Overview. Chartbook 2004 In 2003, Congress passed the most sweeping reform to the Medicare program since its inception by adding outpatient prescription.

Overview

Chartbook 2004

In 2003, Congress passed the most sweeping reform to the Medicare program since its inception by adding outpatient prescription drugs to its list of benefits. The Medicare Prescription Drug Improvement and Modernization Act (MMA) made many other changes to the program, including increasing payments to hospitals (primarily those in rural areas) by about $25 billion over the next 10 years and expanding coverage for certain preventive services, such as cardiovascular and diabetes screening tests. However, large federal budget deficits combined with the steep cost of the new legislation have created challenges. And, the effects of the MMA remain to be seen.

Recent trends in health care spending and hospital use reveal that national health expenditures grew over 9 percent between 2001 and 2002, topping $1.5 trillion. Health expenditures reached over 14 percent of the gross domestic product. While hospital services were the largest category of spending, prescription drugs continued to grow at a higher rate.

Hospitals have been under financial pressure in the last five years, both from public and private payers. Since 1999, up to one third of hospitals have had negative total margins. Early data for 2003 show a decline in operating and patient margins, while a sharp gain in non-operating income – due to improvement in the investment environment – pushed up total margins. Meanwhile, the performance of health plans continues to improve.

Every year, hospitals provide valuable health care services to those who need them, but the importance of hospitals goes well beyond the health care services they provide. Unlike many other sectors of the economy that lost vitality and shed jobs during the 2001 recession, the health care sector – and hospitals, in particular – provided an economic mainstay. For example, hospitals support one out of every nine jobs, either directly or indirectly, in the U.S.

The following charts report trends in the hospital field within the context of the broader health care environment. Hospital data are drawn primarily from the American Hospital Association Annual Surveys. The Chartbook begins with a chapter on overall patterns in health care spending, financing, and coverage. The next four chapters examine trends specific to hospital organizational, volume and utilization, financing, and workforce issues. The final chapter contains data on the economic benefits hospitals provide to their communities.

Overview

Overview

3

Chapter 1:Trends in the OverallHealth Care Market

Chartbook 2004

16.0

%

12.6

%

10.1

%

10.4

%

9.4%

7.1%

8.9%

12.1

%

11.6

%

11.8

%

9.5%

8.6%

7.4%

5.5%

5.7%

5.0%

5.1%

5.3% 6.

3% 7.1% 8.

5% 9.3%

0%

5%

10%

15%

20%

81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Chart 1.1:Total National Health Expenditures

1980 - 2002

Chart 1.2:Percent Change in Total National Health

Expenditures1981 - 2002

Bill

ions

Source: Centers for Medicare & Medicaid Services, Office of the Actuary(1) Expressed in 1980 dollars; adjusted using the overall Consumer Price Index for All Urban Consumers

Inflation-adjusted (1)

Source: Centers for Medicare & Medicaid Services, Office of the Actuary

Trends in the Overall Health Care Market

7

Chartbook 2004

8.8

%9.1

%9.8

%10.0

%9.9

%10.1

%10.3

%10.5

%10.9

%11.3

%12.0

%12.7

%13.1

%13.4

%13.3

%13.4

%13.3

%13.1

%13.1

%13.2

%13.3

%14.1

%14.9

%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

$5,500

$6,000

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Chart 1.4:National Health Expenditures

as a Percentage of Gross Domestic Product1980 - 2002

Chart 1.3:Per Capita National Health Expenditures

1980 - 2002

Per

Cap

ita A

mount





8

Chartbook 2004

1980 2002

Chart 1.5:National Expenditures for Health Services

and Supplies(1) by Category1980 and 2002


(1) Excludes medical research and medical facilities construction(2) “Other” includes net cost of insurance and administration, government public health activities, and other personal health care(3) “Other professional” includes dental and other non-physician professional services

Prescription Drugs - 5.2%


Physician Services - 20.2%

Hospital Care - 43.5%

Nursing Home Care - 7.6%

Other(2) - 9.5%

Other Medical Durablesand Non-durables - 5.9%

Home Health Care - 1.0%

Other Professional(3) - 7.3%

$233.5 B $1,496.3 B

Other Medical Durables andNon-durables – 3.4%

Prescription Drugs – 10.9%

Home Health Care - 2.4%

Other Professional(3) - 7.8%

Physician Services - 22.7%

Hospital Care - 32.5%

Other(2) – 13.5%

Nursing Home Care – 6.9%

9

Chartbook 2004

16.2%15.3%

9.5%8.7%

7.2%

4.1%

2.6%

7.3%7.7%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Chart 1.6:Percent Change in National Expenditures

for Health Services and Supplies(1) by Category

2001 - 2002


(1) Excludes medical research and medical facilities construction(2) “Other” includes government public health activities and other personal health

care(3) “Other professional” includes dental and other non-physician professional services

10


Prescription Drugs

Other (2) Physician Services Other

Professional (3)

HospitalCare

Nursing HomeCare

Home Health

Care

OtherMedical Durables

and Non Durables

Admin.and NetCost of Priv.

