expense per unit of service may be influenced by shifts in the age-sex distribution of the population (Feldstein, 1971c; Fuchs and Kramer, 1972), and by changes in the proportion of expenses funded by third parties, health manpower, real income, and regulation of the health sector. When projected changes in these determinants deviated significantly from historical trends, we reflected such changes in the projected growth rates for use per capita and real expense per unit of service. We also examined growth rates for use per capita and real expenses per unit of service together, since one may offset the other. Years of abnormally high growth in visits per capita for example, may be associated with years of abnormally low growth in real expense per visit, and vice-versa. Taking the above considerations into account, we projected year-to-year growth rates from 1980 to 1990 for medical care prices relative to the implicit price deflator for GNP, use per capita, and real expenses per unit of service. These growth rates, combined with projections of growth rates for total population and the implicit price deflator for GNP, yielded yearly expenditure growth rates for each type of service from 1980 to 1990. The projected levels of expenditures for each year and each type of expenditure were calculated. We then summed the projections for each expenditure type, which resulted in the projected yearly total of national health expenditures.

Projection of Selected Supply Variables

We projected selected supply variables simultaneously with the projection process just discussed (the five-factor projection module). In some cases supply projections were taken from specialists in those areas (see Technical Note). Projections of the number of active M.D.s, Doctors of Osteopathy, (DOs), and dentists are obtained from the Bureau of Health Professions within the Department of Health and Human Services. Projections of non-Federal office-based M.D.s, DOs, and dentists are then made by the Health Care Financing Administration based on historical relationships between active physicians and dentists and non-Federal office-based practitioners. Revenues and real output per non-Federal office-based physician and dentist are projected simultaneously with the five-factor methods of projecting expenditures for services of physicians and dentists. Growth in the number of visits, real expenditures per visit, and medical care prices relative to the GNP deflator are iteratively adjusted until reasonableness based on historical trends and relationships is obtained for both the five-factor module and the revenues and real output per physician and dentist sectors.[4] The Health Care Financing Administration projects the number of community hospital beds, Federal hospital beds, and nursing home beds. The number of beds and occupancy rates are projected simultaneously with patient days to reflect judgments relating to the interplay of patient demand (involving such factors as: demographics, insurance, and real income), regulations pertaining to new construction, credit cost, and credit availability. Expenditures for medical facilities construction are projected in nominal and real terms and are related to the growth in the number of community hospital, Federal hospital, and nursing home beds (see Technical Note).

Projection of Source of Funds

For each type of expenditure, the Channel of Finance Module projects six sources of funds: 1) direct or out-of-pocket payments, 2) private health insurance, 3) spending by philanthropic organizations, industrial in-plant health services (for example an on-site nurse), and privately financed construction, 4) Medicare, 5) other Federal, and 6) State and local (Gibson, 1980).[5] Medicare actuaries' projections of Medicare benefit outlays used the same assumptions for overall inflation, GNP, and so forth (Tables 1 and 2) that were used for national health expenditures. We based projections for all other sources of funds on historical trends. We asked this question: What proportion of each expenditure type was attributable to a particular source of funds? Trends in these proportions were projected from 1980 to 1990. In each year for which projections were made, the sum of the proportions for all sources for each type of expenditure was constrained to equal 100 percent. Yearly changes in proportions preserved historical trends. We adjusted figures derived from the Channel of Finance and the Five-Factor Modules for consistency and reasonableness.

Projected Trends

The remainder of the article reports detailed projections of national health expenditures focusing first on short-term and long-term economic outlooks for the U.S. economy; second on trends in aggregate national health expenditures and sources of funds, accompanied by commentary on factors influencing growth; and third on projections of individual types of expenditure and sources of funds.

Short-Term Economic Outlook for the U.S. Economy, 1979-1981

The short-term outlook for the economy for the period 1979 to 1981 can be characterized as no real growth and high inflation (Table 1). The Trustees' Report indicates that inflation, as measured by the implicit price deflator for the GNP, will rise at an average annual rate of 9.9 percent, in contrast to an 11.9 percent increase for the Consumer Price Index for All Items (CPIW). The Trustees' Report also indicates that nominal GNP will rise at an average annual rate of 10 percent per year and population will rise at an average annual rate of slightly less than 1 percent per year.

Long-Term Economic Outlook for the U.S. Economy, 1981-1990

For the period 1981 to 1985, the Trustees' Report projects that the GNP will grow at an average annual rate of 12.9 percent (Table 1) with real GNP averaging 4.2 percent and the implicit price deflator 8.4 percent. For the period 1985 to 1990, the Trustees' Report expects that the rate of inflation (GNP deflator) will slow to an average annual rate of 6.9 percent. The Trustees' Report also projects that growth in real GNP will slow to 3.2 percent. For the entire projection period of 1979 to 1990, the Trustees' Report projects the GNP deflator will escalate at an average annual rate of 8.0 percent, real GNP at 2.9 percent, and nominal GNP at 11.2 percent. During the last decade (1969 to 1979) the GNP deflator increased at an average annual rate of 6.7 percent; real GNP at a 2.9 percent rate; and nominal GNP at a 9.7 percent rate. As in the historical period (1965 to 1979) population will continue growth at 0.9 percent per year (Table 1). Important shifts are taking place in the demographic mix of the population (Easterlin, 1978; Office of the Actuary, 1980) which affect health expenditure growth (Fisher, 1980). The aged population, especially persons age 75 and over, use health care services with greater frequency than the rest of the population. From 1979 to 1990 the proportion of the population age 65 and over will rise from 11.0 to 12.6 percent, and the proportion of persons age 75 and over will rise from 4.3 percent to 5.4 percent (Table 2).

Projected Trends for Total Health Expenditures and Sources of Funds

Expenditures for health care rose from $42 billion in 1965 to $212 billion in 1979, an average annual rate of growth of 12.3 percent. Projected outlays (Table 6 and Figure 2) are:
Table 6

Aggregate and Per Capita National Health Expenditures, by Source of Funds and Percent of Gross National Product, Selected Calendar Years, 1929-1990

YearGross National Product (billions)Health Expenditures
TotalPrivatePublic
Amount (billions)Per Capita3Percent of GNPAmount (billions)Percent of TotalTotalFederalState and Local
Amount (billions)Percent of TotalAmount (billions)Percent of TotalAmount (billions)Percent of Total
Historical1
1929$103.4$3.6$29.493.5%$3.286.4%$0.513.6%N.A.N.A.N.A.N.A.
1940100.04.029.624.03.279.70.820.3N.A.N.A.N.A.N.A.
1950286.212.781.864.49.272.83.427.21.612.81.814.4
1955399.317.7105.384.413.274.34.625.72.011.32.614.4
1960506.026.9146.305.320.375.36.624.73.011.23.613.5
1965688.142.0212.326.131.073.911.026.15.613.45.312.7
1966753.046.4231.886.232.870.713.629.37.415.96.213.4
1967796.351.9256.816.532.963.419.141.211.925.67.115.3
1968868.558.5286.176.736.362.122.237.914.124.18.013.7
1969935.566.0319.897.141.162.324.937.716.124.48.913.5
1970982.474.9359.417.647.162.927.837.117.623.510.213.6
19711,063.483.1394.747.851.461.931.738.120.324.411.413.7
19721,171.193.5440.348.058.162.135.437.922.824.412.613.5
19731,306.5103.0481.657.963.761.839.438.225.124.414.213.8
19741,412.9116.3539.118.269.159.547.240.630.526.216.714.4
19751,528.8132.1607.588.675.857.456.342.637.128.119.214.6
19761,702.2148.9678.798.785.757.563.242.542.628.620.613.9
19771,899.5169.9768.308.999.358.470.641.647.427.923.213.7
19782,127.6188.6845.538.9108.057.280.742.853.928.626.814.2
19792,368.8212.2942.949.0120.856.991.443.160.928.730.514.4
Projections
19812,864.32278.51,216.009.7157.756.6120.843.480.729.040.114.3
19854,653.22462.21,946.009.9255.753.3206.644.7139.730.266.814.5
19907,588.72821.03,309.0010.8440.053.6381.046.4262.532.0118.514.4
Average Annual Percent Increases for Selected Periods
1950-553.56.95.2--7.5--6.2--4.6--7.6--
1955-608.38.76.8--9.0--7.5--8.4--6.7--
1960-656.39.37.7--8.8--10.8--13.3--8.0--
1965-707.412.311.1--8.7--20.4--25.7--14.0--
1970-759.212.011.1--10.0--15.2--16.1--13.5--
1975-7911.612.611.6--12.4--12.9--13.2--12.3--
1979-8110.014.613.5--14.4--15.0--15.1--14.7--
1981-8512.913.512.5--13.0--14.4--14.7--13.7--
1985-9010.312.211.2--11.6--13.9--13.4--12.1--
1965-799.212,311.2--10.2--16.3--18.6--13.2--
1969-799.712.411.4--11.4--13.9--14.2--13.1--
1979-8511.913.912.8--13.5--14.6--14.8--14.0--
1979-9011.213.112.1--12.6--13.9--14.2--13.1--

Robert M. Gibson, “National Health Expenditures, 1979” Health Care Financing Review, Summer 1980, p. 16. Data for selected years are unpublished.

The Board of Trustees, Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, 1980 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, June 17,1980. Alternative II (intermediate) economic assumptions were used.

Per Capita amounts in projections are rounded to the nearest dollar.

