services covered under the medical insurance program (table 1). No adjustment was made for seasonal variation. Excluded are services and charges by hospitalbased physicians such as pathologists and radiologists. Included are persons using covered services for which a bill is not expected. All services performed by relatives are included, for example, as well as those provided by government agencies such as health departments, with the possibility that these services may in the future become chargeable to the program. Charges are not imputed, however, to those services for which a bill will not be rendered. Although information was collected during the field interview on the use of noncovered services, such as eyeglasses and routine physical examinations, the information on use of services presented here refers only to covered services. On this basis, an aged person purchasing eyeglasses during July, without a visit to a physician for any covered services, is classified here as having used no covered services. Of the 5.6 million enrollees using covered services in July, approximately 600,000 persons or about 10 percent had used services with charges totaling $50 or more and thus met the deductible during the first month of the program's operation. Use of medical services among the aged differs to some extent by age and sex. The CMS provides some evidence that the proportion using covered medical services increased with age from 31 percent of persons aged 65-74 to 36 percent of persons aged 85 and over. A somewhat larger proportion of the aged women use medical services than aged men. There are, however, no material regional differences in the use of medical services. Total charges of $167 million were incurred in July by the 5.3 million persons using covered medical services and for whom bills have been rendered or are expected to be rendered. This total represents an average of $31 per person using such services (table 2). As expected, when the dollar amounts are allocated to the deductible status of the enrollees, a different picture emerges. For the 4.7 million persons who had used medical services and incurred charges of less than the $50 deductible during July, the aggregate charges amounted to $57 million, or an average of $12 per person. By contrast, for the estimated 607,000 persons who had incurred charges of more than the $50 deductible during July, the average amount per person was about $181. On an aggregate basis, total charges for this group amounted to approximately $110 million. For the first month of the program's operation, all but the first $50 and 20 percent of the remaining charges are potentially reimbursable, on the assumption that all charges are classified as reasonable by the intermediary. On this basis, about $64 million or 58 percent of the total charges for the group of aged persons meeting the deductible in the first month are potentially reimbursable. This percentage rises somewhat in succeeding months as the same individuals continue to use additional medical services and the deductible amounts have already been accounted for. By the end of the third quarter of 1966, potentially reimbursable charges amounted to approximately $227 million. The following tabulation presents the estimated charges for persons using medical services in each of the first 3 months of the program, categorized by their deductible status. The use of medical services in August and September 1966 by aged beneficiaries of the medical insurance program remained about the same as in the first month of the program's operation. About 32 percent of the enrollees used medical services in each month. These figures are not additive because many of the same 2 See "Enrollment in the Health Insurance Program for the Aged," Social Security Bulletin, March 1966, pp. 21-24. 3 "Reasonable charges" are based on the customary charges for similar services generally made by the physician or other person, as well as the prevailing charges in the locality for similar services. They may not be higher than the charge applicable for the carrier's own policyholder for comparable services under comparable circumstances. TABLE 2.-CURRENT MEDICARE SURVEY, MEDICAL INSURANCE SAMPLE: ESTIMATED AVERAGE CHARGE PER MEDICAL INSURANCE ENROLLEE USING MEDICAL SERVICES, BY SELECTED CHARACTERISTICS AND DEDUCTIBLE STATUS, JULY-SEPTEMBER 1966 1 Based on number of enrollees using covered services, excluding persons for whom a bill is not expected. 2 Based on number of enrollees for whom the first $50 of covered expenses have been met by the end of the month and for whom a chargeable expense has been incurred during the month. 3 Excludes the first $50 and 20 percent of the remaining charges and assumes that all charges are classified as reasonable by the intermediary. 4 Age attained in 1966. 5 Based on mailing address of enrollee when selected for sample. persons use services in successive months. In August and in September, as in July, there were indications of the increasing use of services with advancing age, and a somewhat higher proportion of women than men continued to utilize medical care services (table 1). Total charges incurred in August and in September also remained at about the same level as in July-approximately $165 million or $31 per enrollee using medical services. When the enrollees and their incurred charges are distributed according to their deductible status, the picture changes significantly for each of the months. During July, approximately 4 percent of the enrollees had met the deductible and the amount incurred averaged approximately $181. In August, 6 percent of the enrollees had used some services and met the deductible by the end of the month, but their charges averaged $113. About 9 percent had used some services during September and met the deductible by the end of the month, and the average charge for this group declined to approximately $82. This successively decreasing average charge for the enrollees using services in a given month who have already met the deductible is undoubtedly a function of the pattern of expenditures for medical services