Health Care Indicators: Hospital, Employment, and Price Indicators for the Health Care Industry: Second Quarter 1999

Abstract

This feature presents highlights from statistics on health care utilization, prices, expenses, employment, and work hours, as well as on national economic activity, with brief analysis of these economic indicators. These statistics provide an early indication of changes occurring in the health care sector and within the general economy. Although most statistics include data for the second quarter of 1999, American Hospital Association data are through the third quarter of 1998.

Key Trends

• Hospital Insurance (HI) Trust Fund assets rose 4.7 percent in the second quarter of 1999, compared with the same period of the previous year. Estimates in the 1999 Annual Report of the Board of Trustees of the Federal Hospital Insurance Trust Fund (Board of Trustees of the Federal Hospital Insurance Trust Fund, 1999) indicate that, given current law and trends, the HI Trust Fund will be exhausted in 2015.

• The recent declines in home health care services employment slowed, as employment fell 3.3 percent in the second quarter of 1999, compared with the second quarter of 1998. This followed declines of 8.1 percent and 6.6 percent in the fourth quarter of 1998 and the first quarter of 1999, respectively. Home health care employment and payroll decreases began in early 1998, following public sector actions to control Medicare spending growth and ongoing actions to detect fraud and abuse.

• Employment in all private and government hospitals rose by 1.1 percent in the second quarter of 1999, driven by a 1.2-percent increase in private hospital employment and a 2.1-percent increase in local government hospital employment. Employment in State government hospitals rose for the first time since the third quarter of 1992, while employment in Federal Government hospitals continued to decline.

• Medical services price growth had leveled off for a few quarters but continued to outpace growth in overall prices in the second quarter of 1999, even including recent energy price increases.

• Although hospital inpatient and outpatient producer prices have grown at similar rates over the past few years, the underlying patterns of growth by payer type have been very different. Prices increased more slowly for public payers than for all other payers for inpatient services but increased faster than for all other payers for outpatient services.

• Nursing home price growth continued to decelerate in the second quarter of 1999, moving closer to the rate in input prices in the industry.

• Although most statistics include data for the second quarter of 1999, American Hospital Association data (Tables 1 and 2) go through to the third quarter of 1998.

Table 1. Selected Community Hospital Statistics: 1995-1998¹.

Item	Calendar Year			1996 Q2	1996 Q3	1996 Q4	1997 Q1	1997 Q2	1997 Q3	1997 Q4	1998 Q1	1998 Q2	1998 Q3
	1995	1996	1997
Utilization
All Ages
Admissions in Thousands	33,389	33,268	33,388	8,267	8,159	8,331	8,500	8,342	8,265	8,281	8,640	8,326	8,361
Admissions per 1,000 Population2	122	121	120	120	118	121	123	120	119	119	124	119	119
Inpatient Days in Thousands	190,377	183,495	181,313	45,532	44,349	45,563	47,177	45,177	44,193	44,766	47,553	44,607	44,545
Adult Length of Stay in Days	5.7	5.5	5.4	5.5	5.4	5.5	5.5	5.4	5.3	5.4	5.5	5.4	5.3
65 Years of Age or Over
Admissions in Thousands	12,820	12,870	13,050	3,204	3,090	3,252	3,374	3,253	3,173	3,250	3,479	3,260	3,193
Admissions per 1,000 Population2	375	373	375	372	357	375	389	374	364	373	398	373	365
Inpatient Days in Thousands	91,164	86,431	85,315	21,445	20,448	21,566	22,661	21,179	20,431	21,044	22,941	20,859	20,295
Adult Length of Stay in Days	7.1	6.7	6.5	6.7	6.6	6.6	6.7	6.5	6.4	6.5	6.6	6.4	6.4
Under 65 Years of Age
Admissions in Thousands	20,569	20,398	20,339	5,063	5,070	5,078	5,126	5,089	5,092	5,032	5,162	5,066	5,168
Admissions per 1,000 Population2	86	85	84	84	84	84	85	84	84	82	84	83	84
Inpatient Days in Thousands	99,213	97,064	95,999	24,087	23,902	23,997	24,516	23,999	23,762	23,722	24,712	23,748	24,251
Adult Length of Stay in Days	4.8	4.8	4.7	4.8	4.7	4.7	4.8	4.7	4.7	4.7	4.8	4.7	4.7
Surgical Operations in Thousands	23,739	24,165	24,601	6,087	6,028	6,102	6,047	6,245	6,197	6,111	6,200	6,405	6,461
Outpatient Visits in Thousands	452,558	481,298	507,523	119,874	122,232	122,857	123,270	127,607	128,285	128,361	131,411	135,812	138,222
Adjusted Patient Days in Thousands3	273,638	270,023	275,864	67,394	66,247	67,087	70,050	68,813	68,258	68,682	72,261	69,196	70,246
Beds in Thousands	874	854	833	859	849	844	842	832	829	830	829	827	825
Adult Occupancy Rate4	59.7	58.7	59.6	58.3	56.8	58.7	62.3	59.7	57.9	58.7	63.8	59.3	58.7
Total Hospital Revenues in Millions5	$324,961	$338,118	$349,329	$84,396	$83,449	$85,993	$86,941	$87,073	$87,092	$88,223	$91,024	$89,187	$89,695
Total Patient Revenues in Millions	307,228	318,183	327,938	79,349	78,461	80,664	81,998	81,781	81,441	82,717	85,391	83,583	84,102
Inpatient Revenues in Millions	213,771	216,242	215,558	53,609	52,526	54,784	55,223	53,692	52,728	53,914	56,194	53,882	53,331
Outpatient Revenues in Millions	93,457	101,941	112,380	25,740	25,934	25,880	26,774	28,090	28,713	28,803	29,197	29,701	30,770
Total Expenses
Total Hospital Expenses in Millions	$308,411	$320,789	$331,482	$79,958	$79,593	$81,877	$82,092	$82,694	$82,835	$83,862	$85,251	$86,155	$86,169
Labor in Millions	163,842	168,796	173,047	41,935	41,925	43,063	42,888	42,958	43,326	43,875	44,502	44,576	44,812
Non-Labor in Millions	144,569	151,993	158,435	38,023	37,668	38,814	39,204	39,735	39,509	39,986	40,749	41,580	41,357
Inpatient Expense in Millions6	$214,570	$217,994	$217,869	$54,020	$53,284	$55,608	$55,287	$54,291	$53,631	$54,660	$56,102	$55,540	$54,643
Amount per Patient Day	1,127	1,188	1,202	1,186	1,201	1,220	1,172	1,202	1,214	1,221	1,180	1,245	1,227
Amount per Admission	6,426	6,553	6,525	6,534	6,530	6,675	6,504	6,508	6,489	6,600	6,493	6,671	6,535
Outpatient Expense in Millions6	$93,841	$102,796	$113,614	$25,937	$26,309	$26,269	$26,805	$28,403	$29,204	$29,201	$29,149	$30,615	$31,527
Amount per Outpatient Visit	207	214	224	216	215	214	217	223	228	227	222	225	228

¹Collection of American Hospital Association (AHA) data used in this table was discontinued after third quarter 1998.

²Admissions per 1,000 population is calculated using population estimates prepared by the Social Security Administration.

³Adjusted patient days is an aggregate figure reflecting the number of days of inpatient care, plus an estimate of the volume of outpatient services, expressed in units equivalent to an inpatient day in terms of level of effort. It is derived by multiplying the number of outpatient visits by the ratio of outpatient revenue per outpatient visit to inpatient revenue per inpatient day, and adding the product to the number of inpatient days.

⁴The adult occupancy rate is calculated by the National Health Statistics Group. The AHA does not publish this statistic. Adult occupancy rate is the ratio of average daily census to average number of beds maintained during the reporting period.

⁵Total hospital revenue is the sum of total patient revenue and all other operating revenue. Total patient revenue is the sum of inpatient revenue and outpatient revenue.

⁶Inpatient expense and outpatient expense are calculated by the National Health Statistics Group. These statistics are calculated by applying the ratio of inpatient or outpatient revenue to total patient revenue multiplied by total hospital expenses.

NOTES: Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: American Hospital Association; Trend Analysis Group: National Hospital Panel Survey Reports. Chicago. Monthly reports for January 1995-September 1998.

Table 2. Percent Change in Selected Community Hospital Statistics: 1995-1998.

Item	Calendar Year			1996 Q2	1996 Q3	1996 Q4	1997 Q1	1997 Q2	1997 Q3	1997 Q4	1998 Q1	1998 Q2	1998 Q3
	1995	1996	1997
	Annual Percent Change			Percent Change from Same Period of Previous Year
Utilization
All Ages
Admissions in Thousands	1.4	-0.4	0.4	-0.2	-0.7	0.9	-0.1	0.9	1.3	-0.6	1.6	-0.2	1.2
Admissions per 1,000 Population	0.4	-1.3	-0.6	-1.1	-1.6	-0.1	-1.1	0.0	0.4	-1.5	0.7	-1.1	0.3
Inpatient Days in Thousands	-2.9	-3.6	-1.2	-3.7	-4.1	-1.9	-1.8	-0.8	-0.4	-1.7	0.8	-1.3	0.8
Adult Length of Stay in Days	-4.2	-3.3	-1.5	-3.6	-3.5	-2.8	-1.7	-1.7	-1.6	-1.2	-0.8	-1.1	-0.4
65 Years of Age or Over
Admissions in Thousands	2.9	0.4	1.4	0.5	0.6	2.2	1.5	1.5	2.7	-0.1	3.1	0.2	0.7
Admissions per 1,000 Population	1.8	-0.5	0.6	-0.4	-0.3	1.2	0.6	0.7	1.9	-0.7	2.5	-0.4	0.1
Inpatient Days in Thousands	-3.9	-5.2	-1.3	-6.0	-4.9	-2.2	-1.4	-1.2	-0.1	-2.4	1.2	-1.5	-0.7
Adult Length of Stay in Days	-6.6	-5.6	-2.7	-6.5	-5.5	-4.3	-2.8	-2.7	-2.7	-2.3	-1.8	-1.7	-1.3
Under 65 Years of Age
Admissions in Thousands	0.4	-0.8	-0.3	-0.6	-1.4	0.0	-1.2	0.5	0.4	-0.9	0.7	-0.5	1.5
Admissions per 1,000 Population	-0.5	-1.7	-1.2	-1.5	-2.3	-0.9	-2.1	-0.4	-0.5	-1.8	-0.3	-1.4	0.6
Inpatient Days in Thousands	-2.0	-2.2	-1.1	-1.6	-3.4	-1.7	-2.2	-0.4	-0.6	-1.1	0.8	-1.0	2.1
Adult Length of Stay in Days	-2.4	-1.3	-0.8	-1.0	-2.0	-1.7	-1.1	-0.9	-1.0	-0.2	0.1	-0.6	0.6
Surgical Operations in Thousands	1.9	1.8	1.8	2.1	3.4	3.2	1.7	2.6	2.8	0.2	2.5	2.6	4.3
Outpatient Visits in Thousands	8.3	6.4	5.4	5.4	7.9	7.4	6.0	6.5	5.0	4.5	6.6	6.4	7.7
Adjusted Patient Days in Thousands	-0.9	-1.3	2.2	-1.1	-1.2	0.0	1.2	2.1	3.0	2.4	3.2	0.6	2.9
Beds in Thousands	-1.8	-2.4	-2.4	-2.1	-2.6	-2.6	-2.4	-3.1	-2.3	-1.7	-1.6	-0.7	-0.6
Adult Occupancy Rate1	-0.7	-0.9	0.9	-1.0	-0.9	0.4	1.0	1.4	1.1	0.0	1.5	-0.4	0.8
Total Hospital Revenues in Millions	5.0	4.0	3.3	4.2	3.9	5.1	3.2	3.2	4.4	2.6	4.7	2.4	3.0
Total Patient Revenues in Millions	4.8	3.6	3.1	3.6	3.3	4.4	2.9	3.1	3.8	2.5	4.1	2.2	3.3
Inpatient Revenues in Millions	2.6	1.2	-0.3	0.9	0.3	2.4	-0.2	0.2	0.4	-1.6	1.8	0.4	1.1
Outpatient Revenues in Millions	9.9	9.1	10.2	9.9	9.9	8.9	9.8	9.1	10.7	11.3	9.0	5.7	7.2
Total Expenses
Total Hospital Expenses in Millions	5.3	4.0	3.3	4.2	3.6	4.2	3.4	3.4	4.1	2.4	3.8	4.2	4.0
Labor in Millions	4.5	3.0	2.5	2.9	2.6	3.3	2.4	2.4	3.3	1.9	3.8	3.8	3.4
Non-Labor in Millions	6.3	5.1	4.2	5.7	4.8	5.2	4.6	4.5	4.9	3.0	3.9	4.6	4.7
Inpatient Expense in Millions	3.2	1.6	-0.1	1.4	0.6	2.2	0.4	0.5	0.6	-1.7	1.5	2.3	1.9
Amount per Patient Day	6.3	5.4	1.1	5.3	4.9	4.2	2.2	1.3	1.0	0.0	0.7	3.6	1.1
Amount per Admission	1.8	2.0	-0.4	1.6	1.3	1.3	0.5	-0.4	-0.6	-1.1	-0.2	2.5	0.7
Outpatient Expense in Millions	10.5	9.5	10.5	10.5	10.2	8.7	10.4	9.5	11.0	11.2	8.7	7.8	8.0
Amount per Outpatient Visit	2.0	3.0	4.8	4.8	2.2	1.2	4.2	2.9	5.8	6.4	2.0	1.3	0.2

¹Change in rate, rather than percent change.

NOTES: Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: American Hospital Association; Trend Analysis Group: National Hospital Panel Survey Reports. Chicago. Monthly reports for January 1995-September 1998.

Medicare Trust Fund Operations

Total Medicare outlays, the sum of HI (Part A) and Supplementary Medical Insurance (SMI) (Part B) outlays, increased 0.3 percent in the second quarter of 1999. Although Medicare Part A outlays fell 1.0 percent, Part B outlays rose 2.4 percent. The HI Trust Fund income grew 5.4 percent, and by the end of the second quarter of 1999, the level of assets in the HI Trust Fund increased 4.7 percent from the same period 1 year earlier (Table 3). This was the fifth consecutive quarterly increase in assets and was attributable to the 5.4 percent income increase, coupled with a 1.0-percent decrease in outlays. A strong economy with low unemployment continued to boost HI Trust Fund income, while outlays slowed for reasons similar to those explaining lower outlays in 1998: lower Medicare hospital updates for reimbursement rates for 1998 and 1999 and other cost-restraining strategies under the Balanced Budget Act of 1997 (BBA) and continuing efforts to combat fraud and abuse. Estimates found in the 1999 Annual Report of the Board of Trustees of the Federal Hospital Insurance Trust Fund (Board of Trustees of the Federal Hospital Insurance Trust Fund, 1999) indicate that, given current law and trends, the HI Trust Fund will be exhausted in 2015.

Table 3. Hospital Insurance (HI) and Supplementary Medical Insurance (SMI) Trust Fund Operations: 1995-1999.

