Health care spending growth at slowest rate in 52 years

1 | Health economics Health care trends
Executive summary
Health spending as a share of the gross domestic
product has remained stable from 2009 through
2011, which means that growth in all three years has
occurred at the slowest rates ever recorded in the
52-year history of the National Health Expenditures
Accounts. The 2007–2009 economic recession, the
shift away from fee-for-service payment, the slowing
pace of medical innovation and rising out-of-pocket
payments are some of the contributing factors to the
recent decline in health care cost growth.
Although implemented provisions of the Affordable
Care Act (ACA) have resulted in millions of young
adults gaining insurance coverage and access to care
in 2012, nearly half of U.S. adults ages 19–64 did not
have insurance for the full year, nor did they have
coverage that provided adequate protection from
high health care costs. It will be critical to continue to
monitor the effects of the ACA as its major provisions
go into effect—such as health insurance exchanges—
to ensure the law achieves its goal of near-universal,
comprehensive health insurance.
In the early 2000s there was widespread belief that the
health insurance market was competitive; however,
the current level of competition is far from ideal. Since
health care reform relies on the private insurance
industry for fully half of the expected increase in the
number of insured Americans, it is critically important
to look at the industry, assess where and when it
functions well, and try to promote competition
through well-designed regulatory reforms.
After outpacing all other health care expenditures for
many years, the rate of pharmaceutical expenditure
growth is now consistently similar to the growth
of overall health care expenditures. The ongoing
introduction of generic versions of widely used
expensive medications continues to moderate drug
expenditures. However, from the patient’s perspective,
savings from generics may not be realized, as the
cost sharing required by insurance plans (deductibles
and copayments) continues to increase. Further,
the growing use of expensive specialty medications
continues to drive medication expenditures for select
patient populations, and the out-of-pocket costs to
patients for these medications are particularly high.
Drug shortages are presently more than four times
greater than the number of medication shortages
in 2004. The worsening drug shortage problem—
primarily a result of manufacturing deficiencies that
lead to production shutdowns—impacts patient care,
especially in hospitals, as chemotherapy, surgery and
care for patients with pain and infections are disrupted
by the lack of critical medicines.
Health economics
Health care trends

Over the past 40 years, U.S. health care spending grew
from 7 percent of the Gross Domestic Product (GDP) to
nearly 18 percent of GDP. The health spending share
of the GDP curve from January 1990 through January
2011 is characterized by rapid upturns in and around
recessions and stability in between. This growing
health spending share of GDP is problematic because
roughly half of U.S. health spending is financed by the
government. Thus, continued cost growth will remain
at odds with national deficit reduction goals.
Trends: Health care spending
Over the past few years, health care inflation has
decelerated, which is driving the long-term projections
for Medicare spending downward. Contributing factors
to the recent decline in cost growth include the recent
recession, the slow shift away from fee-for-service
payment, the slowing pace of medical innovation and
rising out-of-pocket payments. It will be important that
lawmakers and regulators take the necessary steps to
ensure that all Americans can fully benefit from the
Affordable Care Act (ACA) improvements to the quality,
efficiency and affordability of the health care system.
nn In 2011 U.S. health care spending reached $2.7
trillion, or $8,680 per person. Health spending grew
3.9 percent in 2011, the same rate of growth as
in 2009 and 2010. National health spending and
nominal GDP grew similarly in 2010 and 2011, and
health spending as a share of GDP has remained
stable from 2009 through 2011 at 17.9 percent.
This shows that growth in all three years has
occurred at the slowest rates ever recorded in the
52-year history of the National Health Expenditures
Accounts.
• Hospital spending increased 4.3 percent to
$850.6 billion in 2011 compared to 4.9 percent
growth in 2010. The slower growth in 2011 was
influenced by a decelerated price growth and
decline in the use of hospital services. Medicaid
spending on hospital services slowed in 2011,
while private health insurance and Medicare
Health economics
Source: Altarum monthly health spending estimates (monthly GDP estimates from Macroeconomic Advisors)

hospital spending accelerated. Spending on
physician and clinical services increased 4.3
percent in 2011 to $541.4 billion, up from 3.1
percent growth in 2010. Although growth in
prices slowed, non-price factors such as use and
intensity of services increased faster than
in 2011.
• Spending by private health insurance and
Medicare, the two largest payers of physician
and clinical services, both accelerated in 2011.
Spending for other professional services reached
$73.2 billion in 2011, increasing 4.9 percent and
slightly faster than growth of 4.6 percent in 2010.
Spending in this category includes services such
as physical therapy, optometry, podiatry and
chiropractic medicine.