by aged persons. It is likely that initial large expenditures resulting from an illness requiring hospital care are often followed by additional smaller outlays for follow-up physician visits. Thus, the calculation of average charges in August and September among persons who have already met the deductible involves an increasing number of persons who have met the deductible in previous months and use little services in the month of calculation, and an increasing number of persons who have partially met the deductible in previous months and meet the deductible with relatively small charges incurred during the current month. In addition, there are some persons who may have met the deductible in July but did not use any services in the months following. Likewise, others may have met the deductible in August but did not use services in September. A cumulative picture of the number and percent of the enrollees meeting the deductible by the end of each month is shown in table 3. An initial group of 607,000 met the deductible in July, and another group about the same size reached this amount by the end of August. By September's end, about 2 million persons, or 11 percent of the enrollees, had reached the deductible. The evidence of increasing use with increasing age continued to manifest itself. At the end of the third month of program operation, there was no material difference between the proportion of men and women who had met the deductible. Regional variations were, however, evident. A somewhat higher proportion of the aged enrollees in the West (14 percent) than in the South (10 percent) had met the deductible by the end of September-a reflection perhaps of both the relatively higher utilization and higher charges in the West. RELIABILITY OF ESTIMATES Since the estimates are based on a sample, they may differ somewhat from the figures that would have been obtained if the same data had been collected for the entire universe of enrolled persons and the same collection procedures used. The data may also differ from the results of statistical compilation of data from the administrative records. As in any data collection, the results are subject to errors of response, reporting, and processing as well as being subject to sampling variability. On the other hand, statistical compilations of data from the administrative records may be subject to errors of omission or incompleteness as well as processing and, where sampling is employed, may also be subject to sampling variability. The standard error is primarily a measure of sampling variability-that is, of the variations that occur by chance, because a sample rather than the whole universe was used. As calculated for this report, the standard error also partially measures the effect of response errors but does not measure any systematic biases TABLE 3.-CURRENT MEDICARE SURVEY, MEDICAL INSURANCE SAMPLE: ESTIMATED NUMBER AND PERCENT OF ENROLLEES MEETING THE DEDUCTIBLE BY THE END OF EACH MONTH, BY SELECTED CHARACTERISTICS, JULYSEPTEMBER 1966 1 Based on the estimated number of enrollees in the medical insurance program as of the beginning of each month. 2 Age attained in 1966. 3 Based on mailing address of enrollees when selected for sample. in the data. The chances are about 68 out of 100 that an estimate from the sample would differ from the result for the entire universe, with the same procedures and methods used, by less than the standard error. The chances are about 95 out of 100 that the differences would be less than twice the standard error. The chances are about 99 out of 100 that the differences would be less than two and one-half times the standard error. For this report, a group of items have been selected for which approximations to the standard errors have been estimated. Similar approximations of the standard errors of other estimates could be calculated. At the start of this statistical program, sampling variability estimates are shown only for some data in order to illustrate the range of variability in the basic data. In order to derive standard errors that would be applicable to the wide variety of items presented and that could be prepared at a moderate cost, a number of approximations would be required. The necessary experimentation to enable the generalization to be carried out is under way. In subsequent reports, as soon as possible, generalized tables of standard errors will be provided. The medical insurance sample of the CMS estimates that 1,978,000 persons had met the $50 deductible during the first quarter of operation. The standard error is about 125,000. The chances are 68 out of 100 that the result based on the CMS collection procedures for the entire universe would be between 1,853,000 and 2,103,000. Approximately the same number of persons met the deductible in July, August, and September. The estimate of about 600,000 for July or August has a standard error of about 65,000. The estimate of 780,000 for September has a standard error of about 80,000. It is estimated that approximately 5.6 million persons have been using services covered by the program each month. The standard error is about 180,000. Chances are about 68 out of 100 that the number of persons using these services lies within the range of 5.42 million and 5.78 million in each month. The aggregate amount of reimbursable charges for the first 3 months of the program among the 1,978,000 who have met the deductible has been estimated to amount to about $227 million. The standard error is about $18 million. The survey has estimated that the average amount of total charges in September among persons using services and meeting the deductible by the end of September is $82. The standard error is about $11. The estimates developed from the medical insurance sample of the CMS are based in part on the memory or knowledge of one person. The memory factor in data derived from field surveys probably produces underestimates, because the tendency is to forget minor or irregular items. Other errors of reporting may result from misunderstanding as to the scope of the program's coverage. INPATIENT HOSPITAL SERVICES |