Indicator	Calendar Year				1996 Q2	1996 Q3	1996 Q4	1997 Q1	1997 Q2	1997 Q3	1997 Q4	1998 Q1	1998 Q2	1998 Q3	1998 Q4	1999 Q1	1999 Q2
	1995	1996	1997	1998
	Millions of Dollars
Total Medicare Outlays	$184,203	$200,337	$213,600	$213,228	$49,642	$50,599	$52,639	$50,084	$53,696	$53,922	$55,897	$50,818	$53,692	$53,165	$55,553	$48,626	$53,841
HI Trust Fund	117,604	129,929	139,475	133,671	32,160	32,615	33,866	33,407	35,307	35,208	35,552	30,526	33,942	35,230	33,973	30,834	33,612
SMI Trust Fund	66,599	70,408	74,125	79,557	17,482	17,984	18,773	16,677	18,389	18,714	20,345	20,292	19,750	17,935	21,580	17,792	20,229
HI Trust Fund Operations
Income	$115,027	$124,603	$130,107	$140,546	$37,000	$27,840	$33,470	$29,535	$36,644	$28,852	$35,075	$31,551	$41,080	$30,496	$37,419	$34,678	$43,304
Outlays	117,604	129,929	139,475	133,671	32,160	32,615	33,866	33,407	35,307	35,208	35,552	30,526	33,942	35,230	33,973	30,834	33,612
Difference	(2,577)	(5,325)	(9,368)	6,875	4,840	(4,774)	(396)	(3,873)	1,337	(6,356)	(477)	1,025	7,138	(4,734)	3,446	3,844	3,231
Assets at End of Period1	130,267	124,942	115,573	122,448	130,112	125,338	124,942	121,069	122,406	116,050	115,573	116,598	123,736	119,002	122,448	126,292	129,523
SMI Trust Fund Operations
Income	$60,306	$85,609	$81,924	$87,712	$19,653	$19,208	$20,152	$19,906	$20,855	$19,893	$21,270	$19,803	$20,998	$19,884	$27,027	$15,389	$22,098
Outlays	66,599	70,408	74,125	79,557	17,482	17,984	18,773	16,677	18,389	18,714	20,345	20,292	19,750	17,935	21,580	17,792	20,229
Difference	(6,293)	15,202	7,799	8,155	2,171	1,224	1,378	3,229	2,466	1,179	925	(489)	1,248	1,949	5,447	(2,403)	1,869
Assets at End of Period1	13,130	28,332	36,131	44,286	25,729	26,953	28,332	31,561	34,027	35,206	36,131	35,642	36,890	38,839	44,286	41,883	43,752
	Annual Percent Change				Percent Change from the Same Period of the Previous Year
Total Medicare Outlays	11.7	8.8	6.6	-0.2	6.2	8.7	13.0	5.5	8.2	6.6	6.2	1.5	0.0	-1.4	-0.6	-4.3	0.3
HI Trust Fund	12.5	10.5	7.3	-4.2	5.4	11.7	15.8	6.8	9.8	8.0	5.0	-8.6	-3.9	0.1	-4.4	1.0	-1.0
SMI Trust Fund	10.4	5.7	5.3	7.3	7.8	3.6	8.4	3.1	5.2	4.1	8.4	21.7	7.4	-4.2	6.1	-12.3	2.4
HI Trust Fund Operations
Income	5.0	8.3	4.4	8.0	4.0	14.8	11.6	12.3	-1.0	3.6	4.8	6.8	12.1	5.7	6.7	9.9	5.4
Outlays	12.5	10.5	7.3	-4.2	5.4	11.7	15.8	6.8	9.8	8.0	5.0	-8.6	-3.9	0.1	-4.4	1.0	-1.0
Assets at End of Period	-1.9	-4.1	-7.5	5.9	-3.2	-3.2	-4.1	-3.4	-5.9	-7.4	-7.5	-3.7	1.1	2.5	5.9	8.3	4.7
SMI Trust Fund Operations
Income	8.5	42.0	-4.3	7.1	14.3	90.7	21.6	-25.2	6.1	3.6	5.5	-0.5	0.7	0.0	27.1	-22.3	5.2
Outlays	10.4	5.7	5.3	7.3	7.8	3.6	8.4	3.1	5.2	4.1	8.4	21.7	7.4	-4.2	6.1	-12.3	2.4
Assets at End of Period	-32.4	115.8	27.5	22.6	21.6	94.3	115.8	34.0	32.2	30.6	27.5	12.9	8.4	10.3	22.6	17.5	18.6

¹As shown in the Monthly Treasury Statement. Excludes undisbursed balance.

NOTES: Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCES: (U.S. Department of the Treasury, 1998; Board of Trustees of the Federal Hospital Insurance Trust Fund, 1999; Board of Trustees of the Federal Supplementary Medical Insurance Trust Fund, 1999.)

Health Sector Employment and Payrolls

The 1.3 percent increase in private health services employment in the second quarter of 1999 masks a third consecutive quarterly drop in nursing home employment (-0.6 percent) and a continuing decline in home health care services employment (-3.3 percent).

Following nine quarters of decelerating growth, nursing home employment experienced declines of 0.4 percent and 0.6 percent in the fourth quarter of 1998 and the first quarter of 1999, respectively, before registering another 0.6 percent drop in the second quarter, compared with the same period of 1998. These declines in employment began during the implementation of a prospective payment system (PPS) for nursing homes.

Home health care's employment decrease of 3.3 percent in the second quarter of 1999 is less severe than decreases experienced over the previous four quarters and suggests that the brunt of industry's reaction to the implementation of Medicare spending controls in the fourth quarter of 1997 is attenuating. The rapid employment growth of 1988-1993 began to slow after the first quarter of 1994; actual decreases began in the first quarter of 1998. These declines followed public sector actions to control Medicare spending and continuing actions to detect fraud and abuse activities.

Hospitals

Employment in all private and government hospitals increased by 1.1 percent in the second quarter of 1999, compared with the same quarter of the previous year. Private hospital employment grew by 1.2 percent, while local government hospital employment rose by 2.1 percent, and State government hospital employment increased for the first time since the third quarter of 1992. Only employment in Federal Government hospitals failed to grow, decreasing by 2.0 percent in the second quarter of 1999. Private hospitals' share of total hospital employment has increased steadily from 68.8 percent in 1982 to 76.5 percent in 1998. The Federal hospitals' share has decreased from a high of 5.8 percent in 1985 to 4.3 percent in 1998. State hospitals' share has dropped steadily from 11.3 percent in 1982 to 6.8 percent in 1998, and local hospitals' share has dipped from 14.5 percent in 1982 to 12.4 percent in 1998. Part of the local share long-term decline may be the merging of for-profit (private) facilities with local community facilities in order to gain bargaining power in negotiating with managed care organizations and to improve administrative efficiency.

By the end of the second quarter of 1999, the private hospital and local hospital shares of total hospital employment had each risen slightly from their 1998 levels, while the State and Federal shares continued to decline.

Medical Prices

Medical services prices continued to grow faster than overall prices, as measured by the gross domestic product (GDP) implicit price deflator, in the second quarter of 1999. Annual growth in the Consumer Price Index (CPI) for medical services has been around 3.4-3.5 percent over the past four quarters. The Producer Price Index (PPI) for health services has grown approximately 2.0 percent over this same period. At the same time, annual growth in the GDP implicit price deflator has remained near 1.0 percent, although slightly higher recently because of rising energy prices. The widening gap between medical prices and overall prices is in contrast to most of the 1991-1997 period, where medical inflation (as measured by the CPI) and overall inflation were converging. This same pattern existed for the PPI for health services, except that the growth in the PPI is much closer to that in the GDP implicit price deflator.

The difference in growth between the CPI for medical care services and the PPI for health services reflects two main factors. First, there are substantial methodological differences between the two indexes. For example, the PPI includes price changes from public payers, such as Medicare and Medicaid, while the CPI includes only price changes associated with out-of-pocket expenses. Also, the PPI includes prices for home health care services, but the CPI does not, and the CPI includes prices for dental and eye care services that the PPI does not. Second, the PPI captures transaction prices, but the CPI in some cases measures changes in list (undiscounted) prices.

Hospital Inpatient and Outpatient Producer Prices

Growth in the PPI for hospital inpatient and outpatient treatments has been similar since 1996. For the second quarter of 1999, inpatient prices increased 1.4 percent over the year and outpatient prices increased 1.6 percent. From 1996 to 1998, the two indexes grew at nearly the same rate, differing by just 0.2 percentage points on average per year.

However, underlying this overall similarity for inpatient and outpatient prices are different trends by payer type. For hospital inpatient services, slow growth in Medicare prices (0.4 percent in the second quarter of 1999) and Medicaid prices (0.0 percent in the second quarter of 1999) have been offset by relatively faster growth in prices faced by private patients (2.3 percent in the second quarter of 1999). This has been the trend since 1997 and can be traced directly to low updates in hospital payments under Medicare PPS as mandated by the BBA.

By comparison, hospital outpatient producer price changes have exhibited the exact opposite trend since 1997. Medicare price growth (4.1 percent in the second quarter of 1999) for outpatient services has far outpaced price growth for private patients (1.1 percent in the second quarter of 1999). This mostly reflects the different Medicare payment methodologies for hospital inpatient and outpatient services. The inpatient payments are paid prospectively based on an admission diagnosis, while outpatient payments are based on costs. The BBA mandated that Medicare outpatient payments be made on a prospective basis beginning January 1, 1999, although the implementation date was delayed.

Nursing Home Prices

Nursing home price growth, as measured by the CPI and PPI, continued to decelerate in the second quarter of 1999. This deceleration in growth for nursing home prices has brought these rates closer in line with HCFA's skilled nursing facility (SNF) input price index. In the second quarter of 1999, the CPI for nursing home services was greater than HCFA's SNF input price index by 1.2 percentage points (4.0 percent versus 2.8 percent). This compares with a 1.9-percentage point differential when the CPI for nursing homes was first introduced. The trend is even more significant for the PPI for skilled and intermediate care facilities. The difference in growth for the second quarter of 1999 was 0.8 percentage points (3.6 percent versus 2.8 percent). When the PPI was initially published, it grew 3.5 percentage points faster. The recent deceleration in nursing home prices has coincided with the implementation of the Medicare SNF PPS in July 1998.

Background Information on Data Sources and Methods

Community Hospital Statistics

From 1963 to September 1998, the American Hospital Association, in cooperation with member hospitals, collected data on the operation of community hospitals through its National Hospital Panel Survey. Community hospitals, which comprised more than 80 percent of all hospital facilities in the United States in 1997, 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 alcohol and chemical dependency hospitals.

The survey sampled approximately one-third of all U.S. community hospitals. The sample was designed to produce estimates of community hospital indicators by bed size and region (American Hospital Association, 1963-1998). In Tables 1 and 2, statistics covering expenses, utilization, beds, and personnel depict trends in the operation of community hospitals annually for 1994 to 1997 and quarterly from 1995 through the third quarter of 1998, after which data collection was discontinued.

For purposes of national health expenditures (NHE), survey statistics on revenues 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 1998 (Cowan et al., 1999). The survey also identified 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.

Medicare Trust Fund Operations

Separate trust funds finance the operations of the two parts of the Medicare program. The HI program, or Medicare Part A, helps pay for inpatient hospital, home health care, SNF, and hospice care for the aged and disabled. The HI program is financed primarily by payroll taxes paid by workers and employers. The taxes paid each year are used mainly to pay benefits for current beneficiaries. The SMI program, or Medicare Part B, pays for physician, outpatient hospital, home health care, and other services for the aged and disabled. The SMI program is financed primarily by transfers from the general fund of the U.S. Treasury and by monthly premiums paid by beneficiaries. For both Medicare programs, income not currently needed to pay benefits and related expenses is held in the HI and SMI trust funds and invested in U.S. Treasury securities (Board of Trustees of the Federal Hospital Insurance Trust Fund, 1999; Board of Trustees of the Federal Supplementary Medical Insurance Trust Fund, 1999).

Data on the financial operations of the Medicare trust funds are available from two sources: The monthly statistics on trust fund operations are published in the Monthly Treasury Statement of Receipts and Outlays of the United States Government (U.S. Department of the Treasury, 1998); the 1999 annual reports of the Boards of Trustees of the HI and SMI Trust Funds (Board of Trustees of the Federal Hospital Insurance Trust Fund, 1999;Board of Trustees of the Federal Supplementary Medical Insurance Trust Fund, 1999) contain detailed accounting of all financial operations for the prior fiscal year. The reports also contain actuarial analysis of the expected operations of the trust funds in future years and analysis of the actuarial status of the funds.

Private Health Sector: Employment, Hours, and Earnings

The Bureau of Labor Statistics (BLS) collects monthly information on employment for all workers, and employment, earnings, and work hours for non-supervisory workers in a sample of approximately 305,000 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, 1999a).

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 one time. (Other surveys that are household based, such as the Current Population Survey, also record employment. In the Current Population Survey, however, each person's employment status is counted only once, as either employed, unemployed, or not in the labor force, which includes discouraged workers.) 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 4, 5, and 6 present statistics on employment, non-supervisory employment, average weekly hours, and average hourly earnings for the private non-farm business sector and industries in health services.

Table 4. Percent Change in Employment, Hours, and Earnings in Private¹ Health Service Establishments, by Selected Type of Establishment: 1995-1999.