• Retail prescription drug spending grew 2.9
percent to $263 billion in 2011, following a
historically low growth rate of 0.4 percent
in 2010. The acceleration in 2011 was partly
due to both rapid growth in prescription
drug prices, particularly for brand-name and
specialty drugs, and increased spending on
new brands. However, the relatively low rate of
growth in 2011 continued to be influenced by
slower growth in the number of prescriptions
dispensed, increased use of generics and
continuation of patent expirations for brand-
name drugs.
• Total Medicaid spending grew 2.5 percent in
2011 to $407.7 billion, a deceleration from 5.9
percent growth in 2010. This was partly due
to slower growth in Medicaid enrollment of
3.2 percent in 2011 compared to 4.9 percent
growth in 2010. Federal Medicaid expenditures
decreased 7.1 percent in 2011, while state
Medicaid expenditures grew 22.2 percent—a
result of the expiration of enhanced federal aid
to states in June 2011.1
nn In 2011 private health insurance premiums and
benefits each increased 3.8 percent—accelerating
from 2010 levels by 3.4 percent and 2.7 percent,
respectively.
• The net cost ratio for private health insurance—
the difference between premiums and benefits
as a share of premiums—remained unchanged
from 2010 at 12.3 percent. Private health
insurance enrollment increased 0.5 percent
in 2011 after declining each year from 2008
through 2010.
• On a per-enrollee basis, private health insurance
benefits grew 3.2 percent in 2011, decelerating
from growth of 4.6 percent in 2010, which was
partly a result of additional enrollees aged 26
and under who gained coverage under the ACA.2
nn Out-of-pocket spending grew 2.8 percent in 2011
to $307.7 billion, an acceleration from growth of 2.1
percent in 2010 that reflects higher cost-sharing and
increased enrollment in consumer-directed health
plans. 3
nn The 2007–2009 economic recession and more recent
legislative changes—the American Recovery and
Reinvestment Act of 2009 and the ACA of 2010—had
an impact on health care spending being financed
by businesses, households and governments. As
a share of total health spending, households (28
percent) and the federal government (28 percent)
accounted for the largest sponsor shares. From
2010 to 2011, state and local government shares
(17 percent) increased by about one percentage
point while households and the federal government
shares dropped by a percentage point. Shares of
private businesses (21 percent) remained constant
from 2009 through 2011.4
nn A 2013 Kaiser Family Foundation study, based on
statistical analysis of 50 years of health spending
and economic trends, attributes the slowdown in
U.S. health care spending to the recent recession
and predicts more rapid growth as the economy
strengthens.
• Economic factors related to the recession
accounted for 77 percent of the reduction in
national health care spending, which totaled an
estimated $2.8 trillion in 2012.
• The chilling effect on individual health spending
due to the weak economy will continue for a few
more years; however, the authors contend that if
some of the usual post-recovery uptick in health
spending can be reined in, trillions of dollars
could be saved over the next decade.
• Only 23 percent of the slowdown stemmed from
changes in the health care system, potentially
including higher deductibles and other cost-
sharing that dampened patients’use of services.5

nn Researchers from the department of economics
at Harvard University attribute 37 percent of the
slowdown in U.S. health care spending between
2003 and 2012 to the recession and 8 percent of the
slowdown to a decline in private insurance coverage
and reduced Medicare payment rates, leaving 55
percent unexplained.
• Fundamental changes—including less rapid
development of imaging technology and
new pharmaceuticals—increased patient cost
sharing and improved provider efficiency, were
responsible for the majority of the slowdown in
spending growth.
• Researchers concluded that if these trends
continue between 2013 and 2022, public-sector
health care spending will be up to $770 billion
less than predicted and will have an enormous
impact on the U.S. economy, as well as on
government and household finances.6
nn According to the findings of a recent RAND
Corporation study, emergency departments (EDs)
accounted for about half of the nation’s hospital
admissions between 2003 and 2009.
• Although inpatient admissions grew at a
slower rate than the population, nearly all of
the increases in hospital admissions during this
period were due to a 17 percent increase in
unscheduled admissions made from EDs. Over
the same period, there was a 10 percent decline
in admissions from physician offices and similar
settings.
• The majority of the physicians interviewed for
the study confirmed that office-based physicians
increasingly rely on EDs to evaluate complex
patients with potentially serious problems, rather
than managing these patients themselves.
• Medicare accounts for more inpatient admissions
from EDs than any other payer.
• The study’s findings raise important questions
about how EDs contribute to high U.S. health
care costs and what their role will be in the future
as the nation undergoes fundamental changes in
health care delivery.
