Extensive use of physician services also results from the amount of surgery performed in the United States. During 1983 physicians performed more than 26 million inpatient surgeries.12 The National Center for Health Statistics reported that there was a dramatic increase in the number and rate of surgical procedures performed in the United States, particularly during the 1970's. Specifically, from 1971 to 1978, the rate of surgery increased by more than 24 percent, which is over four times faster than the increase in population growth.13 Although a large number of operations are still being performed, the rate of surgery relative to the population leveled off from 1979 to 1983. The rate of surgery during this period increased by 5.5 percent compared with the sharp increases in the 1970's. Most notably, the rate of increase from 1981 to 1983 amounted to less than 1 percent. 14 Too many physicians performing surgery for the needs of the population may be one supply factor resulting in excessive surgery, according to HCFA. More importantly, extensive third-party coverage may account for the high demand for surgery. The United States not only has the highest rate of surgery in the world; it also has the highest ratio of surgeons to population. In 1970, for example, about 93,000 of the 272,000 physicians in active practice indicated that they performed surgery and there were 42 surgeons per 100,000 population. By 1976, the number of physicians practicing surgery had increased to about 99,000 and there were 46 surgeons per 100,000 population.15 By 1982, there were about 119,000 practicing surgeons in the United States and there were 51 surgeons per 100,000 population.16 Other factors cited by HCFA which have contributed to the increase in surgery in the United States, include --third-party coverage, --improved access to medical care, and -improved technology resulting in surgeons operating on patients who previously would have been treated medically.17 Other health services Increases have occurred in the utilization of other health care services particularly nursing home care, mental health services, and the services provided by the public health system. The number of patients in nursing homes increased from about 1.1 million persons in 197118 to about 1.4 million persons in 1982, 19 a 28.1 percent rise. Approximately 90 percent of nursing home beds are occupied by persons age 65 and over. According to the AMA, the number of elderly nursing home patients may increase by 54 percent by the year 2000.20 Patient care episodes (which include inpatient admissions, outpatient visits, and day care services) in mental health facilities increased from about 4 million in 1971 to about 6.4 million in 1979,21 an increase of nearly 59 percent. The number of outpatient psychiatric services provided from 1971 to 1979 22 increased from 2.3 million to 4.6 million, a 100 percent increase. Federal and state public health activities (discussed in more detail on pp. 174-177) have included programs established to prevent disease and promote health. Examples include programs to improve the health status of mothers and children, combat communicable and chronic disease, protect workers, improve the environment and promote healthy lifestyles. The implementation of these activities, while offering opportunities for many health benefits, has nevertheless increased the use of the health care system by making additional services available. For example, substantial increases have occurred in screening for illnesses, such as cancer, hypertension, and diabetes. The National Center for Health Statistics reported that during the mid to late 1970s --the percent of women between the ages of 20 and 64 --the percent of women screened for breast cancer increased from about 56 percent to nearly 63 percent, and --the percent of the population screened for hypertension While the goal of these programs has been to prevent disease or disability, the extent to which this may ultimately lead to reduced use of the health care system is, for the most part, unknown. WHY HAS UTILIZATION INCREASED? Numerous reasons have been cited as contributing to increased utilization of health care services in the past. Major factors have been (1) increased third-party coverage of health care, which lessened financial barriers to care, (2) unnecessary and/or inappropriate utilization of services, and (3) unhealthy lifestyles. Other reasons include the practice of defensive medicine, tax benefits resulting from the medical expense deduction, and society's views and expectations of what the health care system should provide. Extensive third-party insurance coverage Health care is financed either directly by the consumer through out-of-pocket payments or by third parties. Such third parties include (1) private health insurers, such as Blue Cross and Blue Shield plans, commercial insurance companies, and prepaid and self-insured plans, (2) philanthropic organizations, and (3) federal and state governments. 24 Over the years, third-party payers have covered increasingly greater proportions of the consumer's health care expenses. Such coverage has removed financial barriers to care and encouraged consumers to seek and health care providers to furnish more services than they otherwise would. Third parties have assumed greater roles in financing health services since the 1930s. As the percentage of health expenses paid by third parties has increased, the proportion paid directly by consumers has dropped. In 1950, third parties paid about 35 percent of total personal health expenditures; this rose to more than 60 percent by 1970.25 By 1984, nearly 75 percent of personal health expenditures were financed by third parties.26 Third parties have had a much greater role in financing hospital care and physician services compared to other types of personal health services. In 1950, third parties paid about 70 percent of total expenditures for hospital care, climbing to over 92 percent by 1975.27 In 1984, third parties paid more than 91 percent of hospital expenditures. 