Type of Establishment	Calendar Year				1996 Q2	1996 Q3	1996 Q4	1997 Q1	1997 Q2	1997 Q3	1997 Q4	1998 Q1	1998 Q2	1998 Q3	1998 Q4	1999 Q1	1999 Q2
	1995	1996	1997	1998
Total Employment in Thousands
Non-Farm Private Sector	97,885	100,189	103,133	106,007	100,073	101,379	101,769	100,362	103,027	104,261	104,882	103,432	105,972	107,129	107,495	105,879	108,433
Health Services	9,230	9,478	9,703	9,846	9,451	9,521	9,576	9,607	9,684	9,739	9,781	9,779	9,831	9,872	9,901	9,896	9,958
Offices and Clinics of Physicians	1,609	1,678	1,739	1,803	1,672	1,692	1,700	1,712	1,732	1,747	1,765	1,773	1,792	1,815	1,832	1,840	1,860
Offices and Clinics of Dentists	592	611	629	646	608	614	619	623	628	631	634	636	643	649	655	657	666
Nursing Homes	1,691	1,730	1,756	1,762	1,725	1,740	1,745	1,742	1,753	1,764	1,767	1,760	1,763	1,765	1,760	1,750	1,752
Private Hospitals	3,772	3,812	3,860	3,926	3,806	3,818	3,829	3,836	3,852	3,870	3,883	3,893	3,917	3,943	3,952	3,952	3,966
Home Health Care Services	629	675	710	672	671	679	694	701	713	714	714	692	678	660	656	646	656
Non-Supervisory Employment in Thousands
Non-Farm Private Sector	80,125	82,092	84,541	86,762	82,022	83,167	83,512	82,071	84,505	85,556	86,032	84,495	86,762	87,754	88,035	86,418	88,733
Health Services	8,178	8,405	8,599	8,724	8,381	8,442	8,492	8,512	8,585	8,632	8,668	8,668	8,713	8,749	8,765	8,762	8,819
Offices and Clinics of Physicians	1,314	1,377	1,428	1,486	1,372	1,389	1,396	1,404	1,423	1,435	1,450	1,462	1,478	1,498	1,506	1,513	1,529
Offices and Clinics of Dentists	517	535	550	563	534	538	543	545	549	552	553	555	561	565	570	574	582
Nursing Homes	1,526	1,559	1,579	1,585	1,554	1,567	1,570	1,567	1,576	1,586	1,588	1,583	1,586	1,588	1,581	1,572	1,573
Private Hospitals	3,450	3,489	3,537	3,598	3,484	3,496	3,507	3,513	3,529	3,547	3,560	3,568	3,590	3,614	3,620	3,621	3,635
Home Health Care Services	582	624	655	618	621	628	642	646	657	657	657	638	624	608	604	595	604
Average Weekly Hours
Non-Farm Private Sector	34.5	34.4	34.6	34.6	34.4	34.8	34.6	34.3	34.6	34.9	34.8	34.4	34.5	34.8	34.7	34.2	34.5
Health Services	32.8	32.7	33.0	33.1	32.6	32.8	32.8	32.9	33.0	33.1	33.1	33.2	33.0	33.1	33.0	32.9	32.8
Offices and Clinics of Physicians	32.5	32.9	33.2	33.0	32.8	32.9	33.2	33.2	33.2	33.1	33.3	33.3	32.9	32.8	32.9	32.7	32.8
Offices and Clinics of Dentists	28.0	28.2	28.4	28.3	28.2	28.2	28.4	28.4	28.6	28.2	28.5	28.4	28.2	28.3	28.3	27.9	27.8
Nursing Homes	32.5	32.4	32.4	32.6	32.3	32.7	32.3	32.3	32.3	32.7	32.5	32.4	32.4	32.9	32.6	32.2	32.4
Private Hospitals	34.5	34.4	34.9	35.0	34.3	34.3	34.4	34.6	34.8	34.9	35.1	35.2	34.9	34.9	34.9	34.9	34.6
Home Health Care Services	28.6	28.1	28.9	29.0	27.8	28.3	28.3	28.6	28.9	29.0	29.1	29.2	29.0	29.1	28.9	28.8	29.0
Average Hourly Earnings
Non-Farm Private Sector	11.43	11.81	12.28	12.78	11.74	11.82	12.01	12.15	12.18	12.27	12.51	12.65	12.70	12.78	12.98	13.11	13.16
Health Services	12.45	12.85	13.26	13.73	12.78	12.87	13.01	13.13	13.17	13.29	13.46	13.57	13.65	13.77	13.91	14.05	14.11
Offices and Clinics of Physicians	12.54	13.17	13.79	14.31	13.08	13.22	13.44	13.61	13.67	13.83	14.03	14.19	14.26	14.29	14.50	14.62	14.75
Offices and Clinics of Dentists	12.40	12.88	13.63	14.16	12.77	12.92	13.17	13.46	13.58	13.62	13.85	13.98	14.08	14.18	14.39	14.53	14.69
Nursing Homes	8.77	9.01	9.34	9.77	8.95	9.02	9.10	9.20	9.26	9.40	9.51	9.63	9.71	9.82	9.90	10.01	10.07
Private Hospitals	14.30	14.70	15.03	15.46	14.63	14.73	14.81	14.91	14.94	15.05	15.22	15.28	15.36	15.54	15.67	15.82	15.87
Home Health Care Services	10.91	11.18	11.35	11.49	11.13	11.22	11.28	11.36	11.29	11.33	11.40	11.40	11.41	11.53	11.63	11.81	11.91
Hospital Employment in Thousands
Total	5,069	5,067	5,077	5,132	5,068	5,066	5,065	5,060	5,069	5,085	5,092	5,096	5,121	5,152	5,160	5,164	5,179
Private	3,772	3,812	3,860	3,926	3,806	3,818	3,829	3,836	3,852	3,870	3,883	3,893	3,917	3,943	3,952	3,952	3,966
Federal	233	232	224	223	233	231	229	225	224	225	224	224	224	224	221	221	220
State	395	376	360	348	378	372	368	366	362	358	354	349	347	348	348	349	348
Local	669	648	632	635	651	646	640	633	631	632	631	631	633	637	640	642	646

¹Excludes hospitals, clinics, and other health-related establishments run by all governments.

NOTES: Data presented here conform to the 1987 Standard Industrial Classification. Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington, DC. U.S. Government Printing Office. Monthly reports for January 1995-August 1999.

Table 5. Percent Change in Employment, Hours, and Earnings in Private¹ Health Service Establishments, by Selected Type of Establishment: 1995-1999.

Type of Establishment	Calendar Year				1996 Q2	1996 Q3	1996 Q4	1997 Q1	1997 Q2	1997 Q3	1997 Q4	1998 Q1	1998 Q2	1998 Q3	1998 Q4	1999 Q1	1999 Q2
	1995	1996	1997	1998
	Annual Percent Change				Percent Change from the Same Period of Previous Year
Total Employment in Thousands
Non-Farm Private Sector	3.0	2.4	2.9	2.8	2.3	2.5	2.6	2.9	3.0	2.8	3.1	3.1	2.9	2.8	2.5	2.4	2.3
Health Services	2.7	2.7	2.4	1.5	2.8	2.7	2.6	2.6	2.5	2.3	2.1	1.8	1.5	1.4	1.2	1.2	1.3
Offices and Clinics of Physicians	4.1	4.3	3.6	3.7	4.6	4.4	3.8	3.8	3.6	3.3	3.8	3.6	3.5	3.9	3.8	3.8	3.7
Offices and Clinics of Dentists	3.3	3.1	3.0	2.7	3.0	3.0	3.3	3.6	3.1	2.8	2.4	2.2	2.5	2.9	3.3	3.3	3.5
Nursing Homes	2.6	2.3	1.5	0.3	2.6	2.2	1.9	1.7	1.6	1.4	1.3	1.1	0.6	0.1	-0.4	-0.6	-0.6
Private Hospitals	0.2	1.0	1.3	1.7	1.0	1.0	1.2	1.1	1.2	1.4	1.4	1.5	1.7	1.9	1.8	1.5	1.2
Home Health Care Services	12.4	7.3	5.3	-5.5	8.2	6.4	6.3	7.2	6.3	5.1	2.8	-1.3	-4.9	-7.5	-8.1	-6.6	-3.3
Non-Supervisory Employment in Thousands
Non-Farm Private Sector	3.2	2.5	3.0	2.6	2.4	2.6	2.7	3.0	3.0	2.9	3.0	3.0	2.7	2.6	2.3	2.3	2.3
Health Services	2.7	2.8	2.3	1.4	2.9	2.7	2.7	2.5	2.4	2.2	2.1	1.8	1.5	1.4	1.1	1.1	1.2
Offices and Clinics of Physicians	4.2	4.8	3.7	4.1	5.1	4.8	4.2	3.9	3.8	3.3	3.8	4.2	3.8	4.4	3.9	3.5	3.5
Offices and Clinics of Dentists	3.2	3.5	2.7	2.3	3.7	3.5	3.7	3.4	2.8	2.6	2.0	1.8	2.0	2.4	3.0	3.5	3.8
Nursing Homes	2.6	2.2	1.3	0.3	2.4	2.1	1.7	1.5	1.4	1.2	1.1	1.0	0.6	0.1	-0.4	-0.7	-0.8
Private Hospitals	0.3	1.1	1.4	1.7	1.1	1.1	1.3	1.2	1.3	1.5	1.5	1.6	1.7	1.9	1.7	1.5	1.3
Home Health Care Services	12.3	7.3	4.9	-5.5	8.0	6.3	6.3	6.8	5.9	4.7	2.4	-1.4	-5.1	-7.5	-8.1	-6.7	-3.3
Average Weekly Hours
Non-Farm Private Sector	-0.6	-0.1	0.6	-0.1	0.2	0.1	0.4	1.3	0.5	0.3	0.4	0.3	-0.3	-0.3	-0.3	-0.8	0.0
Health Services	-0.2	-0.3	1.1	0.2	-0.3	-0.1	0.2	1.1	1.2	0.9	1.1	1.0	-0.1	0.1	-0.3	-1.1	-0.5
Offices and Clinics of Physicians	0.2	1.3	1.0	-0.7	1.2	1.4	1.7	1.8	1.2	0.6	0.2	0.2	-0.8	-1.1	-1.2	-1.7	-0.2
Offices and Clinics of Dentists	-0.6	0.6	1.0	-0.6	0.7	1.6	0.8	2.0	1.4	0.0	0.6	-0.1	-1.4	0.2	-0.9	-1.9	-1.3
Nursing Homes	0.5	-0.3	0.1	0.5	0.2	-0.2	-0.9	0.2	-0.2	-0.1	0.6	0.4	0.3	0.8	0.3	-0.7	0.0
Private Hospitals	-0.3	-0.5	1.4	0.3	-0.9	-0.5	0.1	0.7	1.5	1.7	1.8	1.6	0.4	-0.1	-0.6	-0.9	-0.8
Home Health Care Services	1.2	-1.8	3.1	0.4	-3.2	-1.2	0.7	3.2	3.8	2.5	2.8	2.0	0.3	0.1	-0.8	-1.4	0.2
Average Hourly Earnings
Non-Farm Private Sector	2.8	3.4	3.9	4.1	3.4	3.4	3.7	4.0	3.8	3.8	4.1	4.1	4.2	4.2	3.8	3.6	3.7
Health Services	2.9	3.2	3.2	3.5	3.4	3.3	3.1	3.0	3.1	3.2	3.5	3.4	3.6	3.6	3.3	3.6	3.4
Offices and Clinics of Physicians	2.3	5.0	4.7	3.8	5.1	5.6	5.5	5.1	4.5	4.6	4.4	4.2	4.3	3.4	3.3	3.0	3.5
Offices and Clinics of Dentists	3.6	3.9	5.8	3.9	3.4	4.0	4.5	6.1	6.4	5.5	5.2	3.8	3.7	4.1	3.9	3.9	4.3
Nursing Homes	3.2	2.7	3.7	4.5	2.4	2.7	2.9	2.8	3.4	4.2	4.5	4.6	4.9	4.5	4.1	3.9	3.6
Private Hospitals	3.4	2.8	2.3	2.9	3.3	2.7	2.0	2.0	2.1	2.2	2.7	2.5	2.8	3.2	2.9	3.5	3.3
Home Health Care Services	2.3	2.5	1.4	1.3	2.6	2.7	2.3	2.3	1.4	1.0	1.1	0.4	1.1	1.7	2.0	3.6	4.4
Hospital Employment in Thousands
Total	-0.1	0.0	0.2	1.1	0.0	-0.2	-0.1	-0.2	0.0	0.4	0.5	0.7	1.0	1.3	1.3	1.3	1.1
Private	0.2	1.0	1.3	1.7	1.0	1.0	1.2	1.1	1.2	1.4	1.4	1.5	1.7	1.9	1.8	1.5	1.2
Federal	-0.2	-0.6	-3.2	-0.6	0.3	-2.6	-1.9	-4.1	-3.7	-2.6	-2.2	-0.5	0.0	-0.6	-1.3	-1.3	-2.0
State	-2.9	-4.9	-4.2	-3.3	-4.6	-5.2	-5.4	-5.0	-4.4	-3.7	-3.9	-4.5	-4.1	-2.9	-1.6	0.0	0.1
Local	-0.6	-3.1	-2.5	0.5	-3.0	-3.3	-3.4	-3.4	-3.1	-2.1	-1.3	-0.4	0.3	0.8	1.4	1.7	2.1

¹Excludes hospitals, clinics, and other health-related establishments run by all governments.

NOTES: Data presented here conform to the 1987 Standard Industrial Classification. Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington, DC. U.S. Government Printing Office. Monthly reports for January 1995-August 1999.

Table 6. Percent Change in Implied Non-Supervisory Payrolls, Employment, Average Weekly Hours, and Average Hourly Earnings in Private¹ Health Service Establishments, by Selected Type of Establishment: 1995-1999.

Type of Establishment	Calendar Year				1996 Q2	1996 Q3	1996 Q4	1997 Q1	1997 Q2	1997 Q3	1997 Q4	1998 Q1	1998 Q2	1998 Q3	1998 Q4	1999 Q1	1999 Q2
	1995	1996	1997	1998
	Annual Percent Change				Percent Change from the Same Period of Previous Year
Health Services
Payrolls	5.5	5.8	6.7	5.2	6.0	6.0	6.1	6.8	6.9	6.5	6.8	6.3	5.1	5.1	4.2	3.5	4.1
Employment	2.7	2.8	2.3	1.4	2.9	2.7	2.7	2.5	2.4	2.2	2.1	1.8	1.5	1.4	1.1	1.1	1.2
Average Weekly Hours	-0.2	-0.3	1.1	0.2	-0.3	-0.1	0.2	1.1	1.2	0.9	1.1	1.0	-0.1	0.1	-0.3	-1.1	-0.5
Average Hourly Earnings	2.9	3.2	3.2	3.5	3.4	3.3	3.1	3.0	3.1	3.2	3.5	3.4	3.6	3.6	3.3	3.6	3.4
Offices and Clinics of Physicians
Payrolls	6.8	11.4	9.6	7.2	11.8	12.3	11.8	11.2	9.8	8.8	8.6	8.8	7.4	6.7	6.0	4.8	6.9
Employment	4.2	4.8	3.7	4.1	5.1	4.8	4.2	3.9	3.8	3.3	3.8	4.2	3.8	4.4	3.9	3.5	3.5
Average Weekly Hours	0.2	1.3	1.0	-0.7	1.2	1.4	1.7	1.8	1.2	0.6	0.2	0.2	-0.8	-1.1	-1.2	-1.7	-0.2
Average Hourly Earnings	2.3	5.0	4.7	3.8	5.1	5.6	5.5	5.1	4.5	4.6	4.4	4.2	4.3	3.4	3.3	3.0	3.5
Offices and Clinics of Dentists
Payrolls	6.3	8.2	9.7	5.7	8.0	9.3	9.2	12.0	10.9	8.2	7.8	5.6	4.3	6.9	6.1	5.5	6.9
Employment	3.2	3.5	2.7	2.3	3.7	3.5	3.7	3.4	2.8	2.6	2.0	1.8	2.0	2.4	3.0	3.5	3.8
Average Weekly Hours	-0.6	0.6	1.0	-0.6	0.7	1.6	0.8	2.0	1.4	0.0	0.6	-0.1	-1.4	0.2	-0.9	-1.9	-1.3
Average Hourly Earnings	3.6	3.9	5.8	3.9	3.4	4.0	4.5	6.1	6.4	5.5	5.2	3.8	3.7	4.1	3.9	3.9	4.3
Nursing Homes
Payrolls	6.5	4.6	5.3	5.4	5.2	4.6	3.6	4.6	4.6	5.4	6.3	6.1	5.9	5.4	4.0	2.5	2.8
Employment	2.6	2.2	1.3	0.3	2.4	2.1	1.7	1.5	1.4	1.2	1.1	1.0	0.6	0.1	-0.4	-0.7	-0.8
Average Weekly Hours	0.5	-0.3	0.1	0.5	0.2	-0.2	-0.9	0.2	-0.2	-0.1	0.6	0.4	0.3	0.8	0.3	-0.7	0.0
Average Hourly Earnings	3.2	2.7	3.7	4.5	2.4	2.7	2.9	2.8	3.4	4.2	4.5	4.6	4.9	4.5	4.1	3.9	3.6
Private Hospitals
Payrolls	3.3	3.4	5.2	5.0	3.5	3.4	3.5	3.9	5.0	5.5	6.2	5.8	5.0	5.1	4.1	4.1	3.8
Employment	0.3	1.1	1.4	1.7	1.1	1.1	1.3	1.2	1.3	1.5	1.5	1.6	1.7	1.9	1.7	1.5	1.3
Average Weekly Hours	-0.3	-0.5	1.4	0.3	-0.9	-0.5	0.1	0.7	1.5	1.7	1.8	1.6	0.4	-0.1	-0.6	-0.9	-0.8
Average Hourly Earnings	3.4	2.8	2.3	2.9	3.3	2.7	2.0	2.0	2.1	2.2	2.7	2.5	2.8	3.2	2.9	3.5	3.3
Home Health Care Services
Payrolls	16.2	8.1	9.7	-4.0	7.3	7.9	9.5	12.7	11.6	8.3	6.4	1.0	-3.7	-5.8	-7.0	-4.7	1.2
Employment	12.3	7.3	4.9	-5.5	8.0	6.3	6.3	6.8	5.9	4.7	2.4	-1.4	-5.1	-7.5	-8.1	-6.7	-3.3
Average Weekly Hours	1.2	-1.8	3.1	0.4	-3.2	-1.2	0.7	3.2	3.8	2.5	2.8	2.0	0.3	0.1	-0.8	-1.4	0.2
Average Hourly Earnings	2.3	2.5	1.4	1.3	2.6	2.7	2.3	2.3	1.4	1.0	1.1	0.4	1.1	1.7	2.0	3.6	4.4
Non-Farm Private Sector
Payrolls	5.5	5.8	7.7	6.6	6.1	6.2	6.9	8.5	7.4	7.1	7.7	7.5	6.7	6.5	5.9	5.2	6.0
Employment	3.2	2.5	3.0	2.6	2.4	2.6	2.7	3.0	3.0	2.9	3.0	3.0	2.7	2.6	2.3	2.3	2.3
Average Weekly Hours	-0.6	-0.1	0.6	-0.1	0.2	0.1	0.4	1.3	0.5	0.3	0.4	0.3	-0.3	-0.3	-0.3	-0.8	0.0
Average Hourly Earnings	2.8	3.4	3.9	4.1	3.4	3.4	3.7	4.0	3.8	3.8	4.1	4.1	4.2	4.2	3.8	3.6	3.7