• One goal of the ACA was to reduce reliance on
costly emergency room care.7
nn The ACA is predicted to save Medicare over
$200 billion through 2016 by improving care to
beneficiaries.8
A $716 billion“cut”to Medicare under
the ACA actually represents savings to be achieved
over a 10-year period from anticipated reductions in
payments to health care providers, not reductions in
benefits for patients.9
nn According to a recent study using data on more
than a million Medicare beneficiaries, researchers
found the top 10 percent of Medicare’s costliest
patients were responsible for 73 percent of the $91.7
billion the program spent in 2010. These heavy users
of resources were responsible for approximately
33 percent of all ED costs and 79 percent of all
hospitalization costs. After running the data through
computer models that determine whether ED visits
and hospital stays are necessary, about 43 percent
of ED visits and 16 percent of hospitalizations were
considered treatable without a hospital. Overall,
only about 10 percent of all hospital care for the
pricey patients was potentially preventable—about
$6.7 billion.10
nn In May 2013 the Centers for Medicare & Medicaid
Services (CMS) released data showing U.S.
hospitals charge widely varying amounts for the
same services, thus illustrating the variation in
how much Medicare pays for those services. The
database, posted on the CMS website, includes
hospital charges for the 100 most frequently
billed discharges by the more than 3,000 hospitals
reimbursed under the inpatient prospective
payment system. The numbers reflect $66.7 billion
in Medicare spending during fiscal 2011 and
represent seven million discharges, or 60 percent of
the total Medicare Inpatient Prospective Payment
System discharges that year.11
The charges are not
what Medicare pays, which is set by statute, but are
the non-discounted rates hospitals charge for those
services. The CMS already makes some hospital
Medicare charge data available.12

Trends: Access to care
Implemented provisions of the ACA have resulted in
millions of young adults gaining insurance coverage
and have protected people from insurers’practices
of cancelling policies retroactively when a subscriber
becomes sick—or putting a limit on how much they
will pay out in a given year or a lifetime. However,
other major provisions of the law will not be in effect
until 2014, when the health insurance reforms are
fully implemented and the new state insurance
marketplaces become operational. It will be critical
to continue to monitor the effects of the ACA as the
major provisions go into effect to ensure the ACA
achieves its goal of near-universal, comprehensive
health insurance.
nn In 2012 nearly half (46 percent) of U.S. adults ages
19 to 64, an estimated 84 million people, did not
have insurance for the full year or had coverage
that provided inadequate protection from health
care costs according to the Commonwealth Fund
Biennial Health Insurance Survey of 2012. Thirty
percent, or 55 million people, were uninsured at the
time of the survey or were insured, but had spent
some time uninsured in the prior year. An additional
16 percent, or 30 million people, were insured,
however, they had such high out-of-pocket medical
costs relative to their income that they could be
considered underinsured.
• In 2012 more than two of five adults ages 19 to
64, or 75 million people (41 percent), reported
problems paying their medical bills or said they
were paying off medical debt over time.
• People who were uninsured at the time of the
survey were significantly less likely to have a
regular source of care or to be up-to-date on
recommended cholesterol, blood pressure, colon
cancer screenings and mammograms.
• Of the estimated 55 million adults who had a gap
in coverage in 2012, 87 percent had incomes that
would make them eligible for subsidized health
insurance under the ACA.
• Twenty-eight million people had incomes below
133 percent of the poverty level, making them
eligible for Medicaid. Of the 30 million adults
who were underinsured, 85 percent had incomes
that could make them eligible for Medicaid or
subsidized health plans, resulting in reduced out-
of-pocket spending.13
nn A 2013 State Health Access Data Assistance Center
report,“State-Level Trends in Employer-Sponsored
Health Insurance: A State-by-State Analysis,”
revealed a downward trend in employer-sponsored
insurance (ESI) coverage levels at both the national
and state level, with substantial state-level variation
in both the magnitude of these declines and in the
current levels of ESI coverage in each state from
1999/2000 to 2010/2011.
• Nationally, the percent of the nonelderly
population with ESI declined from 69.7 percent
to 59.5 percent.
• Forty-seven states and the District of Columbia
saw significant declines in coverage.
• Nationally, the percentage of employers
offering ESI decreased from 58.9 percent to
52.4 percent.14
nn In November 2012 the Urban Institute published
a brief that compares changes in health insurance
coverage from 2000 to 2010 across nonelderly
racial and ethnic groups. The findings revealed that
ESI deteriorated among all groups, with whites
and blacks experiencing larger percentage point
declines relative to Hispanics and Asians/other
ethnic groups.
• From 2000 to 2010 the number of uninsured
increased by 12.9 million, nearly half of whom
(6.3 million) are white.
• Full implementation of the ACA in 2014 is
expected to substantially increase health
insurance coverage across the United States, as
individuals gain subsidized coverage through
Medicaid and newly created health insurance
exchanges.15
nn Racial and ethnic differentials in uninsurance rates
could be greatly reduced under the ACA, potentially
cutting the black-white differential by more than
half and the Hispanic-white differential by just
under one quarter.
• Improving coverage for these populations will
depend on states adopting policies that promote
high enrollment in Medicaid, CHIP and new
insurance exchanges.