Figure 2

Total National Health Expenditures Selected Years 1950 to 1990

$279 billion by 1981, an average annual rate of increase of 14.6 percent over 1979, $1,215 per capita; $462 billion by 1985, an average annual rate of increase of 13.5 percent over 1981, $1,950 per capita; $821 billion by 1990, an average annual rate of increase of 12.2 percent over 1985, $3,300 per capita. This growth continues the historical trend in which health spending has doubled every six years. These projected increases in health care spending are expected to exceed growth rates in the Gross National Products (GNP). Therefore, health expenditures as a share of the GNP will increase. By 1981, the health care sectors share of the GNP is projected to increase to 9.7 percent.[6] The zero growth in real GNP and fast growth in health care spending (Health Care Financing Trends, Fall 1980; Modern Health Care, 1980; Waldholz, 1980) account for this increase. Due to extensive third-party payments for health care and the necessary nature of such care, growth in aggregate health care expenditure is relatively insulated from short-term fluctuations in real GNP. Spending for health care is expected to rise faster in the projection period, 1979-1990 (average annual rate of 13.1 percent) than in the post-Medicare historical period 1969-1979 (average annual rate of 12.3 percent). The projected average annual rate of inflation (GNP deflator) for 1979-1990 is 8.0 compared to 6.7 percent average annual rate for the period 1969-1979. In real terms we project that national health expenditures will rise at slower rates than during the last decade (1969-1979). The sources of funds to finance national health expenditures have shifted over time. In 1950 private sources funded 73 percent of national health expenditures, the Federal government financed 13 percent, and State and local governments financed 14 percent (Table 6 and Figure 3). These proportions did not greatly change from 1950 to 1965. The Federal Medicare Program and the Federal-State and local Medicaid program shifted the burden of financing to public funding. In 1968, the Federal government financed 24 percent of national health expenditures; State and local governments financed 14 percent; and the private sector financed 62 percent. State and local governments have consistently financed 13-14 percent of national health expenditures for the period 1950 to 1979 (Table 6). By 1979, the Federal government financed 29 percent of national health expenditures and the private sector financed 57 percent. Assuming present trends continue, we project that the Federal government will finance 32 percent of national expenditures in 1990; the private sector, 54 percent; and State and local governments, 14 percent (Table 6).
Figure 3

Percent Distribution of Total National Health Expenditures by Source of Funds for Selected Years, 1950 to 1979

Federal outlays for national health expenditures, which were $1.6 billion in 1950, increased to $5.6 billion in 1965 and to $60.9 billion in 1979 (Table 6). Federal expenditures increased at an average annual rate of 18.6 percent from 1965 to 1979 (Table 6). During this same period, State and local expenditures increased at an average annual rate of 13.3 percent and private spending, 10.2 percent. The near-term outlook is for Federal expenditures to rise to $80.7 billion in 1981, up from $60.9 billion in 1979. We project that Federal expenditures will reach $140 billion by 1985 and $263 billion by 1990. We project that from 1979 to 1990 Federal outlays for national health expenditures will increase an average annual rate of 14.2 percent, the same rate as for the period 1969-1979, but considerably lower than the rate for 1965-1979 (Table 6). We project that State and local outlays will be $40 billion, $67 billion, and $119 billion in 1981, 1985, and 1990 respectively. The average annual rate of growth of State and local financed national health expenditures for the period 1979 to 1990 will be 13.1 percent, the same rate as for the period 1969-1979. In 1950, funding of health expenditures accounted for 4.0 percent of total Federal expenditures (Figure 4A). This percent dropped during the late 1950's and early 1960's. By 1965, health expenditures comprised 4.5 percent of total Federal expenditures. This ratio increased to 8.6 percent in 1970, 10.4 percent in 1975, and 12.0 percent in 1979 (Figure 4A).
Figure 4

Health Care Expenditures as a Percent of Government Expenditures for Selected Years, 1950 to 1979

State and local expenditures for health (net of Federal transfers) as a proportion of total State and local government expenditures have been relatively stable from 1950 to 1979 (Figure 4B) ranging from a low of 7.1 percent in 1965 to a high of 9.2 percent in 1979.

General Factors Influencing Growth in Aggregate National Health Expenditure

Factors contributing to the rapid growth in national health expenditures are numerous and interrelated. The interplay of demand incentives and supply incentives contribute to the growth in specific types of medical expenditures. Two factors are particularly noteworthy; 1) a demand-side factor, the role of third-party payments in increasing consumer demand for services; and 2) a supply-side factor, the fee-for-service and cost-based reimbursement systems which lack incentives to provide medical care in the least expensive manner. Studies correlate increases in medical care prices and expenditures not only to increased insurance coverage, but also to the level of such coverage (American Medical Association, 1978; Newhouse, 1978). As we approach the point where 100 percent of the consumers cost is paid for by third parties, providers and consumers of medical care appear to increasingly treat medical care as a free service at the time of decision-making. For example, the hospital sector has a proportion paid out of pocket that has remained at approximately 9 percent, from 1968 through 1979, while hospital expenditures during this period have increased at an average annual rate of almost 14 percent.[7] One of the factors contributing to the growth in insurance coverage is the provision of tax subsidies for health insurance (Congressional Budget Office, 1980b; Feldstein and Friedman, 1977; Greenspan and Vogel, 1980). These subsidies, that is, the exclusion of employer contributions to employee health insurance plans from taxable income and the deductibility of health insurance premiums, provide incentives to purchase more insurance than would otherwise be the case. The additional insurance then encourages further use of medical care. The third-party reimbursement systems themselves incorporate incentives to increase costs.[8] Retrospective cost-based reimbursement for hospitals and fee-for-service reimbursement for physicians reward providers who supply larger quantities and more costly services with more revenues. An incentive is therefore provided to adopt new diagnostic and therapeutic procedures and techniques (product-innovative technologies) rather than to adopt new processses to more efficiently produce existing procedures and techniques (process-innovative technologies).[9] It has been alleged: that productivity levels in the health services sector are lower than in the overall economy; that the rate of increase in productivity is slower than in the private sector; and that significant increases can be made in current productivity levels.[10] Mushkin, suggest that Baumol's model of unbalanced economic growth (1967) may have relevance for the health services sector. It can be paraphrased as follows: If productivity or output per manhour increases faster in the non-health sector than in the health sector, and wages increase at the same rate in both sectors, then unit costs in the health sector must increase faster than in the non-health sector. Fragmentary evidence on wages, prices, and productivity is consistent with such an application of Baumol's model. Between 1972 and 1979,[11] wages increased 67 percent in both the health services sector and the total private economy (Bureau of Labor Statistics. Employment and Earnings). In this same period, the medical care services component of the Consumer Price Index (CPI) rose 19 percent faster than the CPI for all items less medical care.[12] Relatively high price increases in the health field, combined with an inelastic demand for medical care services (Newhouse and Phelps, 1976), contributed to the increase in expenditures for health care. Another hypothesis relating to increasing health care expenditures is that physicians may be able to induce some demand for their service.[13] The patient' s dependence upon the physician for technical decisions and the existence of third-party payments may provide the means for physicians to raise fees and increase services. According to the physician-induced demand and target-income models, increases in the number of physicians are associated with increases in expenditures for their services. This relationship becomes more important when the interaction of physicians' services and other related health services is noted (Blumberg, 1979; Pauly and Redisch, 1973; Redisch, 1979). Blumberg estimates that the physician influences approximately 70 percent of all personal health care expenditures. Thus, according to this hypothesis, the number of physicians is correlated not only with expenditures for physicians' services, but also with expenditures for hospital care, other professional services, drugs, and so forth. Between 1965 and 1979, the number of active physicians increased at an average annual rate of 3.0 percent, triple the average annual rate for the population growth of 0.9 percent (Table 3). For the period 1979 to 1990, the Bureau of Health Professions projects that the number of active physicians will increase at an average annual rate of 2.7 percent, compared to a population growth rate of 0.9 percent (Table 3). This increase in the number of physicians is likely to be associated with increases in per capita and aggregate medical expenditures, especially for services significantly covered by third-party payments. A last theory is that some services once provided for free by household members are now provided by health professionals (Fuchs, 1979). This factor contributes to growth in the health sector and is of particular importance for one of the fastest growing services, long-term care (Chiswick, 1976). One factor that contributes to this shift in providing services is the increasing proportion of females 16 years of age and over who are in the labor force. This proportion has increased from 39 percent in 1965 to 50 percent in 1978 (Council of Economic Advisors, 1980) and has resulted in a smaller number of persons available for productive, non-paying work in the household. Because more women are working, the opportunity cost of providing unpaid personal care services for relatives and friends has increased (Becker, 1976). In addition, the size of the average household decreased from 3.3 persons in 1965 to 2.8 in 1978, a decline of 15 percent (Bureau of Census, 1980). As average household size decreases due to social, economic, and demographic forces, there are fewer household members to provide personal care. As more women join the labor force and as the average household size decreases, some long-term care activities have been “pushed” out of the household and into the health sector. It is also likely that increased third-party payments for coverage of health services have increased this trend.

Projection Trends by Type of Health Expenditures

In this section, we present highlights relating to projection trends for each of the 12 types of expenditures. First, we provide an historical perspective with commentary on factors influencing expenditure growth. Second, we present a synopsis of the short-term outlook and the long-term projections. Third, we include highlights of projections of sources of funds.

Hospital Care

Expenditures for hospital care comprise the largest category of health expenditures, accounting for 40 percent of national health expenditures in 1979 (Gibson, 1980). Total hospital expenditures have increased from $13.9 billion in 1965 to $85.3 billion in 1979 (Table 8). These figures translate to an average annual rate of growth of 13.8 percent. Community hospital inpatient care is a major component of hospital care. During the last decade (1969-1979) community hospital inpatient expenses have risen from $15.6 billion to $59.1 billion, an average of 14.3 percent annually. Numerous factors accounted for this increase. The chief factor was overall inflation in the economy as measured by the GNP deflator, which accounted for about half of the expenditure growth (Figure 1A).
Table 8

National Health Expenditures by Type of Expenditure, Selected Years, 1929-1990

Historical Estimates, Year1Projections
19291940195019551960196519661967196819691970197119721973197419751976197719781979198119851990
Amount (in millions)Amount (in million)
  Total$3,649$3,987$12,662$17,745$26,895$41,994$46,389$51,939$58,456$65,988$74,903$83,112$93,501$103,045$116,284$132,120$148,872$169,875188,643$212,199$278,543$462,229$821,017
Health Services and Supplies3,4363,86811,70216,88425,18538,55142,77248,18054,40361,23669,58377,06586,99496,291108,907123,822139,823160,794179,113202,318266,618444,575794,590
 Personal Health Care3,2023,54810,88515,88323,68036,00039,85344,89050,76657,27665,37271,97980,17788,688101,007116,522131,276147,968166,627188,551246,686440,288731,438
  Hospital Care6631,0113,8515,9009,09213,88515,66218,25121,01924,01827,79930,76934,97438,67344,76952,14159,80867,72175,84285,342112,277189,528355,089
  Physicians' Services1,0049732,7473,6895,6848,4739,17510,14211,10412,64814,34015,91817,16219,07521,24524,93227,56531,85235,08240,59952,86287,494150,319
  Dentists' Services4824199611,5081,9772,8092,9643,3603,6734,1974,7505,0685,6256,5317,3668,2379,44810,53511,89413,60718,05429,86352,022
  Other Professional Services2521743965628621,0331,1591,2581,4241,4711,5951,6281,8021,9732,2302,6193,2023,5664,0804,6876,34310,85819,139
  Drugs and Medical Sundries26066371,7262,3843,6575,2125,5845,9846,6747,3838,2088,6689,34410,05011,03611,81312,78113,98715,37416,97520,63629,58144,434
  Eyeglasses and Appliances1331894916047761,2111,4661,5081,7541,8741,9261,9702,2152,4802,7072,9823,2193,4913,9454,3535,3337,98612,559
  Nursing Home Care—331873125262,0722,3562,7763,3803,8054,6975,6356,4577,2178,56710,10511,39012,81015,10217,80724,48544,56581,788
  Other Health Services621125269241,1061,3061.4861,6121,7391,8802,0582,3232,5972,6903,0883,6923,8634,0064,5875,1806,65210,36516.371
 Prepayment & Administration1391674566241,0911,7362,0932,4022,5922,7312,7913,3214,8115,3705,1694,1434,7348,5117,2027,72011,62918,87232,441
 Government Public Health Activities961533613774148148258881,0451,2291,4201,7642,0062,2332,7313,1573,8134,3165,2846,0478,29515,30330,269
Research and Construction of Medical Facilities2131199608611,7103,4433,6173,7594,0534,7525,3206,0476,5086,7547,3778,2989,0499,0819,5299,88211,92217,64826,421
 Research—31172106621,4461,5551,6951,8011,8351,8892,0402,2672,4382,7023,2393,6353,8094,3234,6155,8149,05414,381
 Construction2131168436511,0481,9972,0622,0642,2522,9173,4314,0074,2414,3164,6755,0595,4145,2725,2065,2676,1088,59412,040

Robert M. Gibson, “National Health Expenditures, 1979” Health Care Financing Review, Summer 1980, pp. 21-22. Data for some years are unpublished.