¹Excludes hospitals, clinics, and other health-related establishments run by all governments.

NOTES: Data presented here conform to the 1987 Standard Industrial Classification. Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: Employment and Earnings. Washington, DC. U.S. Government Printing Office. Monthly reports for January 1995-August 1999.

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. Table 7 presents national indicators of output and inflation. GDP measures the output of the U.S. economy as the market value of goods and services produced within the geographic boundaries of the United States by U.S. or foreign citizens or companies. Constant dollar or “real” GDP removes the effects of price changes from the valuation of goods and services produced, so that the growth of real GDP reflects changes in the “physical quantity” of the output of the economy. In the most recent comprehensive revision of the National Income and Product Accounts, the method for removing the effects of price changes was altered. The GDP estimates are now deflated using chain-weighted price indexes, replacing the previous fixed-weighted method (U.S. Department of Commerce, 1996 and 1999).

Table 7. Selected National Economic Indicators: 1995-1999.

Type of Establishment	Calendar Year				1996 Q2	1996 Q3	1996 Q4	1997 Q1	1997 Q2	1997 Q3	1997 Q4	1998 Q1	1998 Q2	1998 Q3	1998 Q4	1999 Q1	1999 Q2
	1995	1996	1997	1998
Gross Domestic Product
Billions of Dollars	$7,270	$7,662	$8,111	$8,511	$7,629	$7,703	$7,818	$7,955	$8,063	$8,171	$8,255	$8,384	$8,441	$8,538	$8,681	$8,809	$8,882
Billions of 1992 Chain-Weighted Dollars	6,762	6,995	7,270	7,552	6,984	7,020	7,093	7,167	7,237	7,311	7,365	7,465	7,499	7,567	7,678	7,760	7,794
Implicit Price Deflator (1992 = 100.0)	107.5	109.5	111.6	112.7	109.2	109.7	110.2	111.0	111.4	111.8	112.1	112.3	112.6	112.8	113.1	113.5	114.0
Personal Income
Personal Income in Billions	$6,072	$6,426	$6,784	$7,126	$6,390	$6,479	$6,550	$6,667	$6,744	$6,821	$6,905	$7,004	$7,082	$7,161	$7,258	$7,349	$7,442
Disposable Income in Billions	5,277	5,535	5,795	6,028	5,497	5,577	5,630	5,711	5,768	5,822	5,879	5,937	5,989	6,052	6,133	6,205	6,280
Prices1
Consumer Price Index, All Items	152.4	156.9	160.5	163.0	156.5	157.4	158.5	159.6	160.2	160.8	161.5	161.9	162.8	163.4	164.0	164.6	166.2
All Items Less Medical Care	148.6	152.8	156.3	158.6	152.5	153.3	154.4	155.5	156.0	156.7	157.2	157.5	158.4	159.0	159.5	160.1	161.6
Energy	105.2	110.1	111.5	102.9	112.0	111.9	111.3	112.5	110.7	112.6	110.2	103.6	103.8	103.9	100.2	97.9	105.8
Food and Beverages	148.9	153.7	157.7	161.1	152.8	154.3	156.2	157.0	157.1	158.0	158.9	160.1	160.5	161.3	162.5	163.8	164.1
Medical Care	220.5	228.2	234.6	242.1	227.4	229.1	230.4	232.6	234.1	235.1	236.4	239.1	241.4	243.4	244.7	247.5	249.6
Producer Price Index,2 Finished
Consumer Goods	125.6	129.5	130.2	128.9	129.3	130.2	131.2	130.7	129.9	130.2	130.1	128.2	128.8	129.2	129.4	129.4	131.0
Energy	78.1	83.2	83.4	75.1	84.2	84.7	85.1	84.9	82.5	84.2	81.8	75.9	76.1	75.9	72.7	70.9	77.2
Food	129.0	133.6	134.5	134.3	132.1	134.9	136.1	134.4	134.5	134.5	134.7	133.4	133.7	135.1	135.0	134.8	134.3
Finished Goods Except Food and Energy	141.9	144.3	145.1	147.7	144.2	144.0	145.0	145.2	145.0	144.4	145.8	146.3	147.3	147.4	149.9	151.2	151.1
	Annual Percent Change				Percent Change from Same Period Period of Previous Year
Gross Domestic Product
Billions of Dollars	4.6	5.4	5.9	4.9	5.8	5.5	5.8	6.1	5.7	6.1	5.6	5.4	4.7	4.5	5.2	5.1	5.2
Billions of 1992 Chain-Weighted Dollars	2.3	3.4	3.9	3.9	3.9	3.5	3.9	4.1	3.6	4.1	3.8	4.2	3.6	3.5	4.2	4.0	3.9
Implicit Price Deflator (1992 = 100.0)	2.3	1.9	1.9	1.0	1.9	1.8	1.8	1.9	2.0	1.8	1.7	1.2	1.0	0.9	0.9	1.1	1.2
Personal Income
Personal Income in Billions	5.5	5.8	5.6	5.0	6.0	6.3	5.9	6.1	5.5	5.3	5.4	5.1	5.0	5.0	5.1	4.9	5.1
Disposable Income in Billions	5.1	4.9	4.7	4.0	5.0	5.3	4.9	5.1	4.9	4.4	4.4	4.0	3.8	4.0	4.3	4.5	4.9
Prices1
Consumer Price Index, All Items	2.8	2.9	2.3	1.6	2.8	2.9	3.2	2.9	2.3	2.2	1.9	1.5	1.6	1.6	1.5	1.7	2.1
All Items Less Medical Care	2.7	2.9	2.3	1.4	2.8	2.9	3.1	3.0	2.3	2.2	1.8	1.3	1.5	1.5	1.4	1.6	2.0
Energy	0.6	4.6	1.3	-7.7	5.2	4.4	7.5	6.8	-1.1	0.6	-1.0	-8.0	-6.3	-7.7	-9.0	-5.4	1.9
Food and Beverages	2.8	3.3	2.6	2.1	2.8	3.6	4.2	3.5	2.8	2.4	1.7	2.0	2.2	2.1	2.3	2.3	2.2
Medical Care	4.5	3.5	2.8	3.2	3.7	3.4	3.1	2.9	3.0	2.6	2.6	2.8	3.1	3.5	3.5	3.5	3.4
Producer Price Index2, Finished
Consumer Goods	1.9	3.1	0.5	-1.0	2.9	3.4	3.8	2.6	0.5	-0.1	-0.8	-1.9	-0.8	-0.7	-0.5	0.9	1.7
Energy	1.4	6.5	0.2	-9.8	5.2	6.6	11.5	7.7	-2.0	-0.6	-4.0	-10.6	-7.8	-9.9	-11.0	-6.6	1.4
Food	1.8	3.5	0.7	-0.2	3.2	4.5	4.1	2.5	1.8	-0.3	-1.0	-0.7	-0.6	0.4	0.2	1.1	0.4
Finished Goods Except Food and Energy	2.1	1.7	0.5	1.8	1.8	1.6	0.9	0.8	0.6	0.3	0.5	0.8	1.6	2.1	2.9	3.4	2.6

¹Base period = 1982-1984, unless noted.

²Formerly called the “Wholesale Price Index.”

NOTES: Q designates quarter of year. Unlike Tables 1-5, quarterly data on gross domestic product, personal income, and disposable personal income are seasonally adjusted at annual rates.

SOURCES: U.S. Department of Commerce, Bureau of Economic Analysis: Survey of Current Business. Washington, DC. U.S. Government Printing Office. Monthly reports for January 1995-August 1999; U.S. Department of Labor, Bureau of Labor Statistics.

Prices

Consumer Price Indexes

BLS publishes monthly information on changes in prices paid by consumers for a fixed market basket of goods and services. Tables 7, 8, and 9 present information on the all-urban consumer price index (CPI-U) that measures changes in prices faced by 87 percent of the non-institutionalized U.S. population. The more restrictive wage-earner CPI-W gauges prices faced by wage earners and clerical workers. These workers account for approximately 32 percent of the non-institutionalized population (U.S. Department of Labor, 1998b).

Table 8. Index Levels of Medical Prices: United States, 1995-1999.