• Coverage gains among Hispanics will depend on
policies in California and Texas—where almost
half of Hispanics live.

• If the projected coverage gains are realized,
long-standing racial and ethnic differentials in
access to care and health status could shrink
considerably.16
nn While the impact of the ACA will vary across
the states given their different circumstances,
Massachusetts’2006 reform initiative, the template
for national reform, provides a preview of the
potential gains in insurance coverage, access to and
use of care, and health care affordability for the rest
of the nation.
• Under reform, uninsurance in Massachusetts
dropped by more than 50 percent, due, in part,
to an increase in ESI.
• Gains in health care access and affordability were
widespread, including a 28 percent decline in
unmet need for physician care and a 38 percent
decline in high out-of-pocket costs.17
nn Massachusetts conducts competitive bidding to
promote cost-efficient plans in its exchange and
standardizes the benefit packages to facilitate the
comparison of the plans by consumers. However, in
the 34 states where the federal government will be
running the exchange, the government has decided
to permit any plan to qualify that meets a minimum
set of standards set by the ACA. Additionally, the
federal government will not conduct competitive
bidding, nor will it require that plans contain
the same features so consumers can make easy
comparisons.18
nn According to estimates from the Congressional
Budget Office, full implementation of the ACA will
reduce the number of uninsured people by 32
million in 2019.19
nn For those most concerned about enrollment, in
March 2013, the CMS released a brief about new
health insurance coverage options that become
available in October 2013.
• In 2011 nearly half of the 48.61 million people
without health insurance were young and
healthy, or were older people in good health.
Both groups are not terribly motivated to enroll
in coverage offered in the new online insurance
marketplaces; however, the government needs
healthier individuals to enter the risk pools if
premiums are to be kept low. A little over half of
those surveyed say that cost is the main reason
they are uninsured.
• Nearly one-third of uninsured Americans
are in poor health and concerned about not
having coverage. Nearly 80 percent cite cost
as the main reason they are uninsured. In the
current individual marketplace, they would face
high insurance costs because of pre-existing
conditions. These are the people that need
health insurance most and are likely to sign
up for the new insurance coverage options. Of
the number of uninsured, 15 percent are older
and in generally good health; however, they
lack sufficient knowledge about insurance.
Like the young and healthy, only about half of
them say they would be interested in shopping
for insurance on the exchanges. Almost three
quarters cite cost as a problem.20
nn In 2008 with limited resources to expand its
Medicaid program, Oregon determined a lottery
would be the fairest way to choose enrollees.
About 90,000 low-income adults applied for 10,000
openings. This overwhelming response allowed
researchers to conduct the first randomized,
controlled study of insuring previously
uninsured adults.
• Initial findings from the study provided the
first look at the Oregon experience after nearly
a full year of enrollment. Researchers found
that Medicaid coverage in Oregon increased
individuals’health care access and use of
services, lowered out-of-pocket costs, reduced
medical debt and improved self-reported health
and well-being.
• After two years, the researchers found that
Medicaid coverage increased individuals’use
of health care services, raised rates of diabetes
detection and management, lowered rates
of depression and reduced financial strain.
However, they also found no significant
improvements in measured physical health
outcomes in the first two years of Medicaid
coverage.21

nn According to a report from Global Business
Intelligence (GBI) Research, the number of retail
clinics in the United States is expected to double by
2018. According to the report, the 1,355 retail clinics
present in 2011 are expected to more than double
to 2,854 by 2018. The market, which is currently in a
growth stage, is expected to reach maturity by 2018.
There were just 202 retail clinics in 2006.22
Trends: Health insurance companies
In the early 2000s there was widespread belief that the
health insurance market was competitive; however,
the current level of competition is far from ideal. Since
health care reform relies on the private insurance
industry for fully half of the expected increase in the
number of insured Americans, it is critically important
to look at the industry, assess where and when it
functions well and try to promote competition through
well-designed regulatory reforms.
nn The 2012 edition of the American Medical
Association’s Competition in Health Insurance: A
Comprehensive Study of U.S. Markets found that a
single insurance company held 50 percent or more
of the market in nearly 70 percent of local markets
nationwide. Coupled with the concomitant large
increases in premiums, insurers’profitability, lower
scope of benefits and high barriers to entry, highly
concentrated markets cause competitive harm to
patients and physicians.23
nn According to U.S. census data, the population of
Medicare beneficiaries will grow 36 percent by the
end of this decade. Consequently, health insurance
carriers are in a race to win Medicare Advantage
(health plans that are approved by Medicare and
provided by private companies) market share and
the fastest way is to acquire a company in the same
business. Some examples are Cigna’s acquisition
of HealthSpring Inc., UnitedHealth’s acquisition of
XLHealth Corp. and Aetna’s acquisition of Coventry
Health Care Inc.24
• According to the Kaiser Family Foundation (KFF),
enrollment in Medicare Advantage grew by 9.7
percent in the last year and by 30 percent since
2010—and reached a record 14.4 million in 2013.
