ment also will further the goal of higher quality services.

MANPOWER AND RESOURCE DEVELOPMENT

Quality cannot survive unless manpower and resources are available in adequate quantity. Because it pays for services in a range of settings, Medicare has exerted a positive force and removed some obstacles to the availability of manpower and resources.

It has brought the pharmacist out of the corner pharmacy to his proper place on the community health team, as a medication expert and adviser on drug systems in institutions. Now the pharmacist may provide consultation to extended-care facilities, nursing homes, and small hospitals. Now we find extended-care facilities with formularies, pharmacy and therapeutic committees, dangerous drug procedures, and other elements that add up to higher quality pharmaceutical

service.

We find the States becoming concerned, because of Medicare, with the quality of pharmacy services. A new regulation in one State requires that all pharmacy consultants in nursing homes or hospitals must be certified by the board of pharmaceutical examiners, if the institution does not have a full-time pharmacist. The consultant must be a pharmacist with experience as a staff or consulting pharmacist in a hospital or nursing home and must also have attended a training course in institutional pharmacy.

Training courses for other disciplines also have produced a high net gain in manpower. Medicare has brought nurses out of the kitchen, recapped them, and put them back in active service in hospitals, nursing homes, and home health agencies.

In some areas, licensed practical nurses with "waivered" certificates are taking refresher and training courses in order to achieve the status of graduate licensed practical nurses.

Some States have aimed their training programs both at developing new skills for practicing nurses, physical therapists, nutritionists, dietitians, and other health disciplines to enable them to serve as consultants and supervisors and at reactivating inactive professional personnel through refresher courses. Three States are showing strong current interest in establishing state

wide manpower organizations that would address themselves, in the first instance, to collecting and analyzing the data required to act on needs for essential health manpower. Medicare has been instrumental in focusing attention on manpower needs in these States.

Applications are now being reviewed for training courses for professional nurses employed in extended-care facilities and for home health aides in many areas, and courses for nursing-home administrators are already under way in a few States.

In one State, the health department and the hospital association recently held four institutes for medical record librarian. This action was notable not only because it was motivated by Medicare but because it is supported entirely from non-Federal sources.

For the purpose of jointly sponsoring training courses, some States have established relationships between State agencies and nursing home associations, pharmacy associations, and dietary associations. Many hospitals are involving themselves in home care to a greater extent than ever before.

Medicare has similarly helped us make better use of our resources. Home-care services are a good illustration. Because of Medicare, home care may play a much more important role in the delivery of services in the future than it has in the past. A few years ago, probably no more than 250 agencies provided the services in addition to that of the visiting nurse (physical therapy, occupational therapy, speech therapy, medical social services, or home health aide services) that would meet the Conditions of Participation for home health agencies. Now there are some 1,800 home health agencies across the country. The following data, compiled in one State, illustrate how Medicare is stimulating the growth of comprehensive services through home health agencies.

It seems evident Medicare's most important contribution to effective resource development rests with the utilization review requirement. This requirement has provided communities with an opportunity to look at their hospitals or extendedcare facilities or home health services, and better evaluate their place in meeting overall community needs.

In one State, for example, it has caused a county commission to consider the future community service roll of a 200-bed chronic disease hospital that really seems to be functioning as a long-term care facility or nursing home. In addition, Medicare has been used as a vehicle for countywide utilization review and has sparked interest in establishing regional or statewide programs.

More effective utilization practices are influencing more effective resource development in many States. An increasing number of relatively small rural hospitals that have historically experienced a low patient census are converting some of these empty beds to extended-care beds. Larger community hospitals are planning and constructing new units that will be used as extended-care facilities.

The public hospital system of one State is in the process of being reviewed and evaluated in the light of Medicare's provisions-a step that should prove beneficial to the entire medical care system of the State.

The type of cooperation and coordination occurring in Medicare is a starting point toward the goals that mean good care for all. Before Medicare, one State had six medical active audit committees; now there are 143 active committees working with encouragement from the Medical Society. Before Medicare, another State had no standards for medical audit of utilization review; now the Medical Society is developing a plan for setting what are in effect such standards. Before Medicare, there existed obstacles in State legislature or lethargy in the States to setting laws, regulations, and licensing at levels as high as they might be. These obstacles are being removed, State by State.

TITLE VI OF THE CIVIL RIGHTS ACT

Medicare is also playing a significant role in the area of human rights through its interaction with title VI of the Civil Rights Act, which concerns discrimination in facilities participating in Federal programs. During the past year, there has been a significant change in the way Negro Americans receive hospital care. In hundreds of hospitals in all parts of the Nation, but especially in the South, quality medical care is now being offered to every sick person, regardless of his race. Negroes are able to enter hospitals that were previously reserved for white patients only. Negro physicians are able to apply for hospital staff privileges with assurance that their applications will be considered on their merits.

This is a truly significant step, but it is only a step. Despite the efforts of many courageous people, Negro and white, the sad truth is that discrimination continues to exist in many hospitals. Although the outward, more blatant signs of discrimination have been largely eliminated, in too many hospitals some subtle and ingenious devices to maintain discrimination are still in effect.