Type of Establishment	Calendar Year				1996 Q2	1996 Q3	1996 Q4	1997 Q1	1997 Q2	1997 Q3	1997 Q4	1998 Q1	1998 Q2	1998 Q3	1998 Q4	1999 Q1	1999 Q2
	1995	1996	1997	1998
Consumer Price Indexes, All Urban Consumers1
Medical Care Services2	224.2	232.4	239.1	246.8	231.5	233.3	234.7	237.0	238.4	239.7	241.2	244.0	245.9	248.0	249.3	252.3	254.0
Professional Services	201.0	208.3	215.4	222.2	207.5	209.2	210.7	213.2	215.1	216.2	217.1	219.5	221.8	223.3	224.4	226.7	228.7
Physician Services	208.8	216.4	222.9	229.5	215.8	217.1	218.3	220.8	222.8	223.7	224.2	226.6	228.8	230.8	231.7	233.7	235.5
Dental Services	206.8	216.5	226.6	236.2	215.1	218.0	220.5	223.4	225.8	227.6	229.6	232.6	235.1	237.3	239.7	243.7	246.4
Hospital and Related Services	257.8	269.5	278.4	287.5	267.7	271.0	273.1	276.3	277.2	278.8	281.3	284.6	285.7	289.0	290.8	295.7	297.0
Hospital Services (12/1996 = 100)	—	—	101.7	105.0	—	—	—	101.0	101.3	101.8	102.7	103.9	104.3	105.5	106.2	108.0	108.4
Inpatient Hospital Services (12/1996 =100)	—	—	101.3	104.0	—	—	—	100.8	101.0	101.5	102.1	103.1	103.3	104.4	105.0	106.7	107.0
Outpatient Hospital Services (12/1986 =100)	204.6	215.1	224.9	233.2	213.9	216.5	218.1	222.6	223.7	225.4	227.7	230.0	231.6	234.4	236.7	241.1	243.2
Nursing Home Services (12/1996 =100)	—	—	102.3	107.1	—	—	—	101.0	101.8	102.9	103.5	105.5	106.7	107.8	108.2	110.0	111.0
Medical Care Commodities	204.5	210.4	215.3	221.8	209.9	211.1	212.1	213.8	215.6	215.6	216.1	218.2	221.3	223.1	224.8	226.8	229.7
Prescription Drugs	235.0	242.9	249.3	258.6	242.3	243.7	245.3	247.6	249.8	249.6	250.1	253.3	257.6	260.6	263.0	267.2	272.0
Non-Prescription Drugs and Medical Supplies (1986 =100)	140.5	143.1	145.4	147.7	142.9	143.6	143.6	144.5	145.4	145.8	146.1	146.5	147.7	148.0	148.6	147.8	148.2
Internal and Respiratory Over-the-Counter Drugs	167.0	170.2	173.1	175.4	169.5	170.6	171.3	172.4	173.3	173.3	173.4	173.2	175.6	176.4	176.4	174.8	175.9
Non-Prescription Medical Equipment and Supplies	166.3	169.1	171.5	174.9	169.3	169.8	168.8	169.7	171.2	172.2	173.1	175.1	174.5	173.9	176.0	176.5	175.6
Producer Price Indexes3
Industry Groupings4
Health Services (12/1994 = 100)	102.4	104.6	106.1	107.7	104.4	104.7	105.2	105.8	105.9	106.2	106.3	107.1	107.5	107.9	108.3	109.2	109.4
Offices and Clinics of Doctors of Medicine (12/1993 =100)	106.8	107.6	109.0	111.3	107.5	107.5	107.9	108.7	108.8	109.3	109.2	110.7	111.2	111.5	112.0	113.2	113.5
Medicare Treatments (12/1993 =100)	109.6	105.5	105.8	110.5	105.5	105.5	105.5	105.8	105.8	105.8	105.8	110.5	110.5	110.5	110.5	113.2	113.2
Non-Medicare Treatments (12/1993 =100)	105.9	107.8	109.6	111.4	107.7	107.8	108.2	109.2	109.4	109.9	109.8	110.6	111.2	111.6	112.2	113.1	113.5
Hospitals (12/1992 = 100)	110.0	112.6	113.6	114.4	112.3	112.7	113.4	113.5	113.6	113.5	113.5	114.0	114.2	114.4	115.0	115.7	115.9
General Medical and Surgical Hospitals (12/1992 =100)	109.9	112.5	113.6	114.6	112.2	112.5	113.2	113.4	113.4	113.8	113.8	114.1	114.4	114.6	115.2	115.8	116.1
Inpatient Treatments (12/1992 =100)	109.2	111.8	112.8	113.6	111.6	111.6	112.4	112.5	112.5	113.2	113.0	113.3	113.4	113.6	114.1	114.8	115.0
Medicare Patients (12/1992 =100)	104.7	108.1	108.8	108.1	107.8	107.8	109.1	109.1	109.1	109.1	108.0	108.0	108.0	108.0	108.4	108.4	108.4
Medicaid Patients (12/1992 =100)	109.8	112.2	110.9	110.2	112.5	111.9	112.5	110.7	110.0	111.4	111.5	110.9	110.6	109.6	109.7	109.8	110.6
All Other Patients (12/1992 =100)	111.7	113.7	115.6	117.8	113.4	113.6	114.2	114.8	115.1	116.0	116.3	117.0	117.4	118.1	118.8	120.0	120.2
Outpatient Treatments (12/1992 =100)	113.3	116.2	117.4	118.6	115.8	116.6	117.0	117.4	117.5	117.1	117.5	118.0	118.4	118.6	119.3	120.0	120.4
Medicare Patients (12/1992 =100)	111.2	113.1	116.1	118.8	112.5	113.4	114.4	115.3	115.9	116.7	116.4	117.4	118.3	119.0	120.6	122.2	123.1
Medicaid Patients (12/1992 =100)	106.4	106.1	105.0	105.9	107.1	105.9	104.4	104.8	104.9	105.0	105.2	105.2	105.3	105.3	107.8	107.8	107.8
All Other Patients (12/1992 =100)	114.2	117.7	118.8	119.8	117.1	118.1	118.6	119.0	119.0	118.4	118.9	119.3	119.7	119.9	120.2	120.7	121.0
Skilled and Intermediate Care Facilities (12/1994 =100)	103.6	110.0	114.7	119.6	109.5	110.7	111.6	113.3	113.9	115.5	116.1	117.7	118.6	120.6	121.4	122.5	122.8
Public Payers (12/1994 =100)	103.8	110.5	115.4	120.4	110.1	111.2	112.1	113.7	114.4	116.3	117.0	118.4	119.0	121.5	122.6	123.1	123.1
Private Payers (12/1994 =100)	103.6	109.8	114.3	119.1	109.1	110.4	111.4	113.3	113.8	114.9	115.4	117.4	118.7	120.0	120.3	122.4	123.2
Medical Laboratories (6/1994 =100)	104.0	105.3	106.1	106.4	105.2	105.3	105.3	105.8	106.1	106.2	106.2	106.3	106.5	106.4	106.4	106.2	106.3
Home Health Care Services (12/1996 =100)	—	—	103.4	106.2	—	—	—	101.6	103.4	103.7	104.7	105.7	106.4	106.3	106.6	106.0	106.5
Medicare Payers (12/1996 =100)	—	—	102.2	103.6	—	—	—	101.5	101.5	102.5	103.1	103.2	103.8	103.2	104.3	102.5	103.3
Non-Medicare Payers (12/1996 =100)	—	—	100.3	103.0	—	—	—	100.2	100.0	99.9	101.2	102.6	103.1	103.2	103.0	103.1	103.2
Commodity Groupings
Drugs and Pharmaceuticals	210.9	214.7	219.1	242.6	214.6	215.2	215.2	218.1	218.2	219.2	221.0	229.8	244.5	247.4	248.7	251.1	251.7
Ethical (Prescription) Preparations	257.0	265.4	273.5	322.9	265.1	266.8	267.0	271.0	272.5	273.6	276.8	295.3	328.3	332.9	335.3	337.2	336.1
Proprietary (Over-the-Counter) Preparations	186.6	185.1	184.8	184.5	184.5	183.3	184.2	186.1	183.9	184.3	184.9	184.7	184.3	184.4	184.7	185.3	186.7
Medical, Surgical, and Personal Aid Devices	141.3	143.1	143.1	143.4	143.4	142.6	142.7	142.9	143.2	143.2	143.1	143.3	143.0	143.3	144.0	144.2	144.4
Personal Aid Equipment	133.7	139.3	140.3	143.4	139.8	140.2	140.3	140.3	140.4	139.4	141.1	142.0	143.9	143.9	143.9	146.6	147.5
Medical Instruments and Equipment (6/1982 =100)	128.3	130.1	128.1	126.7	130.1	129.7	130.1	127.8	128.1	128.6	127.8	127.0	126.4	126.6	126.9	127.3	126.7
Surgical Appliances and Supplies (6/1983 =100)	154.8	156.9	158.8	160.6	158.1	156.3	155.8	158.5	158.9	158.6	159.2	160.7	160.1	160.3	161.3	161.3	162.5
Ophthalmic Goods (12/1983 =100)	122.2	120.3	119.8	119.6	119.7	119.8	119.5	120.4	119.9	119.4	119.5	119.2	119.1	119.6	120.7	120.2	119.7
Dental Equipment and Supplies (6/1985 =100)	137.5	141.0	146.6	151.2	140.7	141.0	141.7	145.9	146.5	146.8	147.0	148.8	150.8	152.1	153.0	153.7	154.8

¹Unless otherwise noted, base year is 1982-1984 = 100.

²Includes the net cost of private health insurance, not shown separately.

³Unless otherwise noted, base year is 1982 = 100. Producer price indexes are classified by industry (price changes received for the industry's output sold outside the industry) and commodity (price changes by similarity of end use or material composition).

⁴Further detail for producer price industry groupings, such as types of physician practices, hospital diagnosis-related groups, etc., are available from the Bureau of Labor Statistics.

NOTES: Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics: CPI Detailed Report. Washington, DC. U.S. Government Printing Office. Monthly reports for January 1995-August 1999. U.S. Department of Labor, Bureau of Labor Statistics: Producer Price Indexes. Washington, DC. U.S. Government Printing Office. Monthly reports for January 1995-August 1999.

Table 9. Percent Change in Medical Prices from Same Period a Year Ago: United States, 1995-1999.

Type of Establishment	Calendar Year				1996 Q2	1996 Q3	1996 Q4	1997 Q1	1997 Q2	1997 Q3	1997 Q4	1998 Q1	1998 Q2	1998 Q3	1998 Q4	1999 Q1	1999 Q2
	1995	1996	1997	1998
	Annual Change				Percent Change from the Same Period of Previous Year
Consumer Price Indexes, All Urban Consumers1
Medical Care Services2	5.0	3.7	2.9	3.2	3.8	3.5	3.2	3.0	3.0	2.7	2.8	2.9	3.1	3.5	3.4	3.4	3.3
Professional Services	4.4	3.7	3.4	3.2	3.7	3.5	3.6	3.6	3.7	3.4	3.1	3.0	3.1	3.3	3.3	3.2	3.1
Physician Services	4.5	3.6	3.0	3.0	3.7	3.3	3.2	3.0	3.3	3.0	2.7	2.6	2.7	3.2	3.3	3.1	2.9
Dental servieces	4.9	4.7	4.7	4.2	4.6	4.9	5.1	5.2	4.9	4.4	4.1	4.1	4.1	4.3	4.4	4.8	4.8
Hospital and Related Services	5.0	4.5	3.3	3.3	4.7	4.6	4.2	3.8	3.5	2.9	3.0	3.0	3.0	3.6	3.4	3.9	4.0
Hospital Services (12/1996=100)	—	—	—	—	—	—	—	—	—	—	—	2.9	3.0	3.6	3.3	3.9	3.9
Inpatient Hospital Services (12/1996=100)	—	—	—	—	—	—	—	—	—	—	—	2.3	2.3	2.9	2.8	3.5	3.6
Outpatient Hospital Services (12/1986=100)	4.9	5.1	4.6	3.7	5.7	5.4	4.4	5.2	4.6	4.1	4.4	3.3	3.5	4.0	3.9	4.8	5.0
Nursing Home Services (12/1996=100)	—	—	—	—	—	—	—	—	—	—	—	4.4	4.8	4.8	4.5	4.3	4.0
Medical Care Commodities	1.9	2.9	2.3	3.0	3.1	3.2	2.9	2.6	2.7	2.1	1.9	2.0	2.6	3.5	4.0	4.0	3.8
Prescription Drugs	1.9	3.3	2.6	3.8	3.6	3.5	3.3	3.1	3.1	2.4	1.9	2.3	3.1	4.4	5.2	5.5	5.6
Non-Prescription Drugs and Medical Supplies (1986=100)	1.8	1.9	1.6	1.6	2.0	2.3	1.7	1.4	1.8	1.5	1.7	1.4	1.6	1.5	1.7	0.9	0.3
Internal and Respiratory Over-the-Counter Drugs	0.6	1.9	1.7	1.3	2.1	1.9	2.4	1.8	2.2	1.6	1.3	0.5	1.3	1.8	1.7	0.9	0.2
Non-Prescription Medical Equipment and Supplies	3.9	1.7	1.4	2.0	1.8	2.8	0.6	0.6	1.1	1.4	2.5	3.2	2.0	1.0	1.7	0.8	0.6
Producer Price Indexes3
Industry Groupings4
Health Services (12/1994=100)	—	2.2	1.4	1.5	2.4	2.1	1.8	1.6	1.5	1.5	1.0	1.3	1.4	1.6	1.9	2.1	1.8
Offices and Clinics of Doctors of Medicine (12/1993=100)	3.9	0.7	1.3	2.1	0.7	0.4	0.8	1.3	1.2	1.6	1.2	1.8	2.1	2.0	2.5	2.3	2.1
Medicare Treatments (12/1993=100)	4.7	-3.7	0.3	4.4	-3.7	-3.7	-3.7	0.3	0.3	0.3	0.3	4.4	4.4	4.4	4.4	2.4	2.4
Non-Medicare Treatments (12/1993=100)	3.6	1.8	1.7	1.6	1.5	1.6	2.0	1.6	1.6	2.0	1.5	1.3	1.6	1.5	2.1	2.4	2.1
Hospitals (12/1992=100)	3.5	2.4	0.8	0.7	2.7	2.5	1.8	1.2	1.2	0.8	0.1	0.4	0.5	0.8	1.3	1.7	1.5
General Medical and Surgical Hospitals (12/1992=100)	3.7	2.4	1.0	0.8	2.8	2.3	1.5	1.1	1.1	1.2	0.6	0.7	0.8	0.7	1.2	1.6	1.5
Inpatient Treatments (12/1992=100)	3.1	2.3	0.9	0.7	2.8	2.3	1.4	0.8	0.9	1.4	0.5	0.7	0.8	0.4	1.0	1.5	1.4
Medicare Patients (12/1992=100)	2.0	3.3	0.6	-0.7	4.1	4.1	1.2	1.2	1.2	1.2	-1.0	-1.0	-1.0	-1.0	0.4	0.4	0.4
Medicaid Patients (12/1992=100)	2.5	2.2	-1.1	-0.7	2.6	2.4	1.7	-0.9	-2.2	-0.5	-0.9	0.2	0.5	-1.6	-1.6	0.1	0.0
All Other Patients (12/1992=100)	3.7	1.8	1.7	1.9	2.0	1.4	1.4	1.1	1.5	2.2	1.9	1.9	2.0	1.8	2.1	2.5	2.3
Outpatient Treatments (12/1992=100)	6.2	2.6	1.0	1.0	2.9	2.2	1.9	1.6	1.5	0.5	0.5	0.5	0.8	1.3	1.5	1.8	1.6
Medicare Patients (12/1992=100)	4.0	1.7	2.6	2.4	1.3	1.4	2.3	2.7	3.0	2.9	1.8	1.9	2.0	2.0	3.5	4.7	4.1
Medicaid Patients (12/1992=100)	2.9	-0.2	-1.1	0.9	1.2	0.1	-3.4	-2.1	-2.1	-0.8	0.8	0.4	0.3	0.3	2.5	2.5	2.4
All Other Patients (12/1992=100)	6.9	3.0	1.0	0.8	3.4	2.6	2.4	1.8	1.6	0.3	0.3	0.3	0.6	1.3	1.1	1.3	1.1
Skilled and Intermediate Care Facilities (12/1994=100)	—	6.1	4.3	4.3	6.5	6.2	5.7	4.7	4.0	4.3	4.1	3.9	4.1	4.5	4.6	4.2	3.6
Public Payers (12/1994=100)	—	6.5	4.4	4.3	7.2	6.5	5.5	4.7	4.0	4.6	4.4	4.2	4.0	4.5	4.7	3.9	3.4
Private Payers (12/1994=100)	—	5.9	4.1	4.2	5.8	6.0	6.0	4.7	4.2	4.0	3.6	3.6	4.4	4.4	4.3	4.5	3.8
Medical Laboratories (6/1994=100)	—	1.3	0.8	0.3	1.8	-0.6	0.3	0.5	0.9	0.9	0.9	0.4	0.3	0.2	0.2	0.0	-0.2
Home Health Care Services (12/1996=100)	—	—	—	2.8	—	—	—	—	—	—	—	4.0	2.9	2.4	1.8	0.5	0.1
Medicare Payers (12/1996=100)	—	—	—	1.4	—	—	—	—	—	—	—	1.6	2.3	0.6	1.1	-0.1	-0.5
Non-Medicare Payers (12/1996=100)	—	—	—	2.7	—	—	—	—	—	—	—	2.5	3.1	3.3	1.7	0.4	0.2
Commodity Groupings
Drugs and Pharmaceuticals	2.4	1.8	2.1	10.7	2.0	1.9	0.8	2.0	1.7	1.9	2.7	5.4	12.0	12.8	12.5	8.0	3.0
Ethical (Prescription) Preparations	2.8	3.3	3.1	18.1	3.6	3.6	2.0	3.2	2.8	2.5	3.6	8.9	20.5	21.7	21.2	11.9	2.4
Proprietary (Over-the-Counter) Preparations	1.8	-0.8	-0.1	-0.1	-1.1	-1.8	-1.8	-1.2	-0.3	0.6	0.4	-0.7	0.2	0.1	-0.1	0.3	1.3
Medical, Surgical, and Personal Aid Devices	0.7	1.3	0.0	0.2	1.8	0.8	0.4	-0.4	-0.2	0.4	0.3	0.3	-0.1	0.0	0.6	0.6	1.0
Personal Aid Equipment	2.7	4.2	0.7	2.2	6.1	3.8	2.6	2.6	0.4	-0.6	0.6	1.2	2.5	3.2	2.0	3.1	2.5
Medical Instruments and Equipment (6/1982=100)	1.3	1.4	-1.5	-1.1	1.6	0.8	1.1	-1.9	-1.5	-0.9	-1.7	-0.7	-1.4	-1.5	-0.7	0.0	0.3
Surgical Appliances and Supplies (6/1983=100)	-0.6	1.4	1.2	1.1	2.6	1.1	-0.3	0.7	0.5	1.5	2.2	1.4	0.7	1.1	1.3	0.6	1.5
Ophthalmic Goods (12/1983=100)	2.2	-1.6	-0.4	-0.1	-1.8	-2.5	-2.5	-1.5	0.1	-0.3	0.0	-1.0	-0.7	0.2	1.0	1.0	0.6
Dental Equipment and Supplies (6/1985=100)	1.7	2.5	3.9	3.2	2.0	2.8	2.2	3.6	4.1	4.1	3.8	2.0	3.0	3.6	4.0	4.0	2.6

¹Unless otherwise noted, base year is 1982-1984 = 100.

