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Health care indicators for the United States.

Contained in this regular feature of the journal is a section on each of the following four topics: community hospital statistics; employment, hours, and earnings in the private health sector; health care prices; and national economic indicators.


This article presents statistics on health care utilization, prices, expenses, employment, and work-hours as well as on national economic activity. Some of these statistics are based on sample surveys conducted monthly or quarterly by government agencies or private organizations and are available 1 to 3 months after the completion of the period. They provide the first glimpse at changes occurring within the general economy and the health care sector.

The accompanying tables report quarterly statistics for 1991 and the calendar year aggregation of quarterly information in the past 3 to 10 years. Additional tables show change from the same period 1 year earlier. For quarterly information, this calculation permits analysis of quarterly data to focus on the direction and magnitude of changes, without interference introduced by seasonal fluctuations.

In the national health accounts, indicators such as these play an important role in the estimation of the latest historical year of health care expenditures. Information that is more comprehensive tends to lag behind the close of a calendar year by 9 to 12 months or more. Therefore, we rely extensively on indicators such as these to anticipate and predict changes in health care sector expenditures for the most recent year. Other indicators help to identify specific reasons (e.g., increases in price inflation or declines in utilization) for expenditure change.

In the sections that follow, we will identify important indicators of health care and national economic activity. We will discuss the sources of this information and then describe how it can be used to predict trends in health care expenditures and the share of national economic activity that is consumed by health care purchases.

Community hospital statistics

Since 1963, the American Hospital Association, in cooperation with member hospitals, has collected data on the operation of community hospitals through its National Hospital Panel Survey. Community hospitals, which comprised over 80 percent of all hospital facilities in the United States in 1990, include all non-Federal short-term general, and other special hospitals open to the public. They exclude hospital units of institutions; psychiatric facilities; tuberculosis, other respiratory, and chronic disease hospitals; institutions for the mentally retarded; and alcoholism and chemical dependency hospitals.

The panel survey samples approximately one-third of all U.S. community hospitals. The sample is designed to produce estimates of community hospitals indicators by bed size and region (American Hospital Association, no date). In Tables 1 and 2 and Figures 1 and 2, statistics covering expenses, utilization, beds, and personnel depict trends in the operation of community hospitals annually since 1982 and quarterly for 1991. [TABULAR DATA 1 AND 2 OMITTED]

For purposes of national health expenditures (NHE), Panel Survey statistics on revenues (not shown on Table 1) are analyzed in estimating the growth in the largest component of health care costs--community hospital expenditures. This one segment of NHE accounted for 30 percent of all health spending in 1990 (Levit et al., 1991). The survey also identifies important factors influencing expenditure growth patterns, such as changes in the number of beds in operation, number of admissions, length of stay, use of outpatient facilities, and number of surgeries.

Private health sector: Employment, hours, and earnings

The Bureau of Labor Statistics (BLS) collects monthly information on employment for all workers, and earnings and work-hours for non-supervisory workers in a sample of 350,000 establishments. Data are collected through cooperative agreements with State agencies that also use this information to create State and local area statistics. The survey is designed to collect industry-specific information on wage and salary jobs in non-agricultural industries. It excludes statistics on self-employed persons and on those employed in the military (U.S. Department of Labor, 1991).

Employment in this Survey is defined as number of jobs. Persons holding multiple jobs would be counted multiple times. Approximately 5 percent of the population hold more than one job at any point in time. (Other surveys that are household based, such as the Current Population Survey (CPS), also record employment. In CPS, however, each person's employment status is counted only once, as either employed, unemployed, or not in the labor force.) Once each year, monthly establishment-based employment statistics are adjusted to benchmarks created from annual establishment census information, resulting in revisions to previously published employment estimates.

Tables 3 and 4 and Figure 3 present statistics on employment, average hourly earnings, and average weekly hours in private (non-government) health service establishments. Similar statistics for the all-private non-agricultural sector, included on these tables, provide a basis for comparing employment, earnings, and work-hours for the economy as a whole with the health sector. Table 5 and Figure 4 summarize business activity in the health sector and the overall economy by measuring change in the implied non-supervisory work-hours and payroll. Implied work-hours are the product of the number of non-supervisory employees and average weekly hours. Implied non-supervisory payrolls are calculated by multiplying implied work-hours by average hourly earnings. [TABULAR DATA 3 TO 5 OMITTED]

For purposes of NHE, changes in work-hours by industry combined with changes in prices (discussed in a later section) can be used to gauge the direction and magnitude of expenditure change in specific industries. We use these composite indicators in the estimation of growth in physician and dental expenditures for the most recent period. We study the historical relationship of changes in this indicator to changes in expenditures and estimate this relationship for the most recent period.