Discrimination in any form, overt or subtle, strikes doubly hard at the sick person, who in many cases has lost a measure of his self-respect or is frightened and uncertain because of his illness. If discrimination because of race is added to these factors of inadequacy, the best possible care is difficult to provide.

Recognizing this fact and reasserting the con

stitutional right of every person to receive treatment without discrimination in any form, the Fourth Circuit Court of Appeals rendered a landmark decision in which the court upheld the firm enforcement of the Department's guidelines for ending hospital discrimination, particularly those relating to discrimination in room and ward assignments and in admission of physicians to hospital staffs.

In this case, a suit was brought against a hospital by a Negro physician and two of his patients. A lower court had ruled that the doctor and his patients did not have a case because the hospital had been declared eligible to receive Federal funds by meeting requirements of title VI. The Court of Appeals reversed the lower court, pointing out that certification of the hospital afforded no assurance of actual compliance, for "violations of constitutional rights often continue unabated" through the use of some sort of "contrivance" by which a hospital can still "evade the obligation of the law."

In other words, the fact that a hospital has been certified does not mean that an individual cannot sue for redress of his constitutional rights. The court upheld the legality and constitutionality of the Federal desegregation guidelines but noted that they may be difficult to enforce because of limited staff and budget. Thus, certification of eligibility is not a wall behind which a hospital can continue to act to deny a person his right.

With Medicare as an instrument, the overt forms of discrimination in hospital care are being brought to an end. But much remains to be done. With this court decision, the attack on the subtler forms of discrimination can go forward.

THE OPPORTUNITIES TODAY

Medicare is helping to create a new image of the State Health Departments and of the public health professions. It has helped us prepare for our responsibilities of planning under the Comprehensive Health Planning Act. If we will look at the opportunities we have today to strengthen Medicare in the service of the sick, we will continue to improve the potential for comprehensive health care for all of the American people, It is truly encouraging to detect the growing philoso

phy that we should do not just what needs to be done to meet minimum standards but rather what needs to be done to improve the quality of patient

care.

Now, specifically, to what type of new activities should we turn? What experiences in our involvement with Medicare provide food for thought— thought about how to achieve some other goals we have talked about for years?

The greatest problems we face today in the field of health care are the rising costs of care and the fragmentation of community and personal health

services.

We must find ways to control costs, while recognizing that the delivery of quality care does not permit a full scale lowering of costs.

The problem of fragmentation must be approached through the development, demonstration, and evaluation of comprehensive health care systems. Medicare gives us a basis for encouraging alternatives to hospital care. It has the elements of one system of better coordinated health services: it provides insurance coverage for a range of services; it covers care in extended-care facilities, outpatient care, organized home health services, and professional review of utilization practices.

The time is at hand for the health department to interest itself, in a meaningful way, in this problem of encouraging greater comprehensiveness in health insurance, both private and public. Let the Medicare benefits set a standard-not a ceiling but a standard-for the whole population. And the health department should represent the health interests of the people of the State by encouraging the insurance department to require comprehensive coverages in the private plans and contracts approved in the State. Voluntary health insurance is one of the most important ways in which health services are financed in this country. To the extent that the health department can help to upgrade the quality of private health insurance coverages and policies, it will serve to upgrade the quality and increase the availability of health resources and assure that services reach the people. We need to strengthen the interagency cooperation begun with Medicare and extend it to include effective cooperation in the States between the health department and the insurance department. By no means can all the positive accomplish(Continued on page 50)

ACCELERATION in the rate of increase in medical care prices during the past year has aroused considerable concern and discussion as to the reasons for the increase. Particular attention has been focused on the relationship between the accelerated increases and health insurance for the aged (Medicare), which began operation in July

1966.

The general public, medical care specialists, and the Government are all concerned in different ways. The consumer is adversely affected when higher prices put medical care out of the reach of many and often of those who need it most. Rising prices also increase the cost of Government medical programs and thus place a heavier burden on the taxpayer. The medical care specialist, involved in providing services in an institutional or noninstitutional setting, is concerned because the growing demand for medical services must be met and rising costs tend to impede the delivery of such services.

Early in 1967, the Department of Health, Education, and Welfare reported to the President on medical care prices. The report identified the causes of the long-run upward trend and the recent acceleration in medical prices, estimated future price movements, and recommended Government actions to moderate the price rise and to encourage a more efficient use of medical resources.

This article describes in detail the trends in medical care prices since World War II, with special reference to their growth since the end of 1965. Data on prices are presented for the various medical services and supplies that comprise the medical care price component of the Consumer Price Index (CPI) prepared by the Bureau of Labor Statistics. Data from a special study of 1966 prices of five in-hospital medical and surgical services especially important to aged persons are also included. A brief historical review and a description of the pricing procedures used in the CPI, with particular reference to the

* Special Studies Branch, Division of Health Insurance Studies, Office of Research and Statistics.

1 Department of Health, Education, and Welfare, Report to the President on Medical Care Prices, February 1967.

medical care component, are presented as a basis for understanding and interpreting the trends.