²Includes the net cost of private health insurance, not shown separately.

³Unless otherwise noted, base year is 1982 = 100. Producer price indexes are classified by industry (price changes received for the industry's output sold outside the industry) and commodity (price changes by similarity of end use or material composition).

⁴Further detail for producer price industry groupings, such as types of physician practices, hospital diagnosis-related groups, etc., are available from the Bureau of Labor Statistics.

NOTES: Q designates quarter of year. Quarterly data are not seasonally adjusted.

SOURCES: U.S. Department of Labor, Bureau of Labor Statistics: CPI Detailed Report. Washington. U.S. Government Printing Office. Monthly reports for January 1995-August 1999; U.S. Department of Labor, Bureau of Labor Statistics: Producer Price Indexes. Washington, DC. U.S. Government Printing Office. Monthly reports for January 1995-August 1999.

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 1982-1984 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. The CPI for medical care services also includes an indirect measure of price change for health insurance coverage purchased directly by consumers. The composite CPI for medical care weights together product-specific or service-specific CPIs in proportion to household out-of-pocket expenditures for these items. In addition, some medical care sector indexes measure changes in list or charged prices, rather than in 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 the NHE, a combination of CPIs for selected medical care items, input price indexes for nursing homes, and the PPI for hospitals are used as measures of inflation for the health industry. The indexes are used to develop a chain-weighted price index for personal health care to depict transaction price changes affecting the entire health care industry more accurately than does the overall CPI medical care index (Cowan et al., 1999).

Producer Price Indexes

BLS produces monthly information on average changes in selling prices received by domestic producers for their output. These prices are presented in Tables 7, 8, and 9 as the PPI. The index is designed to measure transaction prices, and is different from the CPI, which in some cases measures list or full-charge prices. The PPI is a fixed-weight or Laspeyres index, with base-period weights determined by values of receipts. The base period varies among series.

The PPI consists of indexes in several major classification structures, including the industry and commodity classifications that are included in articles in the Health Care Indicators series in this journal. The PPI by industry classification measures price changes received for the industry's output sold outside the industry. PPI changes for an industry are determined by price changes for products primarily made by establishments in that industry. The industry into which an establishment is classified is determined by those products accounting for the largest share of its total value of shipments. The PPI by commodity classification measures price changes of the end product (end use or material composition). The classification system for PPI commodity groups is unique to the PPI and is divided into 15 major commodity groupings.

Although PPIs for medical commodities have existed for many years, PPIs for health service industries are relatively new. Most index series began in 1994, and the index series for the composite health services industry did not begin until December 1994. However, the PPI for hospitals began in December 1992, providing enough data for a useful time series. The PPI for hospitals is a measure of transaction prices, or net prices received by the producer from out-of-pocket, Medicare, Medicaid, private third-party payer, and other sources. The PPI for hospitals should not be compared with the CPI for hospital and related services. Although other PPI and CPI series are somewhat comparable (for example, the PPI-Offices and Clinics of Doctors of Medicine and the CPI-Physicians' Services), the PPI and CPI for hospitals have important differences in survey scope and methodology. The PPI for hospitals measures price changes for the entire treatment path, measures net transaction price, includes Medicare and Medicaid, samples both urban and rural hospitals, and reflects total hospital revenue from all sources in its index weights. On the other hand, the CPI for hospitals measures price changes for a discrete sample of hospital services singly, measures published charges, excludes Medicare and Medicaid, samples only urban hospitals, and reflects only consumer out-of-pocket expenses and household health insurance premium payments in its index weights. These differences make a direct comparison between the PPI and CPI hospital services indexes inappropriate.

The PPI for the health services industry is available by detailed industry groupings. For example, general medical and surgical hospitals consist of inpatient and outpatient treatments, which in turn consist of Medicare, Medicaid, and all other patients. These patient categories consist of more detail, such as diagnosis-related groups (DRGs) for Medicare. Although most of the data used to measure PPI price changes for health services are collected through a sample, there are specific instances where data are collected from both a sample and from price changes in Federal regulation. This is the case for Medicare hospital inpatient services and Medicare physician offices and clinics. The producer price changes in Medicare hospital inpatient services are computed from a combination of a national sample of DRGs in hospitals, DRG relative weights from the PPS final rules published in the current and historical year, and other adjustments. The producer price changes in Medicare physician offices are computed from a combination of a geographic area sample of payments under t he HCFA Common Procedure Coding System, updates to this system from the November 2, 1998, Federal Register (1998a), and other adjustments. Because of different methodologies, these two Medicare PPIs are not comparable to the national updates computed by HCFA and published in the Federal Register.

Input Price Indexes

In 1979, HCFA developed the Medicare Hospital Input Price Index (hospital market basket), which was designed to measure the pure price changes associated with expenditure changes for hospital services. In the early 1980s, the 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. Also in the early 1980s, the original Medicare Hospital Input Price Index was revised for use in updating payment rates for routine costs of Medicare inpatient services. All of these indexes have played an important role in helping to set Medicare 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 1992. Cost categories, such as food, fuel, and labor, are identified and their 1992 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 26 expenditure categories in the 1992-based PPS hospital input price index.

Second, a price proxy is selected to match each expenditure category. The proxy's purpose is to measure the rate of price increases of the goods or services in that 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 forecast out several years. The HCFA-chosen price proxies are forecast under contract with Standard and Poor's/DRI. Following every calendar year quarter, DRI updates its macroeconomic forecasts of wages and prices based on updated historical information and revised forecast assumptions. Some of the data in Tables 10, 11, and 12 are forecast and are expected to change as more recent historical data become available and subsequent quarterly forecasts are revised. 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 hospital, HHA, and SNF payment updates. A description of the current structure of the PPS Input Price Index is in the August 29, 1997, Federal Register (1997), and the most recent PPS hospital update for payment rates was published in the July 30, 1999, Federal Register (1999). The latest description of the HHA regulatory input price index was published in the August 11, 1998, Federal Register (1998b). The latest description of the SNF input price index was published in the May 12, 1998, Federal Register (1998c).

Table 10. Quarterly Index Levels and Four-Quarter Moving Average Percent Change in the HCFA Prospective Payment System (PPS) Hospital Input Price Index, by Expense Category: United States, 1997-2001.

Expense Category1	Price/Wage Variable	Base Year Weights FY 19922	1997 Q3	1997 Q4	1998 Q1	1998 Q2	1998 Q3	1998 Q4	1999 Q1	1999 Q2	Forecats
											1999 Q3	1999 Q4	2000 Q1	2000 Q2	2000 Q3	2000 Q4	2001 Q1	2001 Q2
Index Levels
Total	—	100.000	115.1	115.9	116.7	117.9	118.9	119.3	119.7	120.6	121.6	122.4	123.3	124.1	125.0	125.8	126.7	127.6
Compensation	—	61.390	117.1	118.1	119.0	119.9	121.2	121.8	122.7	123.7	124.8	125.7	126.8	127.6	128.8	129.8	130.9	131.7
Wages and Salaries	HCFA Occupational Wage Index4	50.244	116.9	117.9	118.9	119.8	121.1	121.8	122.8	123.7	124.8	125.7	126.8	127.7	128.9	129.9	130.8	131.7
Employee Benefits	HCFA Occupational Benefits Index4	11.146	118.1	119.0	119.6	120.6	121.4	122.1	122.5	123.6	124.7	125.6	126.9	127.5	128.5	129.8	130.9	131.6
Other Professional Fees	ECI-W/S:Professional/Technical (Private)	2.127	117.9	118.9	119.8	120.9	122.2	123.0	123.3	124.3	125.6	126.5	127.7	128.6	129.9	130.9	132.0	133.0
Energy and Utilities3	—	1.542	113.6	111.3	109.0	109.8	113.4	109.6	108.2	108.6	113.9	110.8	111.4	112.7	116.2	112.4	112.5	114.1
Professional Liability Insurance	HCFA-Professional Liability Premium	1.189	95.9	96.0	96.1	96.2	96.4	96.8	97.2	97.6	98.1	98.7	99.4	100.0	100.5	101.1	101.6	102.2
All Other	—	33.752	112.1	112.5	113.4	115.1	115.5	115.6	115.3	116.0	116.6	117.5	118.2	118.6	119.0	119.6	120.4	121.2
Other Products3	—	24.825	110.8	111.0	112.0	114.0	114.2	114.1	113.4	114.0	114.4	115.2	115.8	116.1	116.2	116.7	117.3	118.1
Pharmaceuticals	PPI-Prescription Drugs	4.162	119.7	121.1	129.2	143.7	145.7	146.8	144.6	147.1	147.7	148.8	150.5	151.6	151.4	152.7	154.4	156.1
Food: Direct Purchase	PPI-Processed Foods	2.314	109.9	109.4	107.7	107.6	108.4	107.9	107.6	106.6	107.2	107.2	107.7	108.3	108.6	108.8	109.1	109.7
Food: Contract Service	CPI-Food Away From Home	1.072	112.3	113.2	113.8	114.5	115.3	116.0	116.9	117.4	118.1	119.1	120.1	121.2	122.2	123.3	124.2	125.1
Chemicals	PPI-Industrial Chemicals	3.666	115.9	115.7	114.0	111.7	110.3	109.2	107.5	107.6	107.9	109.4	109.2	108.6	108.2	108.3	108.6	110.0
Medical Instruments	PPI-Medical Instruments/Equipment	3.080	104.9	104.2	103.6	103.1	103.3	103.5	103.5	103.4	102.6	102.4	102.6	102.5	102.6	102.9	103.5	103.6
Rubber and Plastics	PPI-Rubber/Plastic Products	4.750	107.4	107.3	107.2	106.9	106.6	106.5	106.1	106.5	106.8	107.4	107.9	108.2	108.3	108.4	108.6	108.7
Paper Products	PPI-Converted Paper and Paperboard	2.078	109.3	111.6	113.6	113.3	113.3	112.1	111.4	113.1	114.8	116.8	117.6	118.2	119.1	120.2	121.3	121.8
Miscellaneous Products	PPI-Finished Goods	2.236	107.2	107.3	106.1	106.4	106.6	106.9	106.8	107.8	108.7	109.2	109.5	109.8	109.9	110.4	110.8	111.2
Other Services3	—	8.927	115.8	116.6	117.5	118.1	119.1	119.6	120.8	121.6	122.8	123.9	124.8	125.7	127.0	127.9	128.9	130.1
All Other: Labor Intensive	ECI-Comp:Service Workers	7.277	116.9	117.8	118.8	119.4	120.6	121.2	122.5	123.5	124.8	126.0	127.1	128.0	129.4	130.5	131.4	132.8
Four-Quarter Moving-Average Percent Change
Total	—	100.000	2.0	2.1	2.3	2.6	2.9	3.0	3.0	2.8	2.5	2.4	2.6	2.7	2.8	2.9	2.8	2.8
Compensation	—	61.390	2.6	2.7	2.9	3.1	3.3	3.3	3.3	3.2	3.1	3.1	3.2	3.2	3.2	3.3	3.2	3.2
Wages and Salaries	HCFA Occupational Wage Index4	50.244	2.8	3.0	3.2	3.4	3.5	3.5	3.4	3.4	3.2	3.2	3.2	3.2	3.2	3.3	3.2	3.2
Employee Benefits	HCFA Occupational Benefits Index4	11.146	1.5	1.6	1.7	2.0	2.4	2.5	2.6	2.6	2.6	2.6	2.9	3.1	3.2	3.3	3.2	3.2
Other Professional Fees	ECI-W/S:Professional/Technical (Private)	2.127	2.6	2.6	2.8	3.0	3.2	3.3	3.3	3.2	3.0	2.9	3.0	3.2	3.3	3.5	3.4	3.4
Energy and Utilities3	—	1.542	2.3	2.0	0.7	0.6	0.3	-0.7	-0.5	-0.9	-0.7	-0.1	0.8	2.1	2.5	2.5	2.0	1.4
Professional Liability Insurance	HCFA-Professional Liability Premium	1.189	-1.5	-1.8	-1.5	-1.0	-0.4	0.2	0.6	1.0	1.3	1.6	1.9	2.1	2.3	2.4	2.4	2.4
All Other	—	33.752	1.1	1.0	1.2	1.8	2.3	2.7	2.7	2.1	1.6	1.3	1.5	1.8	2.1	2.1	2.0	2.0
Other Products3	—	24.825	0.3	0.2	0.3	1.1	1.9	2.5	2.6	1.8	1.1	0.6	0.8	1.3	1.6	1.7	1.5	1.5
Pharmaceuticals	PPI-Prescription Drugs	4.162	2.6	3.1	4.5	9.0	13.7	18.1	18.7	13.7	8.6	4.0	2.3	2.5	2.8	3.1	2.7	2.7
Food:Direct Purchase	PPI-Processed Foods	2.314	1.8	0.5	-0.6	-1.6	-1.7	-1.8	-1.4	-0.9	-0.8	-0.7	-0.6	0.0	0.6	1.1	1.4	1.4
Food:Contract Service	CPI-Food Away From Home	1.072	2.9	2.8	2.7	2.6	2.6	2.6	2.6	2.6	2.6	2.6	2.6	2.8	3.0	3.2	3.4	3.4
Chemicals	PPI-Industrial Chemicals	3.666	0.3	-0.2	-1.3	-1.7	-2.8	-4.0	-4.8	-5.0	-4.3	-2.9	-1.1	0.1	0.8	0.4	-0.1	0.0
Medical Instruments	PPI-Medical Instruments/Equipment	3.080	-0.8	-1.5	-1.2	-1.2	-1.3	-1.1	-0.9	-0.5	-0.3	-0.4	-0.6	-0.9	-0.7	-0.3	0.1	0.6
Rubber and Plastics	PPI-Rubber/Plastic Products	4.750	-0.6	-0.5	-0.3	-0.4	-0.4	-0.5	-0.8	-0.7	-0.5	-0.1	0.6	1.1	1.4	1.5	1.2	0.9
Paper Products	PPI-Converted Paper and Paperboard	2.078	-4.9	-3.3	-1.3	0.8	2.3	2.5	1.4	0.4	-0.1	0.8	2.7	3.9	4.5	4.2	3.6	3.2
Miscellaneous Products	PPI-Finished Goods	2.236	1.3	0.4	-0.5	-0.8	-0.9	-0.9	-0.3	0.2	0.9	1.6	2.0	2.1	1.9	1.6	1.3	1.2
Other Services3	—	8.927	3.2	3.4	3.6	3.6	3.3	3.1	2.9	2.8	2.9	3.1	3.3	3.4	3.4	3.3	3.3	3.3
All Other: Labor Intensive	ECI-Comp:Service Workers	7.277	3.5	3.8	4.1	4.2	3.8	3.5	3.3	3.1	3.2	3.5	3.6	3.7	3.8	3.7	3.6	3.6

¹For data sources used to estimate the input price index relative weights and choice of price proxies, refer to the August 29, 1997, Federal Register. For the most recent PPS update for payment rates, refer to the July 30, 1999, Federal Register.

²Category weights may not sum to total or subtotals shown because of detail not included.

³The HCFA Occupational Wage and Occupational Benefit Indexes are computed as the weighted average of 10 ECI categories (ECI for hospital workers and 9 ECI occupational categories).