• Although the KFF report indicated that the
number of seniors in the private Medicare
Advantage plans tripled in the past seven years,
future payment cuts could cause insurers to
reduce benefits or increase cost-sharing due to
an overall expected reduction of 5 percent in
Medicare payments in 2014.25
nn Health economists predict that in states with
robust competition among health insurers such
as Colorado, Minnesota and Oregon, the health
insurance exchanges are likely to stimulate more
competition. However, in states such as Alabama,
Hawaii, Michigan, Delaware, Alaska, North Dakota,
South Carolina, Rhode Island, Wyoming and
Nebraska—which are all dominated by a single
insurance company—the advent of the exchanges is
unlikely to change these monopolies.26
nn Many health insurance companies spend a
substantial portion of consumers’premium dollars
on administrative costs and profits, including
executive salaries, overhead and marketing.
• On Dec. 2, 2011 the CMS issued a final regulation
implementing a federal medical loss ratio
standard required under the ACA that mandates
insurance companies to spend at least 80
percent or 85 percent of premium dollars on
medical care. It also includes provisions imposing
tighter limits on health insurance rate increases.
• Starting in 2012, insurance companies that fail to
meet these standards are required to provide a
rebate to their customers.27
nn Health insurers have benefited in recent quarters
from lower medical claims costs as people use fewer
health services, a trend linked to the soft economy.
A number of insurers have been diversifying into
other areas as commercial memberships decline.
• In 2010 UnitedHealth Group acquired Executive
Health Resources, a leading provider of medical
necessity compliance solutions to more than
2,400 hospitals and health systems across the
country. In 2011 the insurer purchased Monarch,
the largest physician group in Orange County,
California, with 2,300 members.
• In 2011 Aetna bought Medicity, which builds
information exchanges for physicians and
hospitals to share patient data electronically.

• In 2012 Blue Cross plans in Pennsylvania and
New Jersey—and the technology company
Lumeris—purchased NaviNet, which combines
medical and claims data on one network for
physicians.28
Trends: Drug utilization and shortages
After outpacing all other health care expenditures for
many years, the rate of pharmaceutical expenditure
growth is now consistently similar to the growth
of overall health care expenditures. The ongoing
introduction of generic versions of widely used
expensive medications continues to moderate drug
expenditures. However, from the patient’s perspective,
savings from generics may not be realized, as the
cost sharing (deductibles and copayments) required
by insurance plans continues to increase. Further,
the growing use of expensive specialty medications
continues to drive medication expenditures for select
patient populations, and the out-of-pocket costs to
patients for these medications are particularly high.
nn An April 2012 report by the IMS Institute for
Healthcare Informatics revealed changes in the
consumption of medicines in 2011:
• Total spending on medicines increased from
$308.6 billion in 2010 to $319.9 billion in 2011.
Branded drugs accounted for 73 percent of total
spending, while unbranded generics accounted
for 27 percent. Traditional medicines were 75
percent, while specialty reached 25 percent.
Small molecules accounted for 75 percent and
biologics were 23 percent. Oral medications
accounted for 58 percent; injectable medications
that patients are able to self-administer were 26
percent, while other medicines were 16 percent.
Retail medicines accounted for 71 percent and
non-retail medicines were 29 percent.
• The decline in the volume of protected branded
medicines reduced spending in 2011 by $5.6
billion compared to 2010. Brands that lost patent
protection or exclusivity in 2011 resulted in a
reduction in spending of $14.9 billion.
• More new medicines—including 34 new
molecular entities—were launched in 2011 than
in the past decade. Spending growth for new
brands was $7.7 billion in 2011, up from $5.2
billion in 2010. Spending on generics increased
by $5.6 billion in 2011 compared to 2010.29
• Overall per capita utilization of medicines
declined in 41 states and fell by more than three
percent in 10 states as patient office visits and
non-ED hospital admissions dropped, and older
Americans reduced their retail drug use.
• Patients with insurance spent $1.8 billion less
out-of-pocket for medicines in 2011, compared
to 2010. The decline was the first on record and
largely related to the introduction of the“donut-
hole”subsidy for Medicare Part D beneficiaries.
Out-of-pocket spending by commercial third-
party insured and Medicaid patients was flat
relative to 2010.
nn Drug shortages have become a growing and critical
problem in America. In 2011 there were a record-
high 267 new prescription drug shortages. This is
56 more than in 2010, when there were 211, and
more than four times greater than the number of
medication shortages in 2004, when just 58 drug
shortages were reported.
• The worsening drug shortage problem
impacted patient care, especially in hospitals, as
chemotherapy, surgery and care for patients with
pain and infections were disrupted as a result
of a lack of critical medicines. At least 15 deaths
were attributed to drug shortages in 2011.