Research and development expenditures of drug companies and other manufactures and providers of medical equipment and supplies are excluded from “research expenditures,” but are included in the expenditure class in which the product falls.

While inflation impacts on all sectors of the economy, we want to focus on the uniqueness of the hospital sector. Increases in hospital input prices (Freeland, Anderson and Schendler, 1979; Freeland, Schendler and Anderson, 1980) in excess of the GNP deflator accounted for 10.2 percent of the growth, nearly as much as the 12.3 percent contribution of growth in admissions per capita. Growth in total population accounted for 6.4 percent of the increase, with growth in real expenses per admission accounting for the remaining 21.9 percent. If we combine the factors specific to the industry: admissions per capita; intensity per admission (which includes such factors as nursing hours per case and diagnostic and therapeutic procedures per case); and hospital input prices in excess of the GNP deflator, they account for 44 percent of the growth. Of the growth in the hospital specific factors, growth in intensity per admission was significant, accounting for about 50 percent. The primary driving force behind the rapid rate of growth in the intensity of services is the demand for increased quality of care, which is facilitated by a high level of insurance coverage (low cost-sharing). The high level of insurance interacts with our retrospective cost-based reimbursement system, which lacks incentives to provide medical care in the least expensive manner (Feldstein, 1971a; Feldstein, 1977a; General Accounting Office, Sept. 19, 1980). The short-term outlook is for hospital expenditures to rise from $85 billion in 1979 to $112 billion in 1981—an average annual rate of growth of 14.7 percent (Tables 8 and 9). Inpatient expenses per day in community hospitals are projected to rise from $226 in 1979 to $288 in 1981. Expenses per inpatient stay are projected to rise from $1,618 in 1979 to $2,046 in 1981 (Table 7). By 1985, inpatient expenses per admission are projected to exceed $3,300.
Table 9

National Health Expenditures, Average Annual Percent Changes, by Type of Expenditure, Selected Periods,1950-1990

1950-551955-601960-651965-701970-751975-791979-811981-851985-901965-791969-791979-851979-90
  Total7.08.79.312.312.012.614.613.512.212.312.413.913.1
Health Services and Supplies7.68.38.912.512.213.114.813.612.312.612.714.013.2
 Personal Health Care7.68.38.712.712.312.814.413.612.312.612.713.813.1
  Hospital Care8.99.08.814.913.413.114.714.013.413.813.514.213.8
  Physicians' Services6.19.08.311.111.712.914.113.411.411.812.413.712.6
  Dentists' Services9.45.67.311.111.613.415.213.411.711.912.514.013.0
  Other Professional Services7.38.93.79.110.415.716.314.412.011.412.315.013.6
  Drugs and Medical Sundries6.78.97.39.57.69.510.39.48.58.88.79.79.1
  Eyeglasses and Appliances4.25.19.39.79.19.910.710.69.59.68.810.610.1
  Nursing Home Care10.811.0117.816.615.217.416.112.916.616.716.514.9
  Other Health Services11.93.73.49.512.48.813.311.79.610.310.712.311.0
 Prepayment and Administration6.511.89.710.08.216.822.813.011.411.211.016.214.1
 Government Public Health Activities0.91.914.511.817.317.617.116.514.615.417.316.715.8
Research and Construction of Medical Facilities-2.214.715.09.19.34.59.810.38.47.87.610.19.4
 Research12.425.816.95.511.49.312.211.79.78.69.711.910.9
 Construction-5.010.013.811.48.11.07.78.97.07.26.18.57.8

Expenditures for nursing home care were revised for the period beginning 1965. Time-series data for 1960 through 1965 are not consistent.

Table 7

Expenses per Inpatient Day and per Inpatient Stay, Community Hospitals, Selected Years 1965-1990

YearExpenses per Inpatient Day2Expenses per Inpatient Stay2
Historical
1965$41.35$315.13
197077.88608.38
1975137.741,016.81
1979226.461,617.73
Projections3
1981288.002,046.00
1985485.003,318.00
1990890.005,914.00
Average Annual Percent Increases for Selected Periods
1965-7013.5%14.1%
1970-7512.110.8
1975-7913.212.3
1979-8112.712.5
1981-8513.912.9
1985-9012.912.3
1965-7912.912.4
1979-8513.512.7
1979-9013.212.5

Historical data are from American Hospital Association “Hospital Indicators,” Hospitals (National Hospital Panel Survey).

Costs are adjusted to eliminate expenses associated with outpatient care.

See comments in Technical Note in the section “Hospital Care: Community Hospital Inpatient.”

Long-term projections for total hospital expenditures are that by 1985 expenditures will be approximately $190 billion, and by 1990 these expenditures will reach $355 billion. We project that per capita hospital expenditures will be $798 in 1985 and $1430 by 1990.

Physicians' Services

Expenditures for physicians' services have risen from $12.6 million in 1969 to $40.6 million in 1979 (Table 8), at a 12.4 percent average annual rate. During this last decade, increases in overall inflation (GNP deflator) accounted for more than half of the increase in expenditures (Figure 1B). Increases in the CPI for physicians' fees in excess of the GNP deflator accounted for 10.4 percent of the expenditure growth. Growth in visits per capita (Technical Note) accounted for 11 percent, and growth in real expenses per visit accounted for 15 percent. One example of the growth in real services is the out-of-hospital laboratory test. Excluding x-rays and radiation therapy, out-of-hospital laboratory tests increased from 850 million to 1.5 billion between 1972 and 1977, or at an average annual rate of 12.0 percent (Gibson, 1980; also see Laboratory Management, 1979). Another example of growth in services is that the number of surgical operations increased from 13.7 million to 18.6 million from 1969 to 1979, an average annual rate of growth of 3.1 percent (American Hospital Association, National Hospital Panel Survey). This increase in intensity of services is caused in part by growth in insurance coverage and the fee-for-service reimbursement system (Delbanco, ; Showstack, ; Sloan and Feldman, 1975). Between 1965 and 1979 the number of active physicians increased at an average annual rate of 3.0 percent. In the projected period, the rate is slightly less. The effect of projected increases in active M.D.s and D.O.s (Bloom 1980) (Table 3) on prices, use of services, distribution by speciality, incomes, geographic distribution, and so forth, is under current study (Bureau of Health Manpower, 1978; Cantwell, 1980; Graduate Medical Education National Advisory Committee, 1980; Hendrickson, 1980; Lamson-Griffiths Associates, 1980; McKinsey and Company, Inc., 1975; Medical Economics, 1980; Scheffler, ; Weber, 1980). During the 1968-1978 period real per capita expenditures for physicians' services rose at an average annual rate of 3.4 percent (Table 10); and real services per physician declined 0.8 percent per year on the average (Table 10). These data seem to suggest that the large increase in the number of active physicians relative to population has been associated with more real services provided per capita, but that less services per physician were provided. Research needs to be done on this finding.[14]
Table 10

Average Income Per Physician and Per Capita Expenditures for Physicians' Services, Nominal and Real, 1968 and 1978

YearAverage Annual Percent Increase
19681978
Per Capita Expenditures for Physicians Services1$54.36$160.4711.4%
Per Capita Expenditures for Physicians' Services Deflated by the CPI for Physicians' Services$51.48$71.933.4
Average Gross Income per Physician2$57,152$111,9007.0
Average Gross Income per Physician Deflated by the CPI for Physicians' Services$54,121$50,157-0.8
Average Total Tax Deductible Professional Expenses per Physician2$19,780$46,4008.9
Average Total Tax Deductible Professional Expenses per Physician Deflated by the CPI for All Items$18,983$23,7222.3
Average Net Income from Medical Practice per Physician2$37,372$65,5005.8
Average Net Income from Medical Practice per Physician Deflated by the CPI for All Items$35,866$33,487-0.7
CPI for Physicians' Services (1967=100.0)105.6223.17.8
CPI for All Items (1967=100.0)104.2195.66.5
CPI for Physicians' Services Deflated by CPI for All Items (1967=100.0)101.3114.11.2

Robert M. Gibson, “National Health Expenditures, 1979”, Health Care Financing Review, Summer 1980.

American Medical Association, Profile of Medical Practice, AMA Center for Health Services Research and Development, 1972 and 1980 editions.

The increasing incidence of malpractice suits in the 1970s has affected expenditures in two ways (Greenspan, 1979; Henderson, 1979, Rottenberg, 1978): 1) fees were raised to reflect increased costs from higher malpractice insurance premiums, and 2) the quantity of services provided increased as physicians became more thorough in response to the threat of malpractice suits. In the projected period, this threat will continue to be a factor in physicians' practice costs but may not be as significant a cost determinant as it was in the 1970s. The short-term outlook is for expenditures for physicians' services to rise from $40.6 billion in 1979 to $52.9 billion in 1981 (Table 8). For the longer term, we project that expenditures for physicians' services will reach $87 billion in 1985 and $150 billion in 1990. The projected average annual rate of growth for the period 1979-1990 is 12.6 percent, slightly more than during the historical period 1965-1979, 11.8 percent.