⁴Represents a subtotal. Detailed categories not shown are listed below by subtotal, detailed category, and base-year weight:Energy and Utilities: Fuel Oil, Coal, and Other Fuel (0.369), Electricity (0.927), and Water and Sewage (0.246). Other Products: Photographic Supplies (0.391), Apparel (0.869), and Machinery and Equipment (0.207). Other Services: Telephone (0.581), Postage (0.272), and Other Non-Labor Intensive (0.796).

NOTES: A dash (—) in the Price/Wage Variable column denotes a total or subtotal produced by adding two or more categories. HCFA is Health Care Financing Administration. FY is fiscal year. Q designates quarter of year. ECI is Employment Cost Index. W/S is Wages and Salaries. PPI is Producer Price Index. CPI is Consumer Price Index. Comp is Compensation. The four-quarter moving-average percent change for the quarter indicated by the column heading is the rate of change in the average index level for four quarters ending in that quarter over the same period of the previous year. The four-quarter moving-average index level for the quarter indicated by the column heading is computed by summing the index level for that quarter and the prior four quarters and dividing by 4. The process is repeated to compute the four-quarter moving-average index level for the same quarter a year ago. The average index level for the quarter indicated by the column heading is divided by the average index level of the same quarter a year ago, and the quotient is subtracted from 1 and multiplied by 100 to determine the four-quarter moving-average percent change in the index.

SOURCES: Health Care Financing Administration, Office of the Actuary:Data from the National Health Statistics Group. Third-quarter 1999 forecasts were produced under contract to HCFA by Standard & Poor's/DRI.

Table 11. Quarterly Index Levels and Four-Quarter Moving-Average Percent Change in the HCFA Skilled Nursing Facility Input Price Index, by Expense Category: United States, 1997-2001.

Expense Category1	Price/Wage Variable	Base Year Weights CY 19922	1997 Q3	1997 Q4	1998 Q1	1998 Q2	1998 Q3	1998 Q4	1999 Q1	1999 Q2	Forecast
											1999 Q3	1999 Q4	2000 Q1	2000 Q2	2000 Q3	2000 Q4	2001 Q1	2001 Q2
Index Levels
Total	—	100.000	116.8	117.5	118.4	119.6	120.5	120.9	121.9	123.0	124.0	124.6	125.7	126.7	127.5	128.3	129.3	130.4
Compensation	—	67.059	118.9	119.8	120.9	121.9	122.8	123.5	125.1	126.2	127.3	128.0	129.3	130.5	131.2	132.4	133.6	134.7
Wages and Salaries	ECI-W/S:Nursing Homes (Private)	54.262	119.6	120.5	122.1	123.1	124.3	124.8	126.6	127.7	129.0	129.6	131.1	132.3	133.1	134.1	135.6	136.7
Employee Benefits	ECI-Benefits: Nursing Homes (Private)	12.797	115.9	116.8	115.9	116.8	116.6	117.7	118.8	119.9	120.2	121.2	121.8	123.0	123.4	124.9	125.1	126.1
Non-Medical Professional Fees	ECI-Comp:Professional and Technical Workers (Private)	1.916	117.9	118.9	119.8	120.9	122.2	123.0	123.3	124.3	125.6	126.5	127.7	128.6	129.9	130.9	132.0	133.0
Utilities3	—	2.500	114.7	110.8	109.1	110.6	114.7	110.1	108.7	109.7	115.1	111.2	111.6	113.4	117.7	113.5	113.6	115.7
Other Expenses	—	18.747	112.1	112.5	113.3	114.8	115.4	115.6	115.6	116.3	117.0	117.6	118.2	118.8	119.3	119.9	120.4	121.2
Other Products3	—	10.964	111.9	112.3	113.7	116.9	117.5	117.5	116.8	117.6	118.3	119.0	119.8	120.4	120.6	121.2	121.9	122.8
Other Services3	—	7.783	115.7	116.3	117.0	117.6	118.3	118.8	119.6	120.6	121.8	122.7	123.7	124.5	125.7	126.6	127.5	128.6
Capital-Related Expenses	—	9.777	109.6	109.7	109.8	110.3	110.8	110.8	111.0	111.5	111.9	112.0	112.1	112.6	112.9	113.0	113.2	113.6
Depreciation3	—	5.915	116.6	117.1	117.9	118.3	119.3	119.7	120.5	120.9	121.7	122.1	122.9	123.3	124.0	124.5	125.2	125.5
Interest3	—	3.189	95.6	94.7	93.4	94.0	93.4	92.5	91.3	92.1	91.5	90.7	89.4	90.2	89.5	88.8	87.6	88.3
Other Capital-Related Expenses	CPI(U)-Residential Rent	0.674	114.6	115.5	116.3	117.2	118.3	119.4	120.3	121.0	122.0	123.4	124.4	125.4	126.5	127.6	128.2	129.0
Four-Quarter Moving-Average Percent Change
Total	—	100.000	2.4	2.4	2.4	2.6	2.8	2.9	3.0	2.9	2.9	3.0	3.0	3.0	3.0	3.0	2.9	2.9
Compensation	—	67.059	2.7	2.7	2.7	2.9	3.0	3.1	3.2	3.3	3.4	3.6	3.6	3.5	3.4	3.3	3.3	3.3
Wages and Salaries	ECI-W/S:Nursing Homes (Private)	54.262	3.1	3.1	3.2	3.4	3.5	3.6	3.7	3.7	3.7	3.8	3.8	3.7	3.5	3.4	3.4	3.4
Employee Benefits	ECI-Benefits: Nursing Homes (Private)	12.797	1.3	1.0	0.8	0.8	0.8	0.7	1.2	1.6	2.2	2.8	2.8	2.8	2.7	2.7	2.8	2.7
Non-Medical Professional Fees	ECI-Comp:Professional and Technical Workers (Private)	1.916	2.6	2.6	2.8	3.0	3.2	3.3	3.3	3.2	3.0	2.9	3.0	3.2	3.3	3.5	3.4	3.4
Utilities3	—	2.500	1.6	1.5	0.7	0.7	0.5	-0.2	-0.1	-0.5	-0.4	0.0	0.8	1.8	2.4	2.6	2.4	2.0
Other Expenses	—	18.747	1.7	1.6	1.5	1.9	2.2	2.6	2.6	2.2	1.9	1.6	1.7	1.9	2.0	2.1	2.0	1.9
Other Products3	—	10.964	0.9	0.7	0.8	1.8	3.0	4.0	4.2	3.2	2.1	1.3	1.3	1.7	2.0	2.2	2.0	1.9
Other Services3	—	7.783	3.0	3.0	2.9	2.8	2.6	2.5	2.4	2.3	2.5	2.8	3.0	3.2	3.3	3.2	3.2	3.2
Capital-Related Expenses	—	9.777	1.4	1.3	1.2	1.2	1.1	1.1	1.1	1.1	1.1	1.0	1.0	1.0	1.0	1.0	1.0	0.9
Depreciation3	—	5.915	2.6	2.5	2.5	2.4	2.4	2.3	2.3	2.2	2.2	2.1	2.1	2.0	2.0	1.9	1.9	1.9
Interest3	—	3.189	-1.5	-1.7	-1.9	-2.1	-2.2	-2.3	-2.2	-2.2	-2.1	-2.1	-2.0	-2.1	-2.1	-2.1	-2.1	-2.1
Other Capital-Related Expenses	CPI(U)-Residential Rent	0.674	2.8	2.9	3.0	3.1	3.2	3.2	3.3	3.3	3.3	3.3	3.3	3.4	3.5	3.5	3.4	3.3

¹For data sources used to estimate the input price index relative weights and choice of price proxies, refer to the May 12, 1998, Federal Register.

²Category weights may not sum to totals shown because of rounding.

³Represents a subtotal. Detailed categories not shown are listed below by subtotal, detailed category, and base-year weight: Utilities: Electricity (1.626), Fuels non-highway (0.332), and Water and Sewage (0.542). Other Products: Pharmaceuticals (2.531), Food (3.353), Chemicals (0.720), Rubber and Plastics (1.529), Paper Products (1.005), and Miscellaneous Products (1.826). Other Services: Telephone Services (0.385), Labor-Intensive Services (3.686), and Non-Labor Intensive Services (3.713). Depreciation: Building and Fixed Equipment (4.118) and Movable Equipment (1.797). Interest: Government and Non-Profit SNFs (1.658) and For-Profit SNFs (1.531).

NOTES: A dash (—) in the Price/Wage Variable column denotes a total or subtotal produced by adding two or more categories. HCFA is Health Care Financing Administration. CY is calendar year. Q is quarter of year. ECI is Employment Cost Index. W/S is Wages and Salaries. Ben is Benefits. Comp is Compensation. CPI(U) is Consumer Price Index for all urban consumers. SNF is skilled nursing facility. An example of how a percent change is calculated is shown in the Notes at the end of Table 10.

SOURCES: Health Care Financing Administration, Office of the Actuary:Data from the National Health Statistics Group. Third quarter 1999 forecasts were produced under contract to HCFA by Standard & Poor's/DRI.

Table 12. Quarterly Index Levels and Four-Quarter Moving-Average Percent Change of the Home Health Agency (HHA) Input Price Index, by Expense Category: United States, 1997-2001.

Expense Category1	Price/Wage Variable	Base Year Weights FY 19934	1997 Q3	1997 Q4	1998 Q1	1998 Q2	1998 Q3	1998 Q4	1999 Q1	1999 Q2	Forecast
											1999 Q3	1999 Q4	2000 Q1	2000 Q2	2000 Q3	2000 Q4	2001 Q1	2001 Q2
Index Levels
Total	—	100.000	113.1	113.9	114.6	115.4	116.4	117.0	117.9	118.8	119.9	120.8	121.8	122.6	123.8	124.7	125.7	126.6
Compensation2	—	77.668	113.2	114.2	115.1	115.9	117.1	117.8	118.7	119.7	120.8	121.7	122.8	123.7	124.9	125.9	126.8	127.8
Wages and Salaries2	HHA Occupational Wage Index5	64.226	113.6	114.6	115.5	116.4	117.6	118.3	119.4	120.3	121.5	122.4	123.5	124.3	125.6	126.6	127.5	128.5
Employee Benefits2	HHA Occupational Benefits Index5	13.442	111.5	112.3	112.9	113.7	114.5	114.9	115.5	116.5	117.5	118.5	119.7	120.4	121.2	122.4	123.5	124.2
Operations and Maintenance	CPI(U)-Fuel and Other Utilities	0.832	109.4	108.4	106.0	106.8	108.4	105.2	104.6	105.8	108.7	108.3	108.7	109.6	111.0	110.2	110.4	111.5
Administrative and General3	—	9.569	114.1	114.5	115.2	116.0	116.8	117.0	117.9	118.5	119.4	119.9	120.9	121.8	122.6	123.2	124.5	125.3
Telephone	CPI(U)-Telephone Services	0.725	105.7	105.6	105.8	106.7	106.6	106.4	106.1	105.4	105.3	105.4	105.9	106.0	105.9	106.1	106.3	106.5
Paper and Printing	CPI(U)-Household Paper Products	0.529	114.2	114.6	115.6	116.6	116.7	117.3	117.4	117.7	117.4	117.5	118.3	118.9	119.1	119.2	119.2	119.2
Postage	CPI(U)-Postage	0.724	110.3	110.3	110.3	110.3	110.3	110.3	113.6	113.6	113.6	113.6	113.6	113.6	113.6	113.6	117.7	117.7
Other Administrative Costs3	CPI(U)-Services	7.591	115.3	115.7	116.6	117.4	118.4	118.7	119.5	120.3	121.5	122.1	123.2	124.2	125.3	126.0	127.2	128.2
Transportation	CPI(U)-Private Transportation	3.405	110.8	110.7	109.1	108.8	108.3	108.5	107.4	110.3	111.8	113.0	112.7	113.4	113.4	114.6	115.0	116.5
Capital-Related	—	3.204	111.0	111.5	112.0	112.3	112.8	113.4	113.8	114.3	115.1	115.8	116.5	117.3	118.2	118.9	119.7	120.5
Insurance	CPI(U)-Household Insurance	0.560	114.3	114.8	115.1	114.5	114.0	114.6	114.8	116.0	117.5	118.2	119.1	119.9	121.0	121.4	122.0	122.6
Fixed Capital	CPI(U)-Owner's Equivalent Rent	1.764	114.6	115.6	116.4	117.3	118.4	119.4	120.1	120.7	121.7	122.7	123.8	125.0	126.2	127.4	128.5	129.7
Movable Capital	PPI-Machinery and Equipment	0.880	101.6	101.3	101.2	100.9	100.7	100.6	100.7	100.5	100.4	100.2	100.4	100.3	100.3	100.4	100.7	100.7
Other Expenses3	CPI(U)-All Items less Food and Energy	5.322	112.4	113.1	113.9	114.6	115.1	115.7	116.4	117.0	117.8	118.8	119.8	120.7	121.7	122.7	123.9	124.8
Four-Quarter Moving-Average Percent Change
Total	—	100.000	2.8	2.9	2.9	3.0	3.0	2.9	2.9	2.9	2.9	3.0	3.1	3.2	3.3	3.2	3.2	3.2
Compensation2	—	77.668	2.9	3.1	3.3	3.4	3.5	3.4	3.3	3.2	3.2	3.2	3.3	3.3	3.4	3.4	3.3	3.3
Wages and Salaries2	HHA Occupational Wage Index5	64.226	3.1	3.3	3.5	3.6	3.7	3.6	3.5	3.4	3.3	3.4	3.4	3.4	3.4	3.4	3.4	3.4
Employee Benefits2	HHA Occupational Benefits Index5	13.442	1.7	2.0	2.2	2.4	2.6	2.6	2.5	2.4	2.4	2.6	3.0	3.2	3.3	3.3	3.2	3.2
Operations and Maintenance	CPI(U)-Fuel and Other Utilities	0.832	3.3	2.5	0.9	0.0	-0.7	-1.8	-1.6	-1.6	-1.2	0.2	1.5	2.7	3.1	2.8	2.3	1.8
Administrative and General3	—	9.569	2.7	2.6	2.4	2.3	2.3	2.3	2.3	2.3	2.2	2.3	2.4	2.5	2.6	2.7	2.8	2.8
Telephone	CPI(U)-Telephone Services	0.725	1.9	1.5	0.9	0.4	0.4	0.5	0.6	0.2	-0.4	-0.8	-0.9	-0.5	0.0	0.4	0.6	0.5
Paper and Printing	CPI(U)-Household Paper Products	0.529	0.6	0.5	0.7	1.2	1.5	1.9	2.0	1.7	1.4	0.8	0.6	0.6	0.8	1.2	1.2	1.0
Postage	CPI(U)-Postage	0.724	0.0	0.0	0.0	0.0	0.0	0.0	0.7	1.5	2.2	3.0	2.2	1.5	0.7	0.0	0.9	1.8
Other Administrative Costs5	CPI(U)-Services	7.591	3.1	3.0	2.9	2.8	2.8	2.7	2.6	2.6	2.5	2.6	2.8	3.0	3.1	3.2	3.2	3.2
Transportation	CPI(U)-Private Transportation	3.405	1.7	0.7	-0.6	-1.1	-1.8	-2.2	-2.0	-1.1	0.3	1.8	3.4	3.8	3.3	2.6	1.9	1.9
Capital-Related	—	3.204	2.0	2.0	2.0	2.0	1.9	1.8	1.7	1.7	1.8	1.9	2.1	2.3	2.4	2.6	2.7	2.7
Insurance	CPI(U)-Household Insurance	0.560	3.0	2.6	2.6	2.1	1.4	0.9	0.1	0.2	1.0	1.8	2.8	3.3	3.3	3.2	2.9	2.6
Fixed Capital	CPI(U)-Owner's Equivalent Rent	1.764	2.9	2.9	3.0	3.1	3.2	3.2	3.2	3.1	3.0	2.9	2.9	3.1	3.3	3.5	3.7	3.8
Movable Capital	PPI-Machinery and Equipment	0.880	-0.5	-0.5	-0.5	-0.7	-0.7	-0.8	-0.7	-0.6	-0.5	-0.4	-0.4	-0.3	-0.3	-0.1	0.0	0.2
Other Expenses3	CPI(U)-All Items less Food and Energy	5.322	2.5	2.4	2.3	2.2	2.3	2.3	2.3	2.3	2.3	2.3	2.5	2.8	3.0	3.2	3.3	3.4

¹For data sources used to estimate the input price index relative weights and choice of price proxies, refer to the July 1, 1996, Federal Register.