Consumer prices

The BLS publishes monthly information on changes in prices paid by consumers for a fixed market basket of goods and services. Tables 6 and 7 and Figure 5 present information on the all-urban consumer price index (CPI) that measures changes in prices faced by 80 percent of the non-institutionalized population in the United States. (The more restrictive wage-earner CPI gauges prices faced by wage earners and clerical workers. These workers account for 32 percent of the non-institutionalized population [U.S. Department of Labor, 1990].) [TABULAR DATA 6 AND 7 OMITTED]

The index reflects changes in prices charged for the same quality and quantity of goods or services purchased in the base period. For most items, the base period of 1982 to 1984 is used to define the share of consumer expenditures purchasing specific services and products. Those shares or weights remain constant in all years, even though consumption patterns of the household may change over time. This type of index is called a fixed weight or Laspeyres index.

CPIs for health care goods and services depict price changes for out-of-pocket expenditures made by consumers directly. The composite CPI for medical care weights together product- or service-specific CPIs in proportion to household out of pocket expenditures for these items. For example, the composite medical care CPI measures inflation for the 5 percent of hospital expenditures that are made out of pocket by consumers; the remaining 95 percent of the costs of hospital care paid by private health insurers, Medicare, Medicaid, and other payers are not weighted into the CPI for medical care. In addition, some medical care sector indexes measure changes in list or charged prices, rather than the prices actually received by providers after discounts are deducted. In several health care areas, received or transaction prices are difficult to capture, although BLS is making advances in this area.

In NHE, a combination of CPIs for selected medical care items and input price indexes for hospitals and nursing homes are used as measures of inflation for the health industry. The indexes are used to develop a personal health care fixed-weight price index to more accurately depict price changes affecting the entire health care industry than does the overall CPI medical care index (Levit et al., 1991).

Background on input price indexes

In 1979, the Health Care Financing Administration (HCFA) developed the hospital input price index to measure the pure price changes associated with expenditure changes for hospital services. In the early 1980s, the skilled nursing facility (SNF) and home health agency (HHA) input price indexes, often referred to as "market baskets," were developed to price a consistent set of goods and services over time. They have played an important role in helping to set payment percent increases and in understanding the contribution of input price increases to growing health expenditures.

The input price indexes, or market baskets, are Laspeyres or fixed-weight indexes that are constructed in two steps. First, a base period is selected. For example, for the PPS hospital input price index, the base period is 1987. Cost categories, such as food, fuel, and labor, are identified and their 1987 expenditure amounts determined. The proportion or share of total expenditures included in specific spending categories is calculated. These proportions are called cost or expenditure weights. There are 28 expenditure categories in the 1987-based hospital prospective payment system (PPS) input price index.

Second, a price proxy is selected to match each expenditure category. The purpose of the price proxy is to measure the rate of price increase of the goods or services in that expenditure category. The price proxy index for each spending category is multiplied by the expenditure weight for the category. The sum of these products (weights multiplied by the price index) over all cost categories yields the composite input price index for any given time period, usually a fiscal year or a calendar year. The percent change in the input price index is an estimate of price change over time for a fixed quantity of goods and services purchased by a provider.

The input price indexes are estimated on a historical basis and forecasted out several years. The HCFA-chosen price proxies are forecasted under contract with Data Resources, Inc./McGraw Hill (DRI). Following every calendar year quarter, in March, June, September, and December, DRI updates its macroeconomic forecasts of wages and prices based on updated historical information and revised forecast assumptions.

The methodology and price proxy definitions used in the input price indexes are described in the Federal Register notices that accompany the revisions of the PPS, HHA, and SNF cost limits. A description of the current PPS input price index was published September 4, 1990 (Federal Register). The latest HHA regulatory input price index was published December 9, 1991 (Federal Register), and the latest SNF input price index was published April 1, 1991 (Federal Register).

Current data

Each input price index is presented in two tables: The first is a percent-change table, and the second provides the actual index numbers from which the percentages were computed. The hospital input price index for PPS is in Tables 8 and 9. The SNF input price index is in Tables 10 and 11. The HHA input price index is in Tables 12 and 13. [TABULAR DATA 8 TO 13 OMITTED]

Data highlight

The PPS input price index has been revised, and a new base year of 1987 has been selected (Tables 8 and 9). Effective October 1, 1990, the new PPS input price index was used to set the fiscal year 1991 market basket value for the update of the prospective payment rates. This revision also included changes in certain variables used for price proxies. Periodically, the various input price indexes are revised so that the cost weights will reflect changes in the mix of goods and services that providers purchase.