• The shortages also delayed clinical trials that
compare new, experimental drugs to older ones,
and led to extraordinary price extortion, causing
many hospitals to pay extremely large markups
for limited drugs.
• The Federal Drug Administration (FDA)
asserts the shortages are primarily a result
of manufacturing deficiencies that lead to
production shutdowns. They are also caused by
companies that discontinue production of drugs
with small profit margins, consolidation in the
generic drug industry and insufficient supplies of
some ingredients.
• While a lack of cancer drugs have been one of
the most significant drug shortages, shortages
have also been reported for drugs used to treat
heart disease, central nervous system conditions,
infection and pain.30

nn According to a recent report from the
Pharmaceutical Research and Manufacturers of
America, drug makers have nearly 450 drugs in
clinical development or awaiting FDA approval for
treating neurological disorders such as Alzheimer’s
disease, brain tumors, multiple sclerosis, headaches
and migraines, epilepsy and seizures, Parkinson’s
disease, Huntington’s disease and amyotrophic
lateral sclerosis also known as ALS or Lou Gehrig’s
disease.31
nn On Oct. 31, 2011, President Barack Obama issued
Executive Order 13588, Reducing Prescription Drug
Shortages, which directs the FDA to take steps
to help prevent and reduce current and future
disruptions in the supply of medicines.
• Six months after the executive order was issued,
there was a six-fold increase in early notifications
of shortages from drug manufacturers.
• Also within this six-month timeframe, the FDA
prevented 128 drug shortages.
• Only 42 new drugs in shortage were reported in
2012, compared to 90 new shortages at the same
time the previous year.32
Predicted impacts for patients
nn As increased numbers of baby boomers enter
retirement age and push up Medicare expenditures,
younger people will complain about having to pay
for the health care of the elderly.
nn The ability to lower health care costs through better
outpatient care for the costliest of Medicare patients
may be limited.
nn Medicare beneficiaries will continue to have to pay
substantially more out of their own pockets for
health care.
nn Uninsured patients will likely experience more
difficulty accessing care as the“safety net”continues
to deteriorate.
nn Without a significant number of healthy people in
the risk pool, insurance exchange rates will be cost
prohibitive for many people.
nn People will increasingly avoid using health care
services due to escalating deductibles and health
care costs.
nn As health insurance premiums continue to rise,
employees will be expected to share more of the
cost of premiums and face higher deductibles and
co-payments.
nn Various insurance exchanges may result in lower
premiums.
nn Access to care will remain tiered for patients with
considerable discretionary income.
nn Large retailers that operate retail clinics will
combine pharmacy and clinical data to create
comprehensive patient profiles and use that to
create membership models that drive patient
decisions.
nn The public will remain concerned about the cost of
health care, but will be most concerned about being
subjected to limited choice and higher levels of co-
payments.
nn Patients will require education on the
methodologies used to calculate charges as
more data on health care costs are made publicly
available.
nn Results of the Oregon Health Insurance Experiment
are likely to impact Medicaid expansion under the
ACA.
nn Greater availability of generic drugs will contribute
to lower patient out-of-pocket spending.
nn Personalized medicines, based on specific genetic
markers, will transform disease treatment options.
nn From a policy perspective, the implications of
expanded medication access, utilization and
expenditures resulting from the introduction of
Medicare Part D will prompt continued assessment.
nn Public dissatisfaction will set the political stage for
the next attempt at health system reform.

Predicted impacts for physicians
nn Physicians will continue to face pressure to reduce
health care costs, creating dilemmas for physicians
in providing appropriate health care services to
patients, possibly affecting their relationships with
patients.
nn The ability to lower health care costs through better
outpatient care for the costliest of Medicare patients
may be limited.
nn Further health plan consolidation will result
in physicians having even less leverage in fee
schedule negotiations and will increase pressure
to participate in health plans’Medicaid and
Medicare Advantage networks in order to be part of
commercial networks.
nn Physicians will continue looking for stability, ability
to attract patient volume, competitive benefits
and work/life balance. Hospitals will be focused on
strengthening relationships with physicians through
employment, economic risk sharing or shared
savings with payers.
nn Retail clinics will further disrupt local established
patient-physician relationships and referral chains.
nn If retail clinics partner with nationwide health
insurers, they will require aggressive price
concessions to participate in their networks.
nn Expect more collection and public release of
providers’charges.
nn Many physicians approaching their retirement age
will require new and innovative models that take
advantage of their expertise while allowing part-
time work, such as supervising nurse practitioners
or telemedicine.
nn Physician organizations will consider consolidation
because they may lack capital, access to capital, IT
investment in clinical systems or an ambulatory
electronic health record system.
nn Both hospitals and physicians will look to local
providers for partnership opportunities and will
evaluate the opportunities with less traditional
partners: private equity firms, publicly traded
organizations, health plans and other health care
organizations.
nn There will be increasing visibility of physicians’
quality scores and pricing, making value much more
important.
nn A physician’s recommendation will continue to
influence patients and how they access health care,
although with diminishing impact.
nn Expect employers, organized labor, the public,
health plans and competitors to access publicly
available data to see physicians’performance
ratings.
nn Expansion of Medicaid and implementation of
health insurance exchanges will result in physicians
caring for patients who may not know their health
plans’benefits and/or limitations.
nn Shortages of preferred medications will require
physicians to be familiar with alternative drugs.