²Category weights may not sum to total because of rounding.

³Includes allocated Contract Services' Labor.

⁴The HHA Occupational Wage and Occupational Benefit Indexes are computed as weighted-averages of five ECI categories (ECI for Civilian Hospital Workers and four ECI occupational categories).

⁵Includes allocated Contract Services' Non-Labor.

NOTES: A dash (—) in the Price/Wage Variable column denotes a total or subtotal produced by adding two or more categories. HCFA is Health Care Financing Administration. FY is fiscal year. Q is quarter of year. CPI(U) is Consumer Price Index for all urban consumers. PPI is Producer Price Index. An example of how a percent change is calculated is shown in the Notes for Table 10.

SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the National Health Statistics Group. Third quarter 1999 forecasts were produced under contract to HCFA by Standard & Poor's/DRI.

Periodically, the input price indexes are revised to a new base year so that cost weights will reflect changes in the mix of goods and services that are purchased. Each revision allows for new base weights, a new base year, and changes to certain price variables used for price proxies.

Each input price index is presented in a table with both an index level and a four-quarter moving-average percent change. The hospital input price index for PPS is in Table 10, the SNF input price index is in Table 11, and the HHA input price index is in Table 12.

Medicare Economic Index

In 1972, Congress mandated the development of the Medicare Economic Index (MEI) to measure the changes in costs of physicians' time and operating expenses. The input price change measured by the MEI is considered in connection with the update factor for the Medicare Part B physician fee schedule under the resource-based relative value scale (Federal Register, 1996) or is used as an advisory indicator by Congress in updating the fee schedule. The MEI is a fixed-weighted sum of annual price changes for various inputs needed to produce physicians' services with an offset for productivity increases. Like a traditional Laspeyres index, the MEI is constructed in two steps. First, a base period is selected (1996 for the MEI), cost categories are identified, and the 1996 expenditure shares by cost category are determined. Second, price proxies are selected to match each relative expenditure category. These proxies are weighted by the category weight determined from expenditure amounts and summed to produce the composite MEI. Unlike a traditional Laspeyres index, the compensation portion of the MEI is adjusted for productivity so both economy wide productivity and physician-practice productivity are not both included in the update, resulting in a double counting of productivity.

Standard & Poor's/DRI produces four main forecasts of the MEI for HCFA: (1) a Presidential budget forecast in December; (2) the mid-session review in June, based on assumptions for the Federal budget exercises; (3) the Medicare Trustees Report forecast in February, based on assumptions by the Medicare Trustees, and (4) the Medicare Premium Promulgation f o recast in August, based on baseline assumptions by Standard & Poor's/DRI. Standard & Poor's/DRI also produces forecasts of the MEI using their own economic assumptions forecast. The forecasts based on Standard & Poor's/DRI assumptions are presented in the Health C are Indicators series. Much of the forecast data changes as more recent historical data becomes available and the assumptions change.

The methodology, weights, and price-proxy definitions used in the MEI are described in the November 2, 1998, Federal Register (1998a) The MEI data are presented in Table 13 as index levels and four - quarter moving -average percent changes.

Table 13. Quarterly Index Levels and Four-Quarter Moving-Average Percent Change in the HCFA Medicare Economic Index (MEI) with DRI Forecast Assumptions, by Expense Category: United States, 1997-2001.

Expense Category1	Price/Wage Variable	Base Year Weights CY 19962	1997 Q3	1997 Q4	1998 Q1	1998 Q2	1998 Q3	1998 Q4	1999 Q1	1999 Q2	Forecast
											1999 Q3	1999 Q4	2000 Q1	2000 Q2	2000 Q3	2000 Q4	2001 Q1	2001 Q2
Index Levels
Total	—	100.000	102.3	103.3	104.1	104.6	105.1	105.8	106.4	106.8	107.3	108.1	108.7	109.2	109.7	110.4	111.0	111.4
Physician Earnings	—	54.460	102.4	103.9	104.6	104.8	105.2	106.2	106.8	107.0	107.4	108.4	109.0	109.2	109.5	110.4	110.9	111.1
Wages and Salaries	AHE-Private3	44.197	102.7	104.4	105.3	105.4	105.7	107.0	107.8	107.8	108.2	109.4	109.9	110.2	110.4	111.4	111.9	112.0
Benefits	ECI-Benefits, Private3	10.263	101.1	101.6	101.8	102.3	102.6	102.8	102.8	103.4	103.9	104.2	105.0	105.3	105.8	106.1	106.9	107.2
Practice Expenses	—	45.540	102.2	102.7	103.4	104.3	105.0	105.4	105.9	106.6	107.2	107.7	108.5	109.1	109.8	110.3	111.2	111.8
Non-Physician Compensation	—	16.812	102.4	103.1	103.8	104.3	105.1	105.3	105.8	106.5	107.1	107.5	108.1	108.6	109.2	109.6	110.2	110.6
Wages and Salaries	—	12.424	102.8	103.5	104.3	104.9	105.8	106.0	106.6	107.3	107.9	108.3	108.9	109.4	110.1	110.5	111.1	111.5
Professional/Technical	ECI-W/S: Professional/Technical 3	5.662	102.5	103.0	103.6	104.2	105.1	105.5	105.9	106.6	107.2	107.6	108.1	108.6	109.4	109.7	110.1	110.5
Managers	ECI-W/S:Administrative/Managerial3	2.410	103.4	104.8	106.1	106.5	107.8	107.2	107.9	108.8	109.3	109.8	110.6	111.2	111.9	112.6	113.3	113.8
Clerical	ECI-W/S:Clerical3	3.830	102.8	103.3	104.0	104.8	105.4	105.8	106.6	107.3	107.9	108.2	108.9	109.4	109.9	110.3	111.0	111.3
Services	ECI-W/S:Service Occupations3	0.522	103.8	104.5	105.0	105.4	106.2	106.5	107.3	108.1	108.9	109.7	110.1	110.6	111.4	112.0	112.4	112.8
Employee Benefits	ECI-Benefits, Private White Collar3	4.388	101.1	101.9	102.5	102.8	103.2	103.5	103.5	104.1	104.7	105.1	105.9	106.2	106.7	107.0	107.8	108.1
Office Expenses	CPI(U)-Housing	11.581	103.2	103.2	103.9	104.7	105.6	105.6	106.2	106.9	108.0	108.3	109.4	110.2	111.4	111.7	112.7	113.6
Medical Materials/Supplies	PPI-Drugs/PPI-Surgical/CPI-Medical Supplies	4.516	102.0	102.7	105.7	109.6	110.1	111.1	110.6	111.4	111.4	112.3	113.1	113.7	113.9	114.6	115.7	116.6
Professional Liability Insurance	HCFA-Professional Liability Premiums	3.152	100.9	100.9	100.9	100.9	102.3	103.6	106.7	106.7	107.3	108.0	108.7	109.4	110.1	110.7	111.4	112.1
Medical Equipment	PPI-Medical Instruments/Equipment	1.878	98.9	98.3	97.7	97.2	97.4	97.6	97.6	97.4	96.8	96.5	96.8	96.9	96.8	97.0	97.6	97.7
Other Professional Expenses	—	7.601	102.1	102.7	103.0	103.5	103.8	104.3	104.6	105.6	106.2	107.0	107.9	108.7	109.5	110.5	111.4	112.3
Automobile	CPI(U)-Private Transportation	1.300	100.4	100.3	98.8	98.6	98.2	98.3	97.4	100.0	100.9	101.8	102.0	103.0	103.1	104.2	104.5	105.8
All Other	CPI(U)-All Items less Food/Energy	6.301	102.5	103.1	103.9	104.5	105.0	105.6	106.1	106.7	107.2	108.1	109.1	109.9	110.8	111.8	112.8	113.7
Four-Quarter Moving-Average Percent Change
Total	—	100.000	2.2	2.3	2.3	2.4	2.6	2.6	2.5	2.4	2.2	2.1	2.1	2.2	2.2	2.2	2.2	2.1
Physician Earnings	—	54.460	2.5	2.5	2.5	2.6	2.7	2.6	2.5	2.3	2.2	2.1	2.1	2.1	2.0	2.0	1.9	1.8
Wages and Salaries	AHE-Private3	44.197	2.8	2.9	2.9	3.0	3.0	2.9	2.7	2.5	2.4	2.3	2.2	2.2	2.1	2.0	2.0	1.8
Benefits	ECI-Benefits, Private3	10.263	1.0	1.1	1.1	1.2	1.3	1.3	1.3	1.2	1.1	1.2	1.4	1.7	1.8	1.9	1.8	1.8
Practice Expenses	—	45.540	2.0	2.0	2.0	2.2	2.4	2.5	2.6	2.5	2.3	2.2	2.2	2.3	2.4	2.4	2.5	2.5
Non-Physician Compensation	—	16.812	2.0	2.1	2.3	2.4	2.6	2.5	2.3	2.2	2.0	2.0	2.1	2.0	2.1	2.1	2.0	1.9
Wages and Salaries	—	12.424	2.3	2.4	2.6	2.7	2.9	2.7	2.6	2.5	2.2	2.2	2.2	2.1	2.1	2.1	2.0	2.0
Professional/Technical	ECI-W/S:Professional/Technical 3	5.662	1.9	2.0	2.3	2.5	2.6	2.5	2.4	2.4	2.3	2.2	2.1	2.0	2.0	2.0	1.9	1.9
Managers	ECI-W/S:Administrative/Managerial3	2.410	3.0	3.2	3.4	3.6	4.0	3.6	3.0	2.6	1.9	1.9	2.1	2.1	2.4	2.4	2.4	2.5
Clerical	ECI-W/S:Clerical3	3.830	2.3	2.4	2.5	2.5	2.6	2.6	2.6	2.5	2.4	2.4	2.3	2.2	2.0	1.9	1.9	1.9
Services	ECI-W/S:Service Occupations3	0.522	2.9	3.0	3.2	3.3	2.9	2.6	2.4	2.3	2.3	2.6	2.7	2.6	2.6	2.4	2.2	2.1
Employee Benefits	ECI-Benefits, Private White Collar3	4.388	1.1	1.2	1.3	1.4	1.8	1.8	1.6	1.5	1.3	1.3	1.7	1.8	1.9	2.0	1.9	1.8
Office Expenses	CPI(U)-Housing	11.581	2.7	2.6	2.4	2.3	2.3	2.3	2.3	2.3	2.2	2.3	2.5	2.7	2.9	3.1	3.1	3.1
Medical Materials/Supplies	PPI-Drugs/PPI-Surgical/CPI-Medical Supplies	4.516	1.4	1.9	2.7	4.2	5.8	7.1	7.1	5.5	3.8	2.1	1.5	1.7	1.9	2.2	2.2	2.3
Professional Liability Insurance	HCFA-Professional Liability Premiums	3.152	0.6	0.6	0.7	0.7	0.9	1.3	2.5	3.9	4.8	5.2	4.2	3.4	2.8	2.4	2.5	2.5
Medical Equipment	PPI-Medical Instruments/Equipment	1.878	-0.8	-1.5	-1.2	-1.2	-1.3	-1.1	-0.9	-0.5	-0.3	-0.4	-0.6	-0.8	-0.6	-0.2	0.2	0.5
Other Professional Expenses	—	7.601	2.3	2.1	1.8	1.7	1.6	1.5	1.6	1.7	1.9	2.1	2.5	2.7	3.0	3.1	3.2	3.2
Automobile	CPI(U)-Private Transportation	1.300	1.7	0.7	-0.6	-1.1	-1.8	-2.2	-2.0	-1.1	0.1	1.5	3.1	3.5	3.4	3.1	2.5	2.4
All Other	CPI(U)-All Items less Food/Energy	6.301	2.5	2.4	2.3	2.2	2.3	2.3	2.3	2.3	2.2	2.2	2.4	2.6	2.9	3.1	3.3	3.4

¹For data sources used to estimate the index relative weights and choice of price proxies, refer to the November 2, 1998, Federal Register.

²Category weights may not sum to total because of rounding.

³Series are adjusted for productivity using 10-year moving average of output per hour for the non-farm business sector. All series in the compensation portion of the Medicare Economic Index are adjusted for productivity so both economywide productivity and physician practice productivity are not included in the update.

NOTES: A dash (—) in the Price/Wage Variable column denotes a total or subtotal produced by adding two or more categories. HCFA is Health Care Financing Administration. CY is calendar year. Q is quarter of year. AHE is Average Hourly Earnings. ECI Employment Cost Index. W/S is Wages and Salaries. CPI(U) is Consumer Price Index for all urban consumers. PPI represents Producer Price Index. An example of how a percent change is calculated is shown in the Notes at the end of Table 10.

SOURCES: Health Care Financing Administration, Office of the Actuary: Data from the National Health Statistics Group. Third-quarter 1999 forecasts were produced under contract to HCFA by Standard & Poor's DRI.

Data Inquiries

For inquiries concerning market basket data, contact Stephen K. Heffler at (410) 786-1211 or Mary Lee Seifert at (410) 786-0030. For all other inquiries, contact Carolyn S. Donham at (410) 786-7947.

Figure 1. Medicare Hospital Insurance Trust Fund Income, Outlays, and Assets: Percent Change from Same Period of Previous Year: 1992-1999.

Figure 2. Employment in Health Services, Percent Change from Same Period of Previous Year: 1989-1999.

Figure 3. Hospital Employment by Sector, Percent Change from Same Period of Previous Year: 1990-1999.

Figure 4. Percent Change in Medical Care and Overall Prices from Same Period of the Previous Year: 1991-1999.

Figure 5. Percent Change in Hospital Inpatient and Outpatient Producer Prices from Same Period of the Previous Year: 1994-1999.

Figure 6. Percent Change in Nursing Home Prices from Same Period of the Previous Year: 1996-1999.