National economic indicators

National economic indicators provide a context for understanding health specific indicators and how change in the health sector relates to change in the economy as a whole. Tables 14 and 15 and Figure 6 present national indicators of output, employment, and inflation. [TABULAR DATA 14 AND 15 OMITTED]

Statistics on the gross national product (GNP) were revised at the end of 1991. These revisions increased the size of GNP in 1990 by 1 percent. The revised GNP produced only a negligible affect on the ratio of GNP devoted to health care between 1960 and 1990 (Table 16). Concurrent with these revisions, the U.S. Department of Commerce's Bureau of Economic Analysis, the Federal agency that prepares GNP estimates, shifted emphasis from GNP to the concept of gross domestic product (GDP). The GDP differs from GNP primarily by the addition of the amount of "receipts by U. S. residents of interest and dividends and reinvested earnings of foreign affiliates of U.S. corporations" less "payments to foreign residents of interest and dividends and reinvested earnings of U.S. affiliates of foreign corporations" (U.S. Department of Commerce, 1992). In recent years, these receipts and payments have largely offset each other, resulting in level differences between GNP and GDP of less than 0.2 percent in 1991.

Traditionally, NHE has been compared to GNP. There are several reasons for converting to the use of GDP in measuring the share of resources devoted to health care. First, GDP measures the U.S. economy as the value of output produced within the geographic boundaries of the United States by U.S. or foreign citizens or companies. GNP measures the output of U.S. citizens and companies, regardless of the geographic area in which that production occurred. The basis on which NHE is calculated closely parallels that of GDP in that services are measured based on the location where the service is produced. Second, the use of a GDP measure is more closely comparable to other measures of domestic economic activity such as employment and productivity. These measures are used in estimating and analyzing NHE components. Third, in many other countries, more significant differences exist between GNP and GDP levels than those that occur in the United States (Office of the President, 1992). Health spending as a share of GDP has been adopted internationally as a measure of domestic health care resource allocation. Calculating consistent measures across countries will reduce the confusion that occurs in discussing resource allocation for health care among countries.

Table 16 compares the NHE calculated both as a share of GDP and GNP. In any single year between 1960 and 1990, use of GDP in the calculation changes the share of economic resources devoted to health care by 0.1 percent or less.
 Table 16
National health expenditures as a share of
gross national and gross domestic product:
 Gross national product Gross
Year Unrevised Revised(1) product(1)
1960 5.3 5.2 5.3
1961 5.4 5.4 5.5
1962 5.5 5.5 5.5
1963 5.7 5.7 5.7
1964 5.8 5.8 5.9
1965 5.9 5.9 5.9
1966 5.9 5.9 6.0
1967 6.3 6.3 6.3
1968 6.6 6.5 6.6
1969 6.8 6.8 6.8
1970 7.3 7.3 7.4
1971 7.5 7.4 7.5
1972 7.6 7.6 7.6
1973 7.5 7.5 7.6
1974 7.9 7.9 8.0
1975 8.3 8.3 8.4
1976 8.5 8.5 8.6
1977 8.6 8.6 8.7
1978 8.6 8.6 8.7
1979 8.7 8.6 8.7
1980 9.2 9.1 9.2
1981 9.5 9.5 9.6
1982 10.3 10.3 10.4
1983 10.5 10.4 10.5
1984 10.3 10.2 10.3
1985 10.5 10.4 10.5
1986 10.7 10.6 10.7
1087 10.9 10.9 10.9
1988 11.2 11.1 11.1
1989 11.6 11.5 11.5
1990 12.2 12.1 12.1
(1) Revised in December 1991.
SOURCES: (Levit et al., 1991); U.S. Department of Commerce, Bureau of
Economic Analysis: Survey of Current Business. Washington. U.S.
Government Printing Office; and Health Care Financing Administration,
Office of the Actuary: Data from the Office of National Health Statistics,
Division of Health Cost Analysis.

Predicting health spending using indicators

Indicators can be used to predict the share of GDP or GNP allocated to health care prior to the availability of more complete health expenditure information. Statistics presented in Tables 1-13 can be used to estimate a range of expected growth in health care expenditures for five major components of NHE. These five categories of expenditures--hospital services, physicians' services, dental services, non-durable medical products, and nursing home care--have comprised 78 to 80 percent of NHE during the last decade.