Dentists' Services

Expenditures for dentists' services grew from $2.8 billion in 1965 to $13.6 billion in 1979, almost a five-fold increase, and an average annual increase of 11.9 percent (Table 9). During this same period, the number of active dentists increased at an average annual rate of 1.8 percent (Table 3), double the annual rate of population growth (Table 1). From 1969 to 1979 dentists' fees accounted for more than half of the expenditure growth for dentists' services (Figure 1C) and grew at the same rate as the GNP deflator, averaging 6.7 percent annually. In contrast, the CPIs for physicians' services and overall services, less rent, each rose at an average annual rate of 8.0 percent for this period. The relatively better price performance of the dental service sector compared to these other two sectors may in part reflect an interaction of: better productivity performance (P. Feldstein, 1974; Medicus Systems, 1980); competitive forces within the industry; and the large influx of new dentists (Bureau of Health Manpower, March 1979; Douglas and Cole, 1979; Lendio, 1980; Millenson, 1980; and Waldman, 1980). Intensity of services per visit, which includes providing more services and procedures per visit (for example, use of high speed drills increases the average number of cavities which can be filled during one visit) as well as shifts in the mix of services and procedures (for example, a higher proportion of expensive procedures such as orthodontics), accounted for 26.5 percent of expenditure growth in the last decade. Growth in intensity accounted for substantially more of the growth in expenditures for dentists' services than growth in both population and visits per capita combined (Figure 1C). In the short-term, projected expenditures for dentists' services are expected to rise from $13.6 billion in 1979 to $18 billion in 1981 (Table 8), an average annual rate of growth of 15.2 percent. High increases for dentists' fees, as measured by the CPI, fueled the increase for 1980 and are likely to make a substantial contribution to expenditure growth in 1981. The number of active dentists is projected to rise from 123,500 in 1979 to 130,100 in 1981 (Table 3). Long-term projections are for expenditures for dentists' services to reach $30 billion by 1985 and $52 billion by 1990 (Table 8). The number of active dentists is projected to increase at an average annual rate of 2.2 percent for the period 1979 to 1990 (Table 3). In contrast, the number of active dentists grew at an average annual rate of 1.8 percent during the period 1965 to 1979. Private health insurance benefits for dentists' services (Carroll and Arnett, 1979) are projected to continue to finance an increasing share of expenditures (Table 5) (American Dental Association, 1979). This rate of increase is likely to slow over the next decade.
Table 5

Per Capita National Health Expenditures by Type of Expenditure and Source of Funds, Selected Years, 1965-1990

PrivatePublic
Consumer
Type of ExpenditureTotalTotalTotalDirectInsuranceOther2TotalFederalState & Local
Per Capital Amount3
1965
  Total$212.32$156.84$144.53$93.96$50.57$12.31$55.48$28.44$27.04
Health Services and Supplies194.91149.42144.5393.9650.574.8945.5020.9524.54
 Personal Health Care182.02142.08138.1093.9644.133.9839.9419.1420.80
  Hospital Care70.2042.8441.2812.0029.271.5627.3612.2815.08
  Physicians' Services42.8439.8739.8326.2813.55.042.97.762.21
  Dentists' Services14.2013.9513.9513.74.22--251608
  Other Professional Services5.225.034.934.54.40.09.20.06.13
  Drugs and Medical Sundries26.3525.3625.3624.68.68--.99.61.39
  Eyeglasses and Appliances6.125.985.985.97.01--.15.06.08
  Nursing Home Care10.486.886.776.76.01.113.602.331.27
  Other Health Services6.602.18------2.184.432.871.55
 Prepayment and Administration8.787.346.43--6.43.901.44.071.37
 Government Public Health Activities4.11----------4.111.742.37
Research and Construction of Medical Facilities17.417.42------7.429.997.492.50
 Research47.31.89------.896.425.94.48
 Construction10.106.53------6.533.571.542.02
1970
  Total$359.41$225.98$207.83$125.37$82.46$18.14$133.44$84.53$48.90
Health Services and Supplies333.89213.69207.83125.3782.465.86120.1975.5544.64
 Personal Health Care313.68205.91200.92125.3775.544.99107.7769.8737.90
  Hospital Care133.3963.3861.5413.5148.021.8470.0145.2424.77
  Physicians' Services68.8153.9753.9230.3723.55.0514.8410.714.13
  Dentists' Services22.7921.7221.7220.571.15--1.07.62.45
  Other Professional Services7.656.606.515.251.26.101.05.66.39
  Drugs and Medical Sundries39.3937.0637.0635.571.49--2.321.151.18
  Eyeglasses and Appliances9.248.728.728.71.01--.52.38.14
  Nursing Home Care22.5411.6211.4511.39.06.1610.926.424.50
  Other Health Services9.872.84------2.847.034.692.35
Prepayment and Administration13.397.786.92--6.92.875.612.732.88
 Government Public Health Activities6.81----------6.812.953.86
Research and Construction of Medical Facilities25.5312.28------12.2813.248.984.26
 Research*9.061.03------1.038.037.15.88
 Construction16.4611.25------11.255.211.833.38
1975
  Total$607.58$348.63$325.31$173.49$151.82$23.33$258.95$170.52$88.43
Health Services and Supplies569.42333.30325.31173.49151.827.99236.13155.9680.16
 Personal Health Care535.85323.48316.40173.49142.917.08212.38145.0067.37
  Hospital Care239.78107.09104.5918.2986.302.49132.7093.1439.56
  Physicians' Services114.6684.5384.4639.9344.53.0630.1321.458.68
  Dentists' Services37.8835.7335.7329.496.24--2.151.26.88
  Other Professional Services12.049.419.277.341.93.132.641.72.91
  Drugs and Medical Services54.3349.6049.6046.213.40--4.722.422.30
  Eyeglasses and Appliances13.7212.6812.6812.53.15--1.04.80.23
  Nursing Home Care46.4720.3420.0619.70.36.2826.1314.6511.48
  Other Health Services16.984.10------4.1012.879.553.33
 Prepayment and Administration19.059.828.91--8.91.919.235.353.88
Government Public Health Activities14.52----------14.525.618.90
Research and Construction of Medical Facilities38.1615.34------15.3422.8214.558.27
 Research414.901.21------1.2113.6812.311.38
 Construction23.2614.12------14.129.142.256.90
1979
  Total$942.94$536.82$508.32$266.50$241.82$28.50$406.12$270.80$135.32
Health Services and Supplies899.03520.26508.32266.50241.8211.94378.76250.79127.97
 Personal Health Care837.85500.65489.95266.50223.4510.70337.20236.90100.31
  Hospital Care379.23167.30163.1230.68132.434.18211.93155.0256.90
  Physicians' Services180.41133.20133.0965.8267.27.1147.2135.5511.66
  Dentists' Services60.4658.0758.0744.1613.91--2.391.321.07
  Other Professional Services20.8315.5015.2712.582.68.235.333.771.57
  Drugs and Medical Sundries75.4369.1269.1263.175.95--6.313.133.18
  Eyeglasses and Appliances19.3417.5217.5216.84.69--1.821.47.34
  Nursing Home Care79.1334.2433.7633.24.52.4844.8924.2720.63
  Other Health Services23.025.70------5.7017.3212.374.95
  Prepayment and Administration34.3119.6218.37--18.371.2514.697.946.75
 Government Public Health Activities26.87----------26.875.9620.91
Research Construction of Medical Facilities43.9116.55------16.5527.3620.007.35
 Research420.511.27------1.2719.2417.331.91
 Construction23.4015.29------15.298.122.675.45
1981
  Total$1,216.00$689.00$654.00$332.00$322.00$35.00$527.00$352.00$175.00
Health Services and Supplies1,164.00669.00654.00332.00322.0015.00495.00328.00167.00
 Personal Health Care1,077,00637.00623.00332.00292.0014.00440.00311.00129.00
  Hospital Care490.00215.00210.0039.00170.005.00275.00203.0072.00
  Physicians' Services231.00168.00168.0082.0087.00562.0048.0014.00
  Dentists' Services79.0076.0076.0055.0021.00--3.002.001.00
  Other Professional Services28.0020.0020.0016.004.0057.005.002.00
  Drugs and Medical Sundries90.0083.0083.0075.008.00--7.004.003.00
  Eyeglasses and Appliances23.0021.0021.0020.001.00--2.002.005
  Nursing Home Care107.0046.0046.0045.001.001.0061.0033.0028.00
  Other Health Services29.007.00------7.0022.0016.006.00
 Prepayment and Administration51.0032.0031.00----1.0019.0010.009.00
 Government Public Health Activities36.00----------36.007.0029.00
Research and Construction of Medical Facilities52.0019.00------19.0033.0024.009.00
 Research425.001.00------1.0024.0022.002.00
 Construction27.0018.00------18.009.002.007.00
1985
  Total$1,946.00$1,077.00$1,027.00$500.00$527.00$49.00$870.00$588.00$282.00
Health Services and Supplies1,872.001,050.001,027.00500.00527.0023.00822.00551.00271.00
 Personal Health Care1,727.00998.00977.00500.00477.0021.00730.00527.00203.00
  Hospital Care798.00344.00335.0063.00273.008.00454.00342.00102.00
  Physicians' Services368.00263.00263.00123.00140.005106.0083.0023.00
  Dentists' Services126.00121.00121.0082.0039.00--4.003.001.00
  Other Professional Sundries46.0033.0033.0025.008.001.0012.009.003.00
  Drugs and Medical Sundries125.00114.00114.00101.0013.00--11.005.006.00
  Eyeglasses and Appliances33.0030.0030.0028.002.00--4.003.001.00
  Nursing Home Care188.0082.0081.0079.002.001.00106.0057.0049.00
  Other Health Services44.0011.00------11.0033.0024.009.00
 Prepayment and Administration80.0053.0051.00--51.002.0027.0014.0013.00
 Government Public Health Activities64.00----------64.0010.0054.00
Research and Construction of Medical Facilities74.0026.00------26.0044.0037.007.00
 Research438.002.00------2.0036.0033.003.00
 Construction36.0024.00------24.0012.004.008.00
1990
  Total$3,309.00$1,773.00$1,701.00$791.00$910.00$73.00$1,535.00$1,058.00$478.00
Health Services and Supplies3,203.001,738.001,701.00791.00910.0037.001,464.001,002.00462.00
 Personal Health Care2,948.001,649.001,614.00791.00823.0035.001,299.00961.00338.00
  Hospital Care1,430.00602.00586.0010.00476.0016.00828.00643.00185.00
  Physicians' Services606.00421.00421.00190.00231.005185.00148.0036.00
  Dentists' Services210.00203.00203.00127.0076.00--7.004.003.00
  Other Professional Services77.0056.0055.0041.0014.001.0021.0016.005.00
  Drugs and Medical Sundries179.00163.00163.00142.0021.00--16.008.008.00
  Eyeglasses and Appliances51.0044.0044.0041.003.00--6.005.001.00
  Nursing Home Care330.00144.00145.00142.003.002.00186.00100.0086.00
  Other Health Services66.0016.00------16.0050.0037.0013.00
 Prepayment and Administration133.0089.0087.00--87.002.0043.0022.0011.00
 Government Public Health Activities122.00----------122.0019.00103.00
Research and Construction of Medical Facilities107.0035.00------35.0071.0056.0016.00
 Research458.002.00------2.0055.0051.004.00
 Construction49.0033.00------33.0016.005.0011.00

Historical estimates are reported in Robert M. Gibson, “National Health Expenditures, 1979”, Health Care Financing Review, Summer 1980, pp. 17-20.