Health Insurance

9.2%All Health Services &Supplies

Chartbook 2004

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

80 90 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

Chart 1.7:Percent Change in National Expenditures

forSelected Health Services and Supplies

1992 - 2002

Chart 1.8:National Health Expenditures(1)

1980 - 2013


(1) Years 2003 – 2013 are projections



11

-5%

0%

5%

10%

15%

20%

25%

92 93 94 95 96 97 98 99 00 01 02

Prescription Drugs

Admin. & Net Cost of Private Health Ins.

Hospital Care

Nursing Home Care

Home Health Care

Bill

ions

Chartbook 2004

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Chart 1.10:Total Prescription Drug Spending

1980 - 2002


Bill

ion

s



12

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

$220

$240

90 91 92 93 94 95 96 97 98 99 00 01 02

Chart 1.9:Consumer Out-of-Pocket Payments for National Health

Expenditures1990 - 2002


Bill

ion

s

Chartbook 2004

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Chart 1.12:Consumer Out-of-Pocket Spending vs. Private Health Insurance Spending for

Prescription Drugs1980 - 2002


Out-of-Pocket

Private Health Insurance

Bill

ion

s


13

0%

5%

10%

15%

20%

25%

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Chart 1.11:Growth in Total Prescription Drug Spending

as a Percentage of Total Growth in National Health Expenditures1980 - 2002


Chartbook 2004

80 90 02

15.2%

3.5%

11.6%

13.4%

14.6%

3.4%

11.2%

13.5%

70.9%

13.9%

4.0%

9.7%

13.0%

73.2%

69.6%

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

Uninsured

Other Government

Medicaid

Medicare

Private

Chart 1.13:Distribution of National Health

Expendituresby Source of Payment1980, 1990, and 2002


Chart 1.14:Distribution of Health Insurance Coverage

Percentage of Population Covered by Payer1990, 2001, and 2002(1)


1990 2001 2002

Medicare - 15.2%

Total Medicaid - 10.6%

Other Government - 16.9%

Other Private - 5.9%

Out of Pocket - 23.7%

Private Insurance - 27.8%

$245.8 B $696.0 B $1553.0 B

19.7%

6.1%

33.5%

14.2%

10.6%

15.8%

Out ofPocket

OtherPrivate

PrivateInsurance

OtherGovernment

Total Medicaid

Medicare

Out of Pocket – 13.7%

Other Private - 5.0%

Private Insurance – 35.4%

Other Government - 12.7%

Total Medicaid – 16.0%

Medicare - 17.2%

14

Source: US Census Bureau, Health Insurance Coverage in the United States: 2002

(1) 2001 and 2002 data use population estimates based on Census 2000.

Chartbook 2004

0

5

10

15

20

25

30

35

40

45

50

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 020%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Chart 1.15:Number and Percent Uninsured(1)

1985 - 2002


(1) 1999 - 2002 data use population estimates based on Census 2000

Chart 1.16:Average Percent Uninsured by State

2000-2002



Num

ber

of

Unin

sure

d(M

illio

ns)

Perc

en

t of

Tota

l Popu

lati

on

Number Percent

15

< 10.0%

10.0% - 14.9%15.0% - 19.9%20.0% and above

RI 8.3%DE 9.5%DC 13.2%

Chartbook 2004

Chart 1.17:Medicare Enrollees(1)

1980 - 2002

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

1990 1995 2000 2001

Source: Centers for Medicare & Medicaid Services

(1) Does not include S-CHIP Enrollees

Chart 1.18:Medicaid Enrollees(1)

1990, 1995, 2000, and 2001


16

28.1

28.6

29.1

29.6

30.0

30.6

31.2

31.9

32.4

33.0

33.7

34.4

35.2

35.9

36.5

37.1

37.7

38.1

38.4

38.7

39.2

39.6

0

5

10

15

20

25

30

35

40

45

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 01 02

Mill

ions


(1) Hospital insurance (Part A) enrollees only; includes all persons (aged and disabled)