Predicted impacts for payers
nn Large health insurers will continue to consolidate
the market and acquire smaller plans, targeting
those with Medicaid or Medicare, as well as medical
groups (especially those with health plans), but on
a much smaller scale. Scale will be important as
reducing administrative cost per dollar of premium
becomes critically important.
nn Health insurers will be focused on health insurance
exchanges (state and private) and ensuring they
have attractive products and delivery networks
to offer to the public. This likely will include high-
deductible health plans and narrow networks.
nn Insurance exchanges will lead to commoditization
of insurance products, making product offerings
highly standardized. Coupled with government
price regulation, this will lead to low profit margins
for the carriers in the long term.
nn Health insurers will continue to diversify their
revenue sources to include infrastructure offerings
to support value-based care and administrative
services to support self-insured employers. Insurers
will also continue to increase access points for
members through Costco, Walmart, Best Buy and
Rite Aid, to name a few.
nn Health insurers will buy into the medical-loss ratio,
which may include reducing premiums for select
groups as well as offering quality improvement
incentives that are included as a medical expense.
nn Expect more health insurers to enter into new
delivery models, such as telemedicine, bundled
payments and patient-centered medical homes,
targeting management of chronic disease and
complex patients.
nn Medicare and Medicaid will aim to hold the line on
payment in 2013.
nn Narrow networks will reduce revenue per unit as a
trade-off for more volume.
nn Increased use of less costly delivery sites—such
as post-acute versus acute—will reduce hospital
revenue.
nn Expect more states to put premium rate review/
approval rules in place or at least an upward cap on
premium increases, as in Massachusetts.
nn Details on Medicare charges could spark
conversations or pushback about how well
nonprofit community hospitals are realizing their
public missions.
nn Expect more collection and public release of
providers’charges and insurance rate information.

1
National Health Expenditure Data. Centers for Medicare
and Medicaid Services. www.cms.gov/Research-Statistics-
Data-and-Systems/Statistics-Trends-and-Reports/
NationalHealthExpendData/. Accessed April 18, 2013.
2
Ibid.
3
Ibid.
4
Ibid.
5
Study finds recent slowdown in health spending growth
mostly tied to the economy. Kaiser Family Foundation.
www.kff.org/insurance/snapshot/chcm042213oth.cfm.
Accessed April 22, 2013.
6
Cutler D., Sahni N. If Slow Rate of Health Care Spending
Growth Persists, Projections May be Off by $770 Billion
[Abstract]. Health Affairs. May 2013; 841-850. http://content.
healthaffairs.org/content/32/5/841.abstract.
Accessed May 15, 2013.
7
Gonzalez Morganti K, et al, The Evolving Role of Emergency
Departments in the United States. Rand Corporation. www.
rand.org/content/dam/rand/pubs/research_reports/RR200/
RR280/RAND_RR280.pdf. Accessed May 21, 2013.
8
The Affordable Care Act: Lowering Medicare Costs by
Improving Care. Centers for Medicare and Medicaid Services.
www.cms.gov/apps/files/aca-savings-report-2012.pdf.
9
Farroni J, et al. Saving Medicare through Patient-Centered
Changes—The Case of Injectables. New England Journal of
Medicine. June 24, 2013. doi:10.1001/jama.2013.7103. www.
nejm.org/doi/pdf/10.1056/NEJMp1213485. Accessed April 25,
2013.
10
Joynt KE, et al. Contribution of Preventable Acute Care
Spending to Total Spending for High-Cost Medicare Patients
[Ab-stract]. Journal of the American Medical Association.
2013;309(24):2572-2578. doi:10.1001/jama.2013.7103. http://
jama.jamanetwork.com/article.aspx?articleid=1699911.
Accessed June 27, 2013.
11
Medicare Provider Charge Data. Centers for Medicare and
Medicaid Services. www.cms.gov/Research-Statistics-Data-
and-Systems/Statistics-Trends-and-Reports/Medicare-
Provider-Charge-Data/index.html. Accessed May 8, 2013.
12
Hospital Compare. Centers for Medicare and Medicaid
Services. www.medicare.gov/hospitalcompare/?AspxAutoDet
ectCookieSupport=1. Accessed May 8, 2013.