Spending by philanthropic organizations, industrial inplant services, and privately financed construction.

Per capita amounts in projections are rounded to nearest dollar.

Research and development expenditures of drug companies and other manufacturers and providers of medical equipment and supplies are excluded from “research expenditures,” but are included in the expenditure class in which the product falls.

Less than $0.50.

Other Professional Services

Expenditures for other professional services (for example, optometrists, podiatrists, chiropractors, private-duty nurses, and home health agency services which are not hospital-based) have grown from 1.0 billion in 1965 to 4.7 billion in 1979 (Table 8), at an average annual rate of growth of 11.4 percent (Table 9). The use of home health services by the aging population is a factor contributing to the growth in expenditures for this service. We project that expenditures for other professional services will reach $6.3 billion in 1981, $10.9 billion in 1985 and $19.1 billion by 1990 (Table 8). We also project that consumer out-of-pocket payments (direct) will continue to fund the majority of expenditures for other professional services (Table 10).

Drugs and Medical Sundries

Expenditures for drugs and medical sundries have grown from $5.2 billion in 1965 to $17.0 billion in 1979 (Table 8). This reflects an average annual rate of increase of 8.8 percent. The pharmaceutical preparations industry (Bureau of Labor Statistics, December 1979) and the drugstore industry (Friedman, 1980) are notable for extraordinary productivity increases (Brand, 1974; Cocks, 1974; Cocks, 1977). From 1965 to 1973, output per hour increased at an average annual rate of 4.8 percent for all persons in the pharmaceutical preparations industry and 6.4 percent for all employees in the drugstore industry (Figure 5). For the most recent 5-year period, 1973-1978, productivity increased at significantly lower rates for both industries, 3.4 percent average annual rate for pharmaceutical preparations and 0.8 percent average annual rate for drugstores.
Figure 5

Drug Industry Trends for Productivity and Inflation-Adjusted Prices (Producer and Consumer), 1965-1978

Prices of drugs at both the producer and consumer levels of distribution have risen at rates significantly lower than the overall inflation rate for the period 1965-1978.[15] During this period the implicit price deflator for GNP rose at an average annual rate of 5.7 percent, whereas producer prices for drugs (Producer Prices and Price Indexes, Code 063, drugs and pharmaceuticals) rose at an average annual rate of 3.0 percent, and consumer prices (CPI Detailed Report, medical care commodities) rose at an average annual rate of 2.8 percent. Thus, after adjusting for inflation, producer prices decreased at an average annual rate of -3.3 percent per year and consumer prices decreased at an average annual rate of -3.5 percent per year (Figure 5). On average, the rate of productivity increases has been negatively associated with the rate of price increases. The relationship of productivity increases and real drug price decreases may have been lessened, beginning in 1974, by the higher price increases for energy-dependent raw materials used for drug manufacturing and packaging. Research needs to be done to quantify cause and effect relationships between productivity and prices. The short-term outlook is for expenditures for drugs and medical sundries to rise to $20.6 billion in 1981, an average annual rate of increase of 10.3 percent for the period 1979-1981. For the longer term, expenditures are projected to reach $30 billion in 1985 and $44 billion in 1990. In 1979 private health insurance benefits financed 7.9 percent of outlays for drugs and medical sundries (Gibson, 1980) and the public sector financed another 8.4 percent, leaving 83.7 percent financed by direct consumer payments. The projections assume moderate growth in private health insurance coverage and assume no significant expansion of benefits through a national health insurance program (Trapnell, 1979).

Eyeglasses and Appliances

Expenditures for eyeglasses and orthopedic appliances have increased from $1.2 billion in 1965 to $4.4 billion in 1979 (Table 8), or at an average annual rate of growth of 9.6 percent (Table 9). These expenditures are primarily for eyeglasses. Compared to most health services and supplies industries, this industry is quite competitive (Benham, 1972; Feldman and Begun, 1978), as evidenced by its considerable price competition and advertising. Direct, out-of-pocket payments accounted for 87 percent of outlays for eyeglasses and appliances in 1979 (Gibson, 1980). Thus, public and private insurance play a small role in consumer demand for these services. These factors appear to be reflected in pricing behavior in the industry. For the period 1965-1977,[16] the Consumer Price Index for Examining, Prescribing and Dispensing of Eyeglasses increased at an average annual rate of 5.I percent while the GNP deflator increased 5.5 percent. Thus, after accounting for overall inflation in the economy, the CPI for this sector decreased at an average annual rate of -0.4 percent. The short-term outlook is for expenditures for eyeglasses and appliances to grow at an average annual rate of 10.7 percent from 1979 to 1981, reaching $5.3 billion in 1981. We project that expenditures will reach $8 billion in 1985 and $12.6 billion in 1990. We project that private health insurance benefits will increase slightly faster than outlays in total for this sector (Table 4), thus financing a higher proportion of the expenses.
Table 4

National Health Expenditures by Type of Expenditure and Source of Funds, Selected Years, 1965-1990

PrivatePublic
Consumer
Type of ExpenditureTotalTotalTotalDirectInsuranceOther2TotalFederalState & Local
Amount (in millions)
1965
  Total$41,994$31,020$28,586$18,584$10,001$2,434$10,974$5,625$5,349
Health Services and Supplies38,55129,55228,58618,58410,0019668,9994,1444,854
 Personal Health Care36,00028,10127,31318,5848,7297887,8993,7854,114
  Hospital Care13,8858,4738,1642,3745,7903095,4122,4302,982
  Physicians' Services8,4737,8857,8775,1972,6808588151436
  Dentists' Services2,8092,7602,7602,71743--493217
  Other Professional Services1,0339949768977918391226
  Drugs and Medical Sundries5,2125,0155,0154,881135--19712076
  Eyeglasses and Appliances1,2111,1821,1821,1811--291217
  Nursing Home Care2,0721,3601,3391,337221712460251
  Other Health Services1,306431------431875568308
 Prepayment and Administration1,7361,4511,272--1,27217828614271
 Government Public Health Activities814----------814344469
Research and Construction of Medical Facilities3,4431,468------1,4681.9751,481495
 Research31,446176------1761,2701,17695
 Construction1,9971,292------1,292705305400
1970
  Total$74,903$47,094$43,313$26,128$17,185$3,781$27,809$17,617$10,191
Health Services and Supplies69,58344,53443,31326,12817,1851,22125,04915,7459,304
 Personal Health Care65,37242,91241,87226,12815,7441,04022,46014,5617,899
  Hospital Care27,79913,20812,8242,81610,00838414,5919,4285,163
  Physicians' Services14,34011,24711,2376,3284,908103,0932,232861
  Dentists' Services4,7504,5264,5264,286240--22313093
  Other Professional Services1,5951,3761,3571,0942622021813880
  Drugs and Medical Sundries8,2087,7247,7247,414310--484239245
  Eyeglasses and Appliances1,9261,8171,8171,8153--1087929
  Nursing Home Care4,6972,4212,3872,37512342,2761,339938
  Other Health Services2,058592------5921,466976490
  Prepayment and Administration2,7911,6221,441--1,4411811,168568600
 Government Public Health Activities1,420----------1,420615805
Research and Construction of Medical Facilities5,3202,560------2,5602,7601,872888
 Research31,889215------2151,6741,491183
 Construction3,4312,345------2,3451,086381705
1975
  Total$132,120$75,811$70,739$37,725$33,014$5,072$56,309$37,079$19,230
Health Services and Supplies123,82272,47670,73937,72533,0141,73751,34633,91517,431
 Personal Health Care116,52270,34168,80237,72531,0771,53946,18231,53114,650
  Hospital Care52,14123,28622,7443,97818,76654228,85520,2538,602
  Physicians' Services24,93218,38018,3668,6829,684146,5524,6651,887
  Dentists' Services8,2377,7707,7706,4121,358--467275192
  Other Professional Services2,6192,0452,0161,59642029573375198
  Drugs and Medical Sundries11,81310,78610,78610,048738--1,027527500
  Eyeglasses and Appliances2.9822,7572,7572,75732--22617451
  Nursing Home Care10,1054,4244,3624,28478615,6813,1862,496
  Other Health Services3,692892------8922,8002,076723
 Prepayment and Administration4,1432,1361,937--1,9371992,0071,163845
 Government Public Health Activities3,157----------3,1571.2211,936
Research and Construction of Medical Facilities8,2983,335------3,3354,9633,1641,799
 Research33,239264------2642,9752,676299
 Construction5,0593,071------3,0711,9884881,500
1979
  Total$212,199$120,806$114,393$59,973$54,420$6,413$91,393$60,941$30,453
Health Services and Supplies202,318117,081114,39359,97354,4202,68885,23756,43928,798
 Personal Health Care188,551112,666110,25959,97350,2862,40775,88453,31122,573
  Hospital Care85,34237,65036,7086,90529,80394247,69234,88612,806
  Physicians' Services40,59929,97529,95114,81315,1382410,6247,9992,625
  Dentists' Services13,60713,06813,0689,9383,130--539298241
  Other Professional Services4,6873,4873,4352,832604521,200848352
  Drugs and Medical Sundries16,97515,55515,55514,2161,339--1,420705716
  Eyeglasses and Appliances4,3533,9443,9443,789155--40933277
  Nursing Home Care17,8077,7057,5987,48111710710,1025,4614,642
  Other Health Services5,1801,283------1,2833,8972,7831,114
 Prepayment and Administration7,7204,4144,133--4,1332813,3061,7871,519
 Government Public Health Activities6,047----------6,0471,3414,706
Research and Construction of Medical Facilities9,8823,725------3,7256,1564,5021,655
 Research34,615285------2854,3303,901429
 Construction5,2673,440------3,4401,8276011,226
1981
  Total$278,543$157,749$149,838$76,015$73,823$7,911$120,794$80,743$40,051
Health Services and Supplies266,618153,290149,83876,01573,8233,452113,32875,82438,146
 Personal Health Care246,686145,927142,80676,01566,7923,121100,75971,33429,425
  Hospital Care112,27749,24948,0188,97839,0401,23263,02746,41316,614
  Physicians' Services52,86338,60538,57418,67919,8953114,25710,9503,308
  Dentists' Services18,05417,39817,39812,6974,701--656359297
  Other Professional Services6,3434,6584,5883,651937701,6851,222464
  Drugs and Medical Sundries20,63618,93218,93217,1191,812--1,704877828
  Eyeglasses and Appliances5,3334,7924,7924,570222--541441100
  Nursing Home Care24,52910,65310,50510,32018514813,8767,4736,403
  Other Health Services6,6521,641------1,6415,0123,6001,412
 Prepayment and Administration11,6377,3627,031--7,0313314,2742,3151,959
 Government Public Health Activities8,295----------8,2951,5336,762
Research and Construction of Medical Facilities11,9254,459------4,4597,4655,5601,905
 Research35,814342------3425,4724,943529
 Construction6,1114,117------4,1171,9936171,376
1985
  Total$462,229$255,661$243,955$118,731$125,224$11,706$206,568$139,722$66,847
Health Services and Supplies444,575249,451243,955118,731125,2245,497195,124130,96164,163
 Personal Health Care410,288236,978231,904118,731113,1735,074173,310125,19748,114
  Hospital Care189,52881,73679,66214,88764,7762,074107,79281,33026,462
  Physicians' Services87,49462,42562,37429,10033,2735125,06919,7975,272
  Dentists' Services29,86328,82728,82719,4519,376--1,036595441
  Other Professional Services10,8587,8907,7715,8951,8761202,9682,152816
  Drugs and Medical Sundries29,58127,04927,04923,9783,070--2,5321,2861,246
  Eyeglasses and Appliances7,8967,0457,0456,626418--941784157
  Nursing Home Care44,61319,44519,17618,79438226925,16813,50711,661
  Other Health Services10,3052,561------2,5617,8045,7452,059
 Prepayment and Administration18,98412,47412,051--12,0514226,5113,4113,100
 Government Public Health Activities15,303----------15,3032,35412,949
Research and Construction of Medical Facilities17,6436,210------6,21010,4448,7612,673
 Research39,054433------4338,6227,844778
 Construction8,5995,777------5,7772,8229171,905
1990
  Total$821,017$440,005$422,021$196,219$225,802$17,984$381,013$262,497$118,516
Health Services and Supplies794,590431,282422,021196,219225,8029,261363,307248,697114,610
 Personal Health Care731,438409,109400,404196,219204,1858,705322,330238,54483,786
  Hospital Care354,668149,299145,42627,272118,1543,873205,369159,46445,906
  Physicians' Services150,319104,470104,38447,21457,1708745,84936,8389,010
  Dentists' Services52,02250,27750,27731,57318,704--1,7451,038707
  Other Professional Services19,13913,84113,63010,2013,4292115,2983,8381,460
  Drugs and Medical Sundries44,43440,54240,54235,3535,189--3,8921,9761.916
  Eyeglasses and Appliances12,55910,85410,85410,099755--1,4461,447259
  Nursing Home Care81,92735,78436,29135,50678449446,14324,73321,410
  Other Health Services16,3714,041------4,04112,3309,2133,117
 Prepayment and Administration32,88222,17321.617--21,61755610,7095,5375,172
 Government Public Health Activities30,269----------30,2694,61625,653
Research and Construction of Medical Facilities26,4288,122------8,72217,70513,7903,905
 Research314,380629------62913,75112,5151,236
 Construction12,0488,093------8,0933,9541,2852,669