Mill

ions

Aged

Blind/Disabled

Children

Adults

Other Title XIX

25.3 M

36.3 M

46.1 M

42.5 M

Chartbook 2004

Chart 1.19:National SCHIP Enrollment(1)

FY 1999 - FY 2003

Chart 1.20:Percent Change in SCHIP Enrollment By

StateFY 2002 - FY 2003


(1) Number of children enrolled at any point in the year

1,959,330

3,333,879

4,622,204

5,353,8125,841,351

FY 1999 FY 2000 FY 2001 FY 2002 FY 2003

Source: Centers for Medicare & Medicaid Services, FY 2003 Number of Children Ever Enrolled in SCHIP by Program Type, January 22, 2004

RI 26%DE 1%DC 16%

1% - 50%0%

Less than 0%

51% - 100%

Over 100%

17

Unknown


Chartbook 2004

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1988 1993 1996 1998 1999 2000 2001 2002 2003

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1988 1993 1996 1999 2000 2001 2002 2003

Conventional

PPO

HMO

POS

(1)

Chart 1.21:Percentage of Employees with Employer-based

CoverageWho Can Choose Conventional, PPO, HMO and POS

Plans1988 - 2003

Source: The Kaiser Family Foundation and Health Research and Educational Trust, Survey of Employer-Sponsored Health Benefits: 1999, 2000, 2001, 2002, 2003; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996

(1) Point-of-service plans not separately identified

Chart 1.22:Distribution of Employer-sponsored Health Insurance

Enrollment by Type of Plan1988 - 2003

Conventional

PPO

HMO

POS


(1)

Source: The Kaiser Family Foundation and Health Research and Educational Trust, Survey of Employer-Sponsored Health Benefits: 2000, 2002, 2003; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996

(1) Point-of-service plans not separately identified

18

Chartbook 2004

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

15%

13% 13%

17%17%16%

13%

10%

8%

6%5%

4%4%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

91 92 93 94 95 96 97 98 99 00 01 02 03


Chart 1.23:Percentage of Medicare Beneficiaries Enrolled

in Medicare Managed Care1991 - 2003


(1) Percentages are risk enrollees divided by enrollees who have both hospital insurance and supplementary medical insurance

Chart 1.24:Percent Growth in Medicare Spending per Beneficiary

vs.Private Health Insurance Spending per Enrollee

1980 - 2002


Private Health Insurance

Medicare

19

(1)

Chartbook 2004

Chart 1.25:Percentage of Medicaid Beneficiaries Enrolled

in Medicaid Managed Care1991 - 2002

Chart 1.26:Percentage of Medicaid Beneficiaries Enrolled

in Medicaid Managed Care by State2002



25% - 49%50% - 74%

75% - 100%

1% - 24%

0%


RI 68.2%DE 77.1%DC 63.2%

10%12%

14%

23%

29%

40%

48%

54%56% 56% 57% 58%

0%

10%

20%

30%

40%

50%

60%

70%

91 92 93 94 95 96 97 98 99 00 01 02

20

Chartbook 2004

Source: Interstudy Competitive Edge: HMO Industry Report 13.2

Chart 1.28:HMO Plan Median Operating Margins

1990 - 2002

Source: The Kaiser Family Foundation and Health Research and Educational Trust, Employer Health Benefits 2000, 2001, 2002, 2003 Annual Surveys; KPMG Survey of Employer -Sponsored Health Benefits: 1988, 1993, 1996

Chart 1.27:Annual Change in Health Insurance Premiums

1988 - 2003


21

12.0%

8.5%

0.8%

3.7%

4.8%

8.2%

11.0%

12.9%13.9%

0%

2%

4%

6%

8%

10%

12%

14%

16%

1988 1993 1996 1998 1999 2000 2001 2002 2003

2.1% 2.1% 2.2%2.5% 2.4%

1.2%

-0.9%

-3.5%-3.5%

-1.3%

-0.6%

0.2%

1.3%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

90 91 92 93 94 95 96 97 98 99 00 01 02

Chartbook 2004

Source: Milliman USA

Chart 1.29:Blue Cross/Blue Shield Underwriting Gain/Loss

1965 - 2002


22

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01

Cycle Year 1 Cycle Year 2 Cycle Year 3

Overview. Chartbook 2004 In 2003, Congress passed the most sweeping reform to the Medicare program since its inception by adding outpatient prescription.

Documents

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health care spending

personal health care

health care sector

valuable health care

hospital services

medicare medicaid services

performance of health