28 Compared to hospital care, third parties have paid much less of the total costs for physicians' services. However, the percentage of expenditures for physicians' services paid by third parties has increased significantly. To illustrate, in 1950, third parties paid only about 17 percent of these expenditures. 29 However, by 1984 third parties paid for over 72 percent of such expenditures. 36 Third parties have also assumed a greater role, although not to the extent for hospital care and physicians' services, in financing other personal health care expenditures. For example, third parties, primarily Medicaid, paid for about 51 percent of nursing home expenditures in 1984.31 In addition, an ever increasing number of persons are covered by health insurance. In 1940, about 12 million persons (or 9.1 percent of the population) had some level of health insurance coverage for hospital care.32 By 1960, those with such coverage had increased to an estimated 122.5 million persons (68 percent of the population). Enrollments steadily continued to increase to an estimated 186.1 million persons in 1980, which represented about 82 percent of the population.33 Tax policies have subsidized the purchase of health insurance through tax benefits resulting from employer paid health insurance premiums. Employer contributions for health insurance are currently excluded from employer and employee taxable income. Because of such exclusions, employees have strong incentives to seek extensive employment-based health insurance coverage.34 Health insurance encourages patients to demand more and better health care because it reduces the price to the patient at the time care is purchased and also has been found to induce changes in consumer and provider behavior through -- increased use of insured services and --reduced concern about the relative cost of providers. 35 Moreover, as health insurance has become more comprehensive, physicians have had fewer incentives to question the cost-effectiveness of alternative treatments or the prices charged by hospitals. Also, physicians have incentives to do more in each medical situation than would be prudent without extensive insurance due to their desire to do as much as possible to help the patient and to protect themselves from malpractice suits.36 Persons without health insurance coverage Although a large percentage of the American population has some form of health insurance, there remains a substantial number of people without coverage. Between 1979 and 1982, the number of Americans without health insurance grew by 14 percent from 28.7 million to 32.7 million persons. Persons from lower-income families and young, adults were more likely than others to be without coverage. More recent data estimate the number of uninsured in 1984 and 1985 to be about the same since the unemployment rate did not change significantly since 1982.38 A significant detriment for persons without adequate insurance coverage relates to their access to health care. Improved access to care was an objective of federal health policy in the 1960's and 1970's. Studies have shown that these efforts have improved access to care for low-income and minority groups. 40 In recent times, however, this seems to be changing. In 1982, it was estimated that 10 percent of the U.S. population (or about 24.5 million people) did not have a usual source of care. Further, in 1982, 6 percent of families believed that they needed care but could not obtain it; and by 1983, this figure had increased to 14 percent of U.S. families. The major obstacle to obtaining health care today is not access to a physician but an inability to pay for services because of lack of insurance or inadequate insurance. The groups most at risk include the poor, the aged, and racial minorities.41 Provision of unnecessary or inappropriate care Numerous studies have demonstrated that a substantial but unknown amount of health care provided is either medically unnecessary or inappropriate. A medically unnecessary service may be defined as any treatment procedure which could be elimi42 nated altogether without harming the health of the patient. Unnecessary services also carry the risk of harming the patient through iatrogenic, or physician-induced, disease. For instance, treatment with unnecessary pharmaceuticals that cause harmful side-effects or unnecessary hospitalization that results in infection by drug-resistant bacteria are disease states caused by physician intervention. Medical treatment appropriateness can be evaluated both clinically and financially. Any treatment setting may be clinically appropriate if it improves health status. But some settings are more expensive than others, making it financially appropriate to use an alternative for an equivalent health outcome. 43 There is evidence that, in some cases, services could be provided and/or delivered at reduced costs and that in other cases, fewer services could be provided with little or no effect on a patient's well-being. Many suggest that if inefficiencies could be reduced and inappropriate care discouraged while at the same time cost-effective care is encouraged, substantial savings could be achieved.44 Because of the lack of universally accepted standards of unnecessary and inappropriate utilization of health services, it is difficult to estimate with any accuracy either the extent of the problem or the financial costs associated with it.45 result, it is debatable as to how large the savings might be, As a |