Not all quality problems reflect overuse of service. Underuse is a quality problem as well. Some underuse reflects barriers to access. Underuse of services that is not due to direct access barriers may be classified as underdiagnosis or undertreatment. 100 Malpractice suits frequently allege that the physician or provider underdiagnosed or undertreated by missing a diagnosis or failing to follow-up on an abnormal test result. 101 Medicare Peer Review Organizations (PROS) include various screens for undertreatment in their quality reviews. For example, each PRO has to screen a sample of medical records to determine whether a patient was discharged prematurely or received an adequate discharge plan. These screens have detected few cases of underservice of Medicare patients, however. More prevalent, it would appear, are other types of underservice, such as less complete diagnostic services and fewer rehabilitation services than experts judge the elderly need. 102

Bad medicine resulting from errors, negligence, incompetence or unprofessional behavior also jeopardizes the quality of care. Knowledge of such problems results from existing quality assurance mechanisms— such as Medicare Peer Review Organizations, the Joint Commission on Accreditation of Healthcare

Organizations, utilization management entities that oversee the quality of care for the nation's larger employers, and inspections by state survey and certification teams. 103 Bad medicine can take many forms, including patients being discharged prematurely from hospitals; errors in diagnosis, medication, and treatment; faulty laboratory tests; hospital-induced infections and other complications resulting from medical treatment; and similar misadventures.

Malpractice Litigation: Protection or Problem?

Malpractice litigation provides consumers with a private course of action when they believe that the quality of the care required falls below acceptable standards. 104 At the level of the individual patient, poor quality medicine is often the catalyst leading to such a suit. But the evidence is strong that malpractice litigation does not adequately protect against or compensate for poor quality care.

A recent study of malpractice claims in New York showed that adverse events due to negligence occurred in 1.0 percent of all hospital discharges. Eight times as many patients suffered an injury from negligence as filed a malpractice claim, and 16 times as many patients suffered an injury from negligence as received compensation from the tort liability system. 105 This is consistent with evidence from the mid-1970s suggesting that at most one in 10 persons injured as a result of negligence actually filed a claim, and evidence from claims data of the early 1980s that one in five persons claiming negligence brought suit. 106, 107

The same study also found that fewer than half the claims made by patients lead to payments by physicians or their insurers-suggesting that negligence did

not occur.

Not only does malpractice litigation provide limited protection; it creates cost, quality, and access problems of its own. The costs of malpractice premiums raise the costs of medical care. And the risk of litigation may distort physicians' practice patterns.

Total malpractice premium costs of doctors and hospitals were over $6 billion in 1987, about 2 percent of dollars spent on these services. 108 Professional liability premiums paid by self-employed physicians nationwide averaged $15,900. There is a great deal of variation in premium by specialty and by geographic location. Of the surveyed specialties, obstetricians/ gynecologists averaged the highest premiums ($35,300), while psychiatrists averaged the lowest

out of particular geographic locations. This problem is seen most sharply in studies of obstetrical services in low-income areas, where physician clinics are reducing this part of their practice, they say, due to the combined pressure of Medicaid cost containment and rising malpractice premiums. 110

A recent Institute of Medicine study concluded that, because of liability concerns, significant numbers of each of the physician groups examined were reducing obstetrical services to high-risk women, eliminating obstetrical practice altogether, or dropping it earlier in their careers than they otherwise would. Similarly, the American College of Obstetricians and Gynecologists (ACOG) in a 1987 survey of its membership found that its members were reducing or eliminating obstetrics as a result of the risk of malpractice. 111

It is difficult to measure how much defensive medicine exists or how much it costs. By one estimate, about $11.7 billion out of the $82.8 billion paid to physicians in 1985 was attributable to service-increasing defensive medicine.112 These numbers may overestimate the amount of potential harm, of course, because much of what might be labeled defensive medicine is good medical practice. But it is significant that a large portion of the medical profession believes that physicians have modified their practice patterns, and in some cases left the profession, in response to both malpractice premiums and their perception of the legal consequences of their medical decisions.

UNDERSERVED AREAS AND SPECIAL POPULATION GROUPS

The Commission's deliberations on health care focused chiefly on the financial barriers to access. But there is more to access than simply paying the bills. Even if health care were financed in full for everyone, some people would still have trouble obtaining adequate care for a variety of reasons-geographic, systemic, cultural, and personal. Like financial barriers to access, these nonfinancial barriers often result in people getting care later or less often than needed. As a result, their medical conditions become more severe and require more acute, and therefore more costly, treatment.

Nonfinancial barriers to access apply primarily to those living in medically underserved areas-such as rural communities or inner cities-and to members of population groups with special needs-such as the poor, substance abusers, the mentally or physically handicapped, and pregnant teenagers.