THE CONSUMER PRICE INDEX AND
THE MEDICAL CARE COMPONENT

This index, often called the cost of living index, has been used for nearly 50 years to measure the changes over a period of time in average prices of goods and services of the same quality, customarily purchased by urban wage earners and clerical workers. It measures changes in pricesthe most important causes of changes in the cost of living-but does not indicate actual living expenses. The general procedure is to measure price changes by repricing a "market basket" of goods and services at regular intervals and comparing the aggregate costs with those of an equivalent market basket purchased in a selected base period.

The CPI has been revised and updated from time to time to keep pace with the changing nature of the supply of goods and services and changes in the demand by consumers for these products and services. The revision of the CPI that was completed in January 1964 was the third comprehensive revision since the index was initiated in 1918. Just as the CPI is the most generally accepted measure of price changes, so are its medical care components the most widely used indicators of changes in health care costs.

Selection of items to be priced is based in part on data obtained from BLS surveys of family expenditures. The current index is based on the 1960-61 Consumer Expenditure Survey. Items are selected partly on the basis of statistical probability, their relative significance in the overall expenditures of urban wage earners and clerical workers, and for their ability to represent the movement of the unpriced items of the same type

2 For a comprehensive review, see the Bureau of Labor Statistics, The Consumer Price Index: History and Techniques, 1966; and "Consumer Prices," Handbook of Methods for Surveys and Studies, 1966, Chapter 10, pages 69-90.

and characteristics. In the absence of adequate information from expenditure surveys for the latter purpose, the selection is made with the assistance of appropriate professional associations. For example, professional drug associations are asked to provide information on sales of important drugs and prescriptions as a basis for selecting the drug items to be priced.

Medical prices have been obtained since 1918 for three physicians' services (family doctor's office and house visit and obstetrical case), several dental services, rates for hospital pay ward (discontinued January 1964), eye examination and eyeglasses, and several drugs and prescriptions. In 1939, prices were added for services of surgeons and specialists (represented by fees for appendectomy and tonsillectomy), private and semiprivate hospital rooms, and services of private nurses. In mid-1947, pricing was discontinued for dentists' charges for cleaning teeth, replacement lens for eyeglasses, hospital room rates for women's pay ward, and fees for a private nurse in the hospital. As part of the interim adjustment of the CPI to improve the coverage of the medical care index, premiums for group hospitalization were added in 1950 in advance of the comprehensive revision completed in January 1953.3 At this time the medical care component of the CPI was made a separate group index. Several changes were made in the 10-year period between the two major revisions. Surgical insurance was added in 1958. Until 1960, only three prescribed drugspenicillin, a narcotic, and a nonnarcotic-were included. In that year the list of prescribed drugs was extended to 16 items.

The index of medical prices, effective January 1964, was considerably expanded and revised in the latest major revision. Pediatrician, psychiatrist, and chiropractor office visits were added, as well as routine laboratory tests and a surgical fee for herniorrhaphy; full upper dentures were also included, and appendectomies no longer priced. The measurement of hospital service charges was changed by eliminating the daily service charge for men's pay ward and adding

3 For detail on the medical care index as calculated through 1953, see Elizabeth A. Langford, "Medical Care in the Consumer Price Index, 1936-56," Monthly Labor Review, September 1957.

4 Bureau of Labor Statistics, Items Priced in the Rerised CPI, January 27, 1964.

two in-hospital items (operating-room charges and X-ray diagnostic series) to supplement the daily service charges. Direct pricing of health insurance premiums was discontinued, and the cost of health insurance was imputed to price changes for certain services plus the net cost of overhead (retained earnings)."

In all, 38 items now make up the medical care index: 18 services and 20 drugs and prescriptions. These 38 items represent one segment of the nearly 400 items, priced for the CPI since January 1964. Not all items are priced in every city. To estimate the sampling error, two subsamples of items that are priced in different cities and in different outlet samples have been established; the list of items in the subsamples includes the most important goods and services and a selection of the less important ones.

PRICING PROCEDURES AND QUALITY CHANGES

Since 1936, collection of data for the CPI has been based on the principles of specification pricing. In order to ensure, to the extent possible, that price changes will not reflect quality changes, a list of the significant characteristics of each item is set forth to guide the pricing agents. Included are the quality determinants of price (established in discussion with manufacturers, merchandisers, and buyers) and the other physical characteristics needed to identify an item from reporter to reporter and from one pricing date to the next. In general, the same specification is used in all cities where the item is priced, and the prices are collected by trained field representatives in personal interview. To obtain some prices, mail questionnaires are employed. Prices are collected in 56 cities (classified according to population) to represent all urban areas in the 50 States."

When no article or service conforming to the precise specifications is offered by a reporter from whom a price quotation is sought, the pricing agent may obtain a quotation on another item as similar as possible to the item specified, if the

5 For a detailed description of this change see James C. Daugherty, "Health Insurance in the Revised CPI," Monthly Labor Review, November, August 1964. Sidney A. Jaffe, "The Statistical Structure of the Revised CPI," Monthly Labor Review, August 1964.