Historical estimates are reported in Robert M. Gibson, “National Health Expenditures, 1979,” Health Care Financing Review, Summer 1980, pp. 17-20.

Spending by philanthropic organizations, industrial inplant services, and privately financed construction.

Research and development expenditures of drug companies and other manufacturers and providers of medical equipment and supplies are excluded from “research expenditures,” but are included in the expenditure class in which the product falls.

Nursing Home Care

Expenditures for nursing home care increased at an average annual rate of 16.6 percent for the period 1965 to 1979 (Table 9). This growth was due to the interplay of demand and supply factors. Demand factors include: demographic shifts toward the aged (Table 2); growth in real income; expanded Medicaid benefits; and the “transfer” of patients from mental hospitals to nursing homes. Supply factors include: the increase in number of nursing home beds; and increases in prices paid for inputs (Bassak and Gerson, 1978; Bishop, 1980; Chiswick, 1976; Congressional Budget Office, August 1977; Congressional Budget Office, February 1977; Dunlop, 1978; Fisher and Schendler, 1980; Fuchs, 1979; General Accounting Office, November, 1979; Liu and Mossey, 1980; Scanlon, 1978). We can account for growth of nursing home expenditures during the period 1969-1979, in terms of the five factors, as follows: growth in nursing home days per capita accounted for 32 percent; growth in the GNP deflator accounted for 45 percent; growth in total population and nursing home input prices in excess of the GNP deflator each accounted for about 5 percent; and growth in real expenses per day (intensity) accounted for 13 percent (Figure 1D). Growth in real expense per day crudely measures increased nursing services and the costs of meeting stricter regulations for the safety and health of nursing home patients. Cost-pressures, as reflected in price increases for the inputs that nursing homes purchase accounted for 49.2 percent of the growth in expenditures—44.5 percent associated with overall inflation in the economy and 4.7 percent for nursing home input prices in excess of overall inflation. The short-term outlook is for nursing home care expenditures to rise from $17.8 billion in 1979 to $24.5 billion in 1980, an average annual rate of increase of 17.4 percent. The higher prices paid for inputs to produce nursing home services and demographic factors (Fisher and Schendler, 1980) (Table 2) account for most of the increases. For the long term, we project that expenditures will rise to $44.6 billion in 1985 and $81.9 billion in 1990. The proportion of nursing home care expenditures financed by third parties is assumed to have stabilized at approximately 60 percent. The out-of-pocket portion of expenses is assumed to be financed by Social Security and private pension payments, investment income, savings, assets, and contributions from friends and relatives.

Other Health Services

Other health services is a catch-all category which captures residual amounts of public program expenditures that are not classified elsewhere. It includes: (1) care provided in Federal units other than hospitals; (2) School health services; and (3) industrial in-plant services (Gibson, 1980). Expenditures for other health services have grown from $1.3 billion in 1965 to $5.2 billion in 1979 (Table 8) at an average annual growth rate of 10.3 percent. We project that expenditures for other health services will reach $6.7 billion by 1981, $10.4 billion in 1985, and $16.4 billion in 1990.

Prepayment and Administration

Expenses for prepayment and administration include three components: 1) prepayment costs (including operating expenses) of private health insurance organizations, 2) administrative expenses of Federally financed health programs, and 3) nonpersonal health expenditures of private voluntary health organizations for health education, lobbying, fund raising, etc. (Gibson, 1980). For private health insurance organizations, prepayment costs reflect the difference between the premiums (subscription income) and benefit payments (claims) and represents the net cost to the consumer. This amount is retained by private health insurance organizations for additions to reserves, profits, and operating expenses. The operating expense component is a function of the size of the enrolled population and the incidence of claims per enrollee. Operating expenses as a proportion of benefit payments are higher for processing small claim amounts such as those associated with benefits for out-of-hospital physicians' services, dentists' services, eyeglasses, and drugs. Growth in wage rates paid to employees in this industry (see Technical Note) also contributes significantly to operating expense increases. Productivity improvements associated with automation offset a portion of the operating expense increases (Bureau of Labor Statistics, 1965; Bureau of Labor Statistics, 1979). The additions to the reserves and profits component are volatile and cyclical. It is hazardous to project this component since both the length of the cycle and the depth of the cycle are variable. Prepayment and administration expenses have risen from $1.7 billion in 1965 to $7.7 billion in 1979 (Table 8).[17] Prepayment and administration expenses are projected to reach $11.6 billion in 1981, $19 billion in 1985 and $33 billion in 1990 (Table 8).

Government Public Health Activities

Expenditures for government public health activities have risen from $0.8 billion in 1965 to $6.0 billion in 1979 (Table 8). This reflects an average annual rate of growth of 15.4 percent. During this period the portion provided by State and local governments has risen from 58 percent in 1965 to 78 percent in 1979 (Table 4). The short-term outlook is for expenses for government public health activities to rise to $8.3 billion by 1981, an increase of 2.3 billion since 1979. Expenses are projected to reach $15.3 billion in 1985 and $30.3 billion in 1990.

Research

Expenditures for medical research have risen from $1.4 billion in 1965 to $4.6 billion in 1979 (Table 8). This reflects an average annual rate of growth of 8.6 percent (Table 9). During this same period, per capita expenditures for medical research, deflated by the biomedical research and development index (National Institutes of Health, 1977, 1980), increased at an average annual rate of 1.3 percent per year. Real per capita GNP increased at an average annual rate of 2.3 percent per year during this same period. Thus, in real terms, medical research is getting a smaller proportion of GNP. Historically, movements in real medical research expenditures are associated with movements in real GNP. In the short-term, we project that expenditures for medical research will increase to $5.8 billion in 1981, up from $4.6 billion in 1979. For the longer term, expenditures are projected to reach $9.1 billion in 1985 and $14.4 billion in 1990. In 1979 the Federal government financed nearly 85 percent of research expenditures (Gibson, 1980). We project that the Federal expenditures will rise faster than private and State and local expenditures (Table 4). Thus, the Federal share is projected to slowly increase, reflecting historical trends.

Construction of Medical Facilities

Expenditures for construction of medical facilities have risen from $2.0 billion in 1965 to $5.3 billion in 1979 (Table 8). This reflects an average annual rate of growth of 7.2 percent (Table 9). In real terms, total construction expenditures were about the same in 1979 as they were in 1965 (Figure 6).
Figure 6

Index of Nominal and Real Expenditures for Construction of Medical Facilities, 1965 to 1979 (1965 = 100.0)

The short-term outlook is for nominal construction expenditures to rise to $6.1 billion in 1981, up from $5.3 billion in 1979. Growth in real medical facilities construction is expected to be negative for the period 1979 to 1981. This negative real growth is consistent with the projections made by Dodge Construction Potentials (Christie, 1980). That company projected negative growth in new construction (as measured by millions of square feet of floor area) for the hospital and health sector for the period 1979-1981. Projected expenditures for construction will reach $8.6 billion in 1985 and $12 billion in 1990.