Medically Underserved Areas

Both rural and inner city areas have trouble recruiting or maintaining physicians and other health care professionals-in part because of the perceived undesirability of living or working in these areas, and in part because of the economics of maintaining a practice in places with large numbers of uninsured. 113 In 1988 there were 33 million people living in federally designated health manpower shortage areas (HMSAs). This population was about equally divided between urban and rural areas. 114

Rural Areas-In 1985, there were 97.9 patient-care physicians per 100,000 population in rural counties, compared with 174.7 patient-care physicians per 100,000 population in urban counties. In rural counties with fewer than 10,000 population there were only 53 physicians per 100,000; and in counties with fewer than 2,500 residents there were only 29.9 per 100,000.115 Although physician supply has increased recently in the more populated rural areas, it is expected to decline in the less populated areas due to a projected 25 percent rate of physician retirement in rural areas and severe cutbacks in the National Health Service Corps (NHSC) program, which supplies physicians to HMSAs. Even areas that can hold on to their physicians may be deprived of some essential services. 116 The problem of too few providers in rural areas is compounded by a general decline in the growth of primary care doctors, who are uniquely suited for rural practice and the shortage of nurses and other midlevel practitioners in rural areas. 117, 118

Problems facing rural hospitals and health centers aggravate the situation. Low patient volume (because patients are so widely scattered in rural areas), Medicaid and Medicare reimbursement policies, rising numbers of patients unable to pay, and personnel shortages have forced an increasing number of rural hospitals to close their doors-all trends expected to continue. 119 Community and migrant health centers-important sources of primary care in some rural communities-have been facing increasing financial strains due to the failure of federal funding to keep pace with inflation, the increase in patients without insurance, rising malpractice premiums, and NHSC's cutbacks, 120

Inner Cities-In 1988, 17 million residents lived in medically underserved urban areas-primarily inner cities. These areas are unattractive to many physicians and may not be able to support an economically viable medical practice. 121 The shortages are particularly acute for office-based primary care physicians. One study found that, between 1963 and 1980, the

availability of such physicians declined in poverty areas, despite growth in the overall number of practicing patient care physicians. 122 This puts even greater burdens on the hospitals, which are beginning to close emergency rooms and trauma centers to avoid the increasing demand for uncompensated care. Finally, community health centers in urban underserved areas face the same financial and personnel strains as their rural counterparts.

Special Needs of Special Populations

Even those with the means to pay for care and providers to supply it may not have access to care for a variety of logistical, physical, mental, cultural, or personal reasons. The following are just a few examples of groups that face particular hurdles in obtaining care, although each of the barriers could apply to anyone. 123

The Poor-Even if their health care is paid for, persons in poverty may face significant logistical barriers to care. For those who cannot afford to maintain a car, take public transportation, or pay taxicab fare, travel to medical care is a serious problem. When public transportation is available and affordable, the effort required to get from home to the source of care may be extraordinary.124 Providers' limited office hours can pose another obstacle for the working poor who cannot take time away from their jobs.

look at our indigent care system and the factors threatening it.

Public Health Programs-Although all levels of government make some contribution to the care of the uninsured through subsidies or direct provision of health services, their efforts are inherently limited in scope. 50 Federal programs established in the 1960s and 1970s have faced steadily declining resources throughout the 1980s. State and local programs similarly face resource constraints.

The main federal efforts are grant programs:

The Maternal and Child Health Services block grant to states, to provide preventive, primary, and specialized care to low-income women and children;

The Community Health Center program, which provides direct support to urban and rural community health centers that furnish primary and prenatal care and other health services to medically underserved populations;

• The Migrant Health Centers program, whose grantees provide care to migrant and seasonal farm workers;

• The Preventive Health Services block grant to states, for discretionary use for any of several specified preventive health priorities;

A variety of other programs and grants targeted to specific populations (the homeless, those in rural areas) or health care needs (family planning, black lung disease, AIDS).

The Public Health Service administers these grants, which help state and local governments and private nonprofit organizations provide facilities, services, and personnel for underserved populations. In most cases, federal monies are combined with state or local government funds, private funds, or insurer payments.

How many persons are being served by these programs is not clear. But it is clear that the programs do not fully meet the needs of the populations they are intended to serve-let alone all those not covered by public or private insurance. The migrant health centers are estimated to serve only 14 percent of the migrant population-about half a million of the 3.5 million migrant workers and their families. 51 Community health centers are estimated to reach 5.35 million persons (not all of them uninsured)-or about 15 percent to 20 percent of the 25 million to 30 million persons living in the nation's medically underserved

areas.