For example, the AHA Panel Survey reports growth in operating expenses (Table 2) and revenues for community hospitals that was slower by 1.2 and 0.6 percentage points respectively in 1991 than in 1990, suggesting that growth in hospital expenditures in 1991 will decelerate. For physician and dental services, the product of growth in BLS reported work-hours (Table 5) and CPIs (Table 7) indicate that growth in physician expenditures is expected to decelerate slightly while growth in dental expenditures will accelerate slightly when compared with 1990 expenditure growth rates. For non-durable medical products, expenditure growth in the historical period closely parallels that of CPIs for prescription drugs (Table 7). Price growth in this CPI component for 1991 is almost identical to that recorded for 1990. For the nursing home sector, the product of growth in BLS work-hours of employees in nursing and personal care facilities (Table 5) and in the skilled nursing facility input price index (Table 10) produce an indicator that tracks closely with expenditure growth. This indicator predicts a slight deceleration in nursing home expenditures in 1991.

Predicted growth rates in these major sectors can be applied to specific 1990 NHE sector expenditures to produce rough estimates of spending for 1991. During the past decade, the proportion of NHE that these major sectors occupy has been stable, falling only gradually from 80 percent in 1980 to 78 percent in 1990. Using historical trends, we can estimate a similar proportion for 1991. Total NHE can then be roughly calculated by dividing the major sectors' expenditures by the estimated 1991 proportion spent on health.

Given these estimates, NHE is expected to increase up from 12.1 percent in 1990 (Table 16) to 12.9-13.1 percent of the GDP. This jump in the share of national resources devoted to health care will rival the increase this ratio experienced in 1982 when it grew 0.9 percent. As in 1982, this increase results from continued deceleration in GDP growth because of a recession, rather than from acceleration in growth in NHE.

Overall, we anticipate no dramatic changes in rates of growth of health expenditures for 1991 when compared with 1990. This assessment is based on indicators presented in Tables 1-13. In 1990, health care expenditures increased 10.5 percent from the previous year. For 1991, we estimate that NHE growth will be similar to that recorded in 1990, approximately 10 to 11 percent. The continued deceleration of economic growth in the Nation's economy in 1991 meant that more and more the Nation's resources were funneled into this sector.


American Hospital Association: National Hospital Panel Survey. American Hospital Association. Chicago. (no date). Office of the President: GNP and GDP. Economic Report of the President. Office of the President. Washington. U.S. Government Printing Office, Feb. 1992. Federal Register: Medicare program; Changes to the inpatient hospital prospective payment system and fiscal year 1991 rates; Final rule. Vol. 55, No. 170, 36043-36050 and 36169-36173. Office of the Federal Register, National Archives and Records Administration. Washington. U.S. Government Printing Office, Sept. 4, 1990. Federal Register: Medicare program; Schedules of limits of home health agency cost per visit for cost reporting periods beginning on or after July 1, 1991; Notice with comment period. Vol. 56, No. 236, 64256. Office of the Federal Register, National Archives and Records Administration. Washington. U.S. Government Printing Office, Dec. 9, 1991. Federal Register: Medicare program; Schedules of limits of skilled nursing facility inpatient routine service costs; Final Rule. Vol. 56, No. 62, 13330. Office of the Federal Register, National Archives and Records Administration. Washington. U.S. Government Printing Office, Apr. 1, 1991. Levit, K.R., Lazenby, H.C., Cowan, C.A., and Letsch, S.W.: National health expenditures, 1990. Health Care Financing Review 13(1):29-54. HCFA Pub. No. 03321. Office of Research and Demonstrations. Health Care Financing Administration. Washington. U.S. Government Printing Office, Fall 1991. U.S. Department of Commerce, National Income and Product Accounts. Survey of Current Business. Vol. 72, No. 3. Bureau of Economic Analysis. Washington. U.S. Government Printing Office, Mar. 1992. U.S. Department of Labor: Employment and Earnings. Vol. 38, No. 6. Bureau of Labor Statistics, Washington. U.S. Government Printing Office, June 1991. U.S. Department of Labor: Notes on Current Labor Statistics: Price Data. Monthly Labor Review Vol. 113, No. 11. U.S. Bureau of Labor Statistics. Washington. U.S. Government Printing Office, Nov. 1990.
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Author:Donham, Carolyn S.; Maple, Brenda T.; Levit, Katharine R.
Publication:Health Care Financing Review
Date:Jun 22, 1992
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