Summary and Discussion

Projections of national health expenditures by type of expenditures and source of finance have been presented for 1981,1985 and 1990. The projections assumed, among other factors, that historical trends and relationships will continue and that neither a mandatory cost containment program nor national health insurance will be in effect. These baseline projections incorporated the Health Care Financing Administration' s projections of Medicare benefit outlays and total community hospital inpatient expenses; the Bureau of Health Professions' projections of active physicians and dentists; and the 1980 Board of Trustees' (Federal Old-Age and Survivors Insurance and Disability Insurance Trusts) projections of the GNP and overall inflation. There are significant implications for the economy as the health sector continues to absorb larger percentages of the GNP. The major one is that, as more labor and capital are drawn into the health sector, relatively fewer resources are available for producing goods and services in other sectors (Cameron and Kirkland, 1980). There seem to be few demand or supply incentives to significantly retard the growth of health expenditures under current institutional arrangements. As health costs increase, so does the risk of financial burden to consumers with inadequate health insurance coverage. As this risk increases, the demand for public programs and private health insurance also rises. Moreover, tax subsidies for health insurance premiums add to this increased demand, by encouraging the purchase of extra insurance. As the coinsurance rate (proportion paid out-of-pocket by consumers) declines with the additional insurance, both consumers and providers increasingly tend to treat health care services as a free good at the time of purchase. The ensuing increased demand for medical care interacts with our fee-for-service and retrospective cost-based reimbursement systems to further increase costs. That is, more services and more costly services reward providers with additional revenues from third-party payors. The reimbursement policy provides an incentive for providers to adopt product-innovative technologies, which increase costs. There is relatively less incentive to adopt process-innovative technologies, which are associated with increased productivity and decreased costs. Our current institutional arrangement of third-party payments, with fee-for-service and retrospective cost-based reimbursement, has evolved out of a pragmatic and cooperative interaction among providers, third party payors, and consumers, based on their economic, social, and political needs and demands. Until an alternative institutional arrangement is devised that better meets the often conflicting needs and demands placed on the current system, the affected parties will probably resist significant changes to the current arrangement. Assuming that the current incentive mechanisms and constraints affecting the demand for and supply of medical care are not significantly modified,[18] and that the projected overall inflation rates are accurate, the projections of health expenditures presented in this paper are a reasonable approximation of what can be expected for the next decade.
Hospital Care: Community Hospital Inpatient
ExpendituresNet total revenues (patient and other) allocated to inpatient care. Data Source: American Hospital Association, “Hospital Indicators,” Hospitals (National Hospital Panel Survey). Net total revenue per adjusted patient day is projected as a percentage mark-up over average expense per adjusted patient day.
UseInpatient days and admissions. Data Source: American Hospital Association, “Hospital Indicators,” Hospitals (National Hospital Panel Survey).
Input PricesNational Hospital Input Price Index. Data Source: Mark S. Freeland, Gerard Anderson, and Carol Ellen Schendler, “National Hospital Input Price Index,” Health Care Financing Review, Summer 1979, pp. 37-61. For current values of this index see Health Care Financing Administration, Health Care Financing Trends, various quarterly issues, beginning Fall 1979.
Real Expense per Day and per AdmissionAverage expense per adjusted patient day and expense per adjusted admission are deflated by the National Hospital Input Price Index.
SupplyBeds. Data Source: American Hospital Association, “Hospital Indicators,” Hospitals (National Hospital Panel Survey).
ConstructionSee the last expenditure category listed in this Technical Note.
CommentsProjected growth rates for community hospital inpatient expenses, admissions, and patient days are from the Board of Trustees, Federal Hospital Insurance Trust Fund, 1980 Annual Report of the Board of Trustees of the Federal Hospital Insurance Trust Fund, Washington, D.C., June 17, 1980. Projected growth rates for 1980 and 1981 were modified by the Medicare actuaries to account for trends evident as of Fall 1980.
The Consumer Price Index for Hospital Room and the Health Insurance Association of America's Semi-private Room Charge are also projected. Data Sources: Bureau of Labor Statistics, CPI Detailed Report, U.S. Department of Labor, various monthly issues. Health Insurance Association of America, Survey of Hospital Semi-Private Room Charges as of January 1980, New York, 1980.
Hospital Care: Community Hospital Outpatient
ExpendituresNet total revenues (patient and other) allocated to outpatient care. Data Source: American Hospital Association, “Hospital Indicators,” Hospitals (National Hospital Panel Survey). Net total revenue per outpatient visit is projected as a percentage mark-up over average expense per outpatient visit.
UseOutpatient visits. Data Source: American Hospital Association, “Hospital Indicators,” Hospitals (National Hospital Panel Survey).
Input PricesNational Hospital Input Price Index. Data Source: Mark S. Freeland, Gerard Anderson, and Carol Ellen Schendler, “National Hospital Input Price Index,” Health Care Financing Review, Summer 1979, pp. 37-61. For current values of this index see Health Care Financing Administration, Health Care Financing Trends, various quarterly issues, beginning Fall 1979.
Real Expense per Outpatient VisitAverage expense per outpatient visit is deflated by the National Hospital Input Price Index.
Hospital Care: Federal Hospitals
ExpendituresTotal expenditures for services provided by Department of Defense, Veteran's Administration, Public Health Service, and other Federal hospitals. Data Source: Data reported to the Office of Management and Budget by the various Federal agencies. Inpatient and outpatient expenditures are included in total expenditures.
UseInpatient days. Data Source: American Hospital Association, Hospital Statistics, 1980 Edition, 1980.
Input PricesA national Federal Hospital Input Price Index was developed. Rates of change for payroll expense per fulltime equivalent Federal hospital employee were derived from data reported in the American Hospital Association, Hospital Statistics, 1980 Edition, 1980. Rates of change for the prices of inputs for nonpayroll expenses were derived from the National Hospital Input Price Index. See Mark S. Freeland, Gerard Anderson, and Carol Ellen Schendler, “National Hospital Input Price Index,” Health Care Financing Review, Summer 1979, pp. 37-61.
Real Expense per DayAverage expense per patient day was deflated by the Federal Hospital Input Price Index.
SupplyBeds. Data Source: American Hospital Association, Hospital Statistics, 1980 Edition, 1980.
ConstructionSee the last expenditure category listed in this Technical Note.
Hospital Care: Other
ExpendituresThis is a residual category that is primarily composed of non-Federal long-term care hospitals and non-Federal short-term psychiatric hospitals. It is derived by subtracting net total revenues for community hospitals and Federal hospital expenditures from total hospital care expenditures reported in Robert M. Gibson, “National Health Expenditures, 1979,” Health Care Financing Review, Summer 1980.
Input PricesNational Hospital Input Price Index. Data Source: Mark S. Freeland, Gerard Anderson, and Carol Ellen Schendler, “National Hospital Input Price Index,” Health Care Financing Review, Summer 1979, pp. 37-61. For current values of this index see Health Care Financing Administration, Health Care Financing Trends, various quarterly issues, beginning Fall 1979.
Real Expense per CapitaPer capita expenditures for “Hospital Care: Other” were deflated by the National Hospital Input Price Index.
Physicians' Services
ExpendituresExpenditures for the services of physicians are reported in Robert M. Gibson, “National Health Expenditures, 1979,” Health Care Financing Review, Summer 1980, pp. 1-36.
UsePhysician visits. Data Sources: Total physician visits except visits to hospital inpatients are from the National Center for Health Statistics, Current Estimates from the Health Interview Survey, U.S. Department of Health and Human Services, various annual issues. The Health Interview Survey data omit physician visits to hospital inpatients. American Hospital Association data on inpatient days in community hospitals are used to provide an indicator of inpatient physician visits. See American Hospital Association, “Hospital Indicators,” Hospitals, (National Hospital Panel Survey).
PricesConsumer Price Index for Physicians' Services. Data Source: Bureau of Labor Statistics, CPI Detailed Report, U.S. Department of Labor, various monthly issues.
Real Expense per VisitAverage revenue per physician visit is deflated by the CPI for Physicians' Services.
SupplyActive physicians (MDs and DOs), Active non-Federal office-based physicians (MDs and DOs), and Foreign Medical Graduates (FMGs). Data Sources: The primary data sources were various published and unpublished reports from the Division of Health Professions Analysis. Especially see Division of Health Professions Analysis, Bureau of Health Professions, Supply of Manpower in Selected Health Occupations: 1950-1990, Health Resources Administration, U.S. Department of Health and Human Services, August 1980; and Division of Health Professions Analysis, Bureau of Health Professions, “Projections of Active Physicians and Dentists, 1976-1990,” Health Resources Administration, U.S. Department of Health and Human Services, October 14, 1980, unpublished. The number of active physicians, including FMGs, was projected by the Division of Health Professions. The Health Care Financing Administration projected the number of active non-Federal office-based physicians based on trends in historical relationships between total active physicians and non-Federal office-based physicians. Historical data on non-Federal office-based MDs are derived from various annual editions of the American Medical Association, Physician Distribution and Medical Licensure in the U.S., Center for Health Services Research and Development, Monroe, Wisconsin.
Dentists' Services
ExpendituresExpenditures for services of dentists are reported in Robert M. Gibson, “National Health Expenditures, 1979” Health Care Financing Review, Summer 1980, pp. 1-36.
UseDental visits. Data Source: National Center for Health Statistics, Current Estimates from the Health Interview Survey, U.S. Department of Health and Human Services, various annual issues.
PricesConsumer Price Index for Dental Services. Data Source: Bureau of Labor Statistics, CPI Detailed Report, U.S. Department of Labor, various monthly issues.
Real Expense per VisitAverage revenue per dental visit is deflated by the CPI for Dental Services.
SupplyActive dentists and active non-Federal office-based dentists. Data Sources: The primary data sources were various published and unpublished reports from the Division of Health Professions Analysis. Especially see Division of Health Professions Analysis, Bureau of Health Professions, Supply of Manpower in Selected Health Occupations: 1950-1990, Health Resources Administration, U.S. Department of Health and Human Services, August 1980; and Division of Health Professions Analyses Bureau of Health Professions, “Projections of Active Physicians and Dentists, 1976-1990,” Health Resources Administration, U.S. Department of Health and Human Services, October 14, 1980, unpublished. Also see Division of Manpower Analysis, Bureau of Health Manpower, Dental Manpower Fact Book, Health Resources Administration, U.S. Department of Health, Education, and Welfare, March 1979. The Division of Health Professions projected the number of active dentists. The Health Care Financing Administration projected the number of active non-Federal office-based dentists based on trends in historical relationships between total active dentists and non-Federal office-based dentists.
Other Professional Services
ExpendituresExpenditures for other professional services (for example, optometrists, podiatrists, chiropractors, private-duty nurses, and home-health agency services that are not hospital-based) are reported in Robert M. Gibson, “National Health Expenditures, 1979,” Health Care Financing Review, Summer 1980, pp. 1-36.
PricesConsumer Price Index for Professional Services. Data Source: Bureau of Labor Statistics, CPI Detailed Report, U.S. Department of Labor, various monthly issues.
Real Expense per CapitaPer capita expenditures for other professional services were deflated by the CPI for Professional Services.
Drugs and Medical Sundries
ExpendituresExpenditures for drugs and medical sundries are reported in Robert M. Gibson, “National Health Expenditures, 1979,” Health Care Financing Review, Summer 1980, pp. 1-36.
PricesConsumer Price Index for Medical Care Commodities. Data Source: Bureau of Labor Statistics, CPI Detailed Report, U.S. Department of Labor, various monthly issues.
Real Expense per CapitaPer capita expenditures for drugs and medical sundries were deflated by the CPI for Medical Care Commodities.
Eyeglasses and Appliances
ExpendituresExpenditures for eyeglasses and appliances are reported in Robert M. Gibson, “National Health Expenditures, 1979” Health Care Financing Review, Summer 1980, pp. 1-36.
PricesConsumer Price Index for Eyeglasses. Data Source: U.S. Bureau of Labor Statistics, CPI Detailed Report, U.S. Department of Labor, various monthly issues.
Real Expense per CapitaPer capita expenditures for eyeglasses and appliances were deflated by the CPI for Eyeglasses.
Nursing Home Care: Nursing Home Care Excluding ICF-MR(Intermediate Care Facilities in Institutions for the Mentally Retarded)
ExpendituresTotal revenue data for nursing home care, excluding Medicaid covered intermediate care facility services in institutions for the mentally retarded, are derived by the Health Care Financing Administration from data on facilities, use, employment, costs, and revenues. Data sources used include: the National Center for Health Statistics' National Nursing Home Surveys; Internal Revenue Service statistical reports; National Center for Health Statistics' Master Facility Inventories; Health Care Financing Administration data on Medicaid and Medicare; Bureau of Labor Statistics' data for the nursing home industry; and Bureau of Census Surveys.
UseNursing home days are derived by the Health Care Financing Administration from data sources discusd above.
Input PricesNational Nursing Home Input Price Index. Data Source: Charles R. Fisher and Carol Ellen Schendler, “National Nursing Home Input Price Index,” Division of National Cost Estimates, Office of Financial and Actuarial Analysis, Health Care Financing Administration, November 1980, unpublished. Current values of the index are reported in Health Care Financing Administration, Health Care Financing Trends, various quarterly issues beginning Fall 1979.
Real Expense per DayAverage revenue per day was deflated by the National Nursing Home Input Price Index.
SupplyData concerning nursing home beds are derived by the Health Care Financing Administration with data from the sources discussed above. No national data on expenditures for construction in the nursing home industry are available. These construction expenditures are included as part of total medical-facilities construction. See the last expenditure category listed in this Technical Note.
Nursing Home Care: ICF-MR
ExpendituresExpenditures for Medicaid covered intermediate care facility services in institutions for the mentally retarded are reported in Medicaid Program Data Branch, Office of Research, Demonstrations, and Statistics, National Medicaid Statistics, Health Care Financing Administration, various fiscal years. Also see Medicaid/Medicare Management Institute, Data on the Medicaid Program: Eligibility, Services, Expenditures, Health Care Financing Administration, 1979.
UseNumber of recipients of Medicaid covered ICF-MR. Data Source: Medicaid Program Data Branch, Office of Research, Demonstrations, and Statistics, National Medicaid Statistics, Health Care Financing Administration, various fiscal years. Also see Medicaid/Medicare Management Institute, Data on the Medicaid Programs Eligibility, Services, Expenditures, Health Care Financing Administration, 1979.
Input PricesNational Nursing Home Input Price Index. Data Source: Charles R. Fisher and Carol Ellen Schendler, “National Nursing Home Input Price Index,” Division of National Cost Estimates, Office of Financial and Actuarial Analysis, Health Care Financing Administration, November 1980, unpublished. Current values of the index are reported in Health Care Financing Administration, Health Care Financing Trends, various quarterly issues beginning Fall 1979.
Real Expense per RecipientAverage expenditures per ICF-MR recipient are deflated by the National Nursing Home Input Price Index.
CommentExpenditures for total nursing home care (ICF-MR and nursing home care excluding ICF-MR) are reported in Robert M. Gibson, “National Health Expenditures, 1979,” Health Care Financing Review, Summer 1980, pp. 1-36.
Other Health Services
ExpendituresExpenditures for “Other Health Services” are reported in Robert M. Gibson, “National Health Expenditures, 1979,” Health Care Financing Review, Summer 1980, pp. 1-36.
PricesConsumer Price Index for Medical Care. Data Source: U.S. Bureau of Labor Statistics, CPI Detailed Report, U.S. Department of Labor, various monthly issues.
Real Expense per CapitaPer capita expenses for “Other Health Services” were deflated by the CPI for Medical Care.
Expenses for Prepayment and Administration
ExpendituresExpenses for Prepayment and Administration are reported in Robert M. Gibson, “National Health Expenditures, 1979,” Health Care Financing Review, Summer 1980, pp. 1-36.
Input PricesAverage hourly earnings of employees in the “insurance carriers: medical service and health insurance” industry (1972 SIC Code 632). Data Source: Bureau of Labor Statistics, Employment and Earnings, U.S. Department of Labor, various monthly issues.
Deflated Expense per CapitaPer capita expenses for Prepayment and Administration were deflated by an index of average hourly earnings of employees in the “insurance carriers: medical service and health insurance” industry.
CommentWe used a different methodology to project expenses for Prepayment and Administration. Prepayment costs (including operating expenses) of private health insurance organizations were projected as a ratio of selected categories of personal health expenditures in accordance with historical relationships and trends. Since we are making trend, rather than cyclical, projections, the volatile cyclical component (additions to reserves and profits) was compressed for the near-term projection, and set at the average trend value for long-term projections. Administrative expenses for Medicare were projected as part of the 1980 Trustees Reports. The authors projected all other administrative expenses in accordance with historical trends and relationships.
Government Public Health Activities
ExpendituresExpenditures for government public health activities are reported in Robert M. Gibson, “National Health Expenditures, 1979,” Health Care Financing Review, Summer 1980, pp. 1-36.
Input PricesWages and salaries per full-time equivalent employee in the civilian Federal government, and wages and salaries per full-time equivalent employee in State and local government (excluding workers in education and government enterprise). Data Source: Bureau of Economic Analysis, Survey of Current Business, U.S. Department of Commerce, various July issues.
Deflated Expense per CapitaPer capita expenses for government public health activities were deflated by an index which is a weighted average of wages and salaries per full-time equivalent employee in civilian Federal government and “other” State and local government.
Research
ExpendituresExpenditures for medical research are reported in Robert M. Gibson, “National Health Expenditures, 1979,” Health Care Financing Review, Summer 1980, pp. 1-36.
PricesBiomedical Research and Development Price Index. Data Source: National Institutes of Health, Public Health Service, Basic Data Relating to the National Institutes of Health, U.S. Department of Health, Education, and Welfare, March 1980. Also see National Institutes of Health, Public Health Service; Dollars for Health Research and Development: 1968-1975, Resources for Health R&D Report No. 23, U.S. Department of Health, Education, and Welfare, June 1977.
Real Expense per CapitaPer capita expenses for medical research are deflated by the Biomedical Research and Development Price Index.
Construction
ExpendituresExpenditures for medical-facilities construction are reported in Robert M. Gibson, “National Health Expenditures, 1979,” Health Care Financing Review, Summer 1980, pp. 1-36.
PricesThere are two implicit price deflectors for this category—one for purchases of structures “private, new, nonresidential—religious, educational, hospital, institutional, and other,” and one for purchases of structures “government, new, buildings excluding military—industrial, educational, hospital and other.” Data Source: Bureau of Economic Analysis, Survey of Current Business, U.S. Department of Commerce, various July issues.
Real Expenditures per BedMedical-facilities construction expenditures per bed were deflated by a weighted average of implicit price deflators for construction of private and public nonresidential structures. A weighted average of community hospital, Federal hospital, and nursing home beds was used as the divisor to calculate real construction expenditures per bed.
  77 in total