Limited funding is the primary reason these programs are falling short of their mission. Total funding

for all the direct health services programs listed here is just under $1.5 billion in 1990.52

But even if they were fully funded and successfully reaching all their target populations, these federal public health programs would not fill the gaps left by private and public health insurance. They are aimed at specific groups and specific problems, and the range of services they provide is sharply limited. None of the programs, for example, includes inpatient hospital care.

One other federal initiative deserves mention in the context of care for those who cannot pay: the HillBurton program, which provided support for hospital construction and renovation in exchange for a commitment by the hospitals to provide free care and below cost care to persons with incomes less than 200 percent of poverty. Although no new grants and loans under this program have been made since the mid-1970s, some of the facilities that received assistance have ongoing obligations to provide at least some free care into the 1990s. A few are obliged to provide free care throughout their existence. And all Hill-Burton-assisted facilities are prohibited from denying emergency services to community residents on the grounds of inability to pay (however, they may bill for services rendered). 53 There have been serious questions about the adequacy of enforcement of the Hill-Burton free care requirements, however, and, in any event, the obligations are tiny compared with the need. The total amount of free care that such hospitals are obliged to provide is $180 million in 1990; and only $1.8 billion in additional care is required over the remaining life of the program. 54

State, county, and municipal governments finance, subsidize, or furnish indigent care-or require providers to furnish it-in a variety of ways. In all but three states, either state or local government has at least some legal obligation to provide indigent care to some patients.55 In 18 states, the responsibility falls solely on the counties. In four others, counties have this responsibility only if they operate a hospital; otherwise the responsibility belongs to the state. In eight other states, responsibility is shared between counties and state or city governments. 56

The state or local insurance programs for non-Medicaid low-income or medically uninsurable persons described earlier account for only part of state and local spending for the uninsured. Additional funds go to direct support for the provision of services, chiefly in public hospitals and clinics, and primarily in the South and South Central regions. 57

These funding levels, which do not all go for care of the uninsured, fall grossly short of the need. Even public hospitals can no longer rely on local government to make up their full losses on uncompensated care. The National Association of Public Hospitals (NAPH) has estimated that its member facilities would average a 30 percent operating deficit without public subsidies, and have a 7 percent deficit even with the subsidies. 60 This is not for want of effort by local governments. The Prospective Payment Assessment Commission (ProPAC) has noted, for example, that state and local appropriations for public hospitals rose 41 percent between 1980 and 1984. Public hospitals' costs for the uninsured almost doubled in the same period. 61

Two factors appear to have contributed to the growing burdens on public facilities. The first is greater demand-not just the rise in the number of uninsured persons, but also new pressures such as the AIDS epidemic, widespread drug abuse, and violent crime. The second is the erosion of privately subsidized care in private or nonprofit hospitals. This includes care given to patients who are not expected to pay (traditional charity) and bad debt from patients who were expected to pay when care was provided.

Charity Care-Traditional charity and bad debt are discussed together for two reasons. 62 First, data limitations make it difficult to distinguish between the two. Second, and more important, studies indicate that most bad debt is incurred by persons without adequate insurance who would have difficulty paying substantial bills.

Uncompensated care furnished by hospitals is the focus of this discussion because the extent of hospital services to the uninsured is fairly well documented. It should be emphasized that physicians and other providers also provide uncompensated care. As much as

10 percent of all physicians' services may be going to patients without charge or insurance payment. 63

Uncompensated care cost hospitals $10.7 billion, 6.3 percent of total expenses in 1988 according to the AHA. The extent of the private subsidy-uncompensated care minus state and local contributionsamounted to $8.3 billion or 4.9 percent of total expenses, in 1988. Hospitals are providing more free care than they were at the start of the decade, when the equivalent figure was $3.0 billion, or 3.9 percent of total expenses. 64 But their ability to continue to afford this burden is in grave doubt.

Providers of care cover their losses on uninsured patients from their charges to those who can pay. This means that employers and insurers are paying much of the cost of uncompensated care. They are increasingly looking for ways to avoid this hidden tax through preferred provider organizations (PPOs) and other negotiated discount arrangements, which successfully restrict their liabilities to their own workers or subscribers.

With the Medicare and Medicaid programs also restraining payment rates, hospitals are steadily losing the cushion they need if they are to finance care for those who cannot pay.

Shrinking finances are not the only cause for alarm. As the ability to finance uncompensated care is going down, the need for such care is increasing. Drug abuse, AIDS, and violent crime are all disproportionately concentrated among the poor, who are most likely to be uninsured. So, too, is the problem of low birthweight babies. By late 1989, one in 10 of all infants born alive in New York City required neonatal intensive care, at enormous cost.65 And in some parts of the country, the special needs of low-income groups are compounded by the need to provide care to a growing population of undocumented immigrants, who are almost entirely excluded from all health care coverage.