1.  Evaluation of medical practices. The case for technology assessment.

Authors:  H V Fineberg; H H Hiatt
Journal:  N Engl J Med       Date:  1979-11-15       Impact factor: 91.245

2.  Trends in physicians' patient volume.

Authors:  G Wilson; J W Begun
Journal:  Inquiry       Date:  1977-06       Impact factor: 1.730

3.  Approaches to controlling the costs of medical care: short-range and long-range alternatives.

Authors:  D Mechanic
Journal:  N Engl J Med       Date:  1978-02-02       Impact factor: 91.245

4.  Measuring hospital productivity.

Authors:  H S Ruchlin; I Leveson
Journal:  Health Serv Res       Date:  1974       Impact factor: 3.402

5.  U.S. health manpower policy: will the benefits justify the costs?

Authors:  J H Morrow; A B Edwards
Journal:  J Med Educ       Date:  1976-10

6.  Deinstitutionalization and mental health services.

Authors:  E L Bassuk; S Gerson
Journal:  Sci Am       Date:  1978-02       Impact factor: 2.142

7.  On broadening the definition of and removing regulatory barriers to a competitive health care system.

Authors:  W McClure
Journal:  J Health Polit Policy Law       Date:  1978       Impact factor: 2.265

8.  Physician-induced demand for medical care.

Authors:  J Green
Journal:  J Hum Resour       Date:  1978

9.  The National Nursing Home Survey: 1977 summary for the United States.

Authors: 
Journal:  Vital Health Stat 13       Date:  1979-07

Review 10.  Taxation and its effect upon public and private health insurance and medical demand.

Authors:  N T Greenspan; R J Vogel
Journal:  Health Care Financ Rev       Date:  1980
View more
  10 in total

1.  Medicare dentistry: the next logical step.

Authors:  H Barry Waldman; Mary Rose Truhlar; Steven P Perlman
Journal:  Public Health Rep       Date:  2005 Jan-Feb       Impact factor: 2.792

2.  National health care surveys and health care management. Examples from the National Center for Health Statistics.

Authors:  W E Bacon; R Mullner
Journal:  J Med Syst       Date:  1983-12       Impact factor: 4.460

3.  Hospital expenses in a sector model.

Authors:  B Friedman; S R Pliska
Journal:  Health Serv Res       Date:  1985-02       Impact factor: 3.402

4.  Traditional and emerging forms of dental practice: another view.

Authors:  H L Bailit
Journal:  Am J Public Health       Date:  1982-07       Impact factor: 9.308

5.  National health insurance always just around the corner?

Authors:  S A Schroeder
Journal:  Am J Public Health       Date:  1981-10       Impact factor: 9.308

6.  National health expenditures, 1981.

Authors:  R M Gibson; D R Waldo
Journal:  Health Care Financ Rev       Date:  1982-09

7.  Comparative trends in hospital expenses, finances, utilization, and inputs, 1970-81.

Authors:  J Cromwell; H T Hewes; N L Kelly; S Franklin
Journal:  Health Care Financ Rev       Date:  1987

Review 8.  Union activity in hospitals: past, present, and future.

Authors:  E R Becker; F A Sloan; B Steinwald
Journal:  Health Care Financ Rev       Date:  1982-06

9.  Medicare expenditures and utilization under State hospital rate setting.

Authors:  J Cromwell; H Hewes
Journal:  Health Care Financ Rev       Date:  1985

10.  Impact of State hospital rate setting on capital formation.

Authors:  J Cromwell
Journal:  Health Care Financ Rev       Date:  1987
  10 in total

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