13
Collins S, et al. Insuring the Future: Current Trends in Health
Coverage and the Effects of Implementing the Affordable Care
Act. The Commonwealth Fund. www.commonwealthfund.
org/~/media/Files/Publications/Fundpercent20Report/2013/
Apr/1681_Collins_insuring_future_biennial_survey_2012_
FINAL.pdf. Accessed May 1, 2013.
14
State-Level Trends in Employer-Sponsored Health Insurance:
A State-by-State Analysis. Robert Woods Johnson Foundation.
www.shadac.org/publications/state-level-trends-in-employer-
sponsored-insurance. Accessed May 1, 2013.
15
Blavin F, et al. Uninsurance Is Not Just a Minority Issue:
White Americans Are a Large Share of the Growth from
2000 to 2010. The Urban Institute. www.urban.org/
UploadedPDF/412698-Uninsurance-Is-Not-Just-a-Minority.
pdf. Accessed April 23, 2013.
16
Clemans-Cope L, et al. The Affordable Care Act’s Coverage
Expansions Will Reduce Differences In Uninsurance Rates By
Race And Ethnicity [Abstract]. Health Affairs. May 2012; 920-
930. http://content.healthaffairs.org/content/31/5/920.full?ijk
ey=to7RiPsbOigAQ&keytype=ref&siteid=healthaff.
17
Long S, et al. Coverage, Access, and Affordability under
Health Reform: Learning from the Massachusetts Model
[Abstract]. Inquiry. Volume 49, Issue 4 (Winter 2012/2013).
www.inquiryjournalonline.org/doi/abs/10.5034/
inquiryjrnl_49.04.03. Accessed April 23, 2013.
18
Jan T. U.S. Won’t Mirror Mass. On Health Exchanges.
The Boston Globe. www.bostonglobe.com/news/
nation/2013/05/19/health-insurance-exchanges-will-
lack-some-key-features-designed-protect-consumers/
TnXNTKagxQXPszZgMQvSEI/story.html.
19
Selected CBO publications related to health care legislation,
2009–2010. Congressional Budget Office. www.cbo.gov/
sites/default/files/cbofiles/ftpdocs/120xx/doc12033/12-23-
selectedhealthcarepublications.pdf. Accessed April 23, 2013.
20
Audience Segmentation for the Emerging Health Insurance
Marketplace. Centers for Medicare and Medicaid Services.
http://capsules.kaiserhealthnews.org/wp-content/
uploads/2013/03/social-marketing-research-for-the-health-
insurance-marketplace.pdf. Accessed April 24, 2013.
21
Baicher K, et al. The Oregon Experiment—Effects of Medicaid
on Clinical Outcomes [Abstract]. New England Journal
of Medicine. 2013;368:1713-1722. www.nejm.org/toc/
nejm/368/18/. Accessed May 7, 2013.
22
Retail Clinics: 2012 Yearbook. GBI Research. http://
gbiresearch.com/Report.aspx?ID=Retail-Clinics-2012-
Yearbook&companyID=jpr. Accessed May 22, 2013.
23
Competition in Health Insurance: A Comprehensive Study of
U.S. Market. American Medical Association. www.ama-assn.
org/ams/pub/amawire/2012-november-28/2012-november-
28-general_news2.shtml. Accessed April 25, 2013.
24
Health Insurance Stock Outlook-March 2013. Zachs Equity
Research. www.zacks.com/commentary/26387/health-
insurance-stock-outlook-march-2013. Accessed April 26, 2013.
References

25
Gold M, et al. Medicare Advantage: 2013 Spotlight. Kaiser
Family Foundation. http://kaiserfamilyfoundation.files.
wordpress.com/2013/06/8448.pdf. Accessed June 11, 2013.
26
Vestal C. Lack of Competition Might Hamper Health
Exchanges. Kaiser Health News. www.kaiserhealthnews.org/
Stories/2013/April/23/stateline-Lack-of-Competition-Hamper-
Health-Exchanges.aspx. Accessed April 25, 2013.
27
Health Insurance Issuers Implementing Medical Loss Ratio
(MLR) Requirements Under the Patient Protection and
Affordable Care Act. Department Health and Human Services.
www.gpo.gov/fdsys/pkg/FR-2010-12-01/pdf/2010-29596.pdf.
28
Hancock J, Conflicts Arise as Health Insurers Diversify. Kaiser
Health News. www.kaiserhealthnews.org/Stories/2012/
April/29/conflicts-arise-as-hospitals-diversify.aspx?p=1.
29
The Use of Medicines in the United States: Review of 2011.
The IMS Institute for Healthcare Informatics. http://www.
imshealth.com/ims/Global/Content/Insights/IMSpercent20
Institutepercent20forpercent20Healthcarepercent20
Informatics/IHII_Medicines_in_U.S_Report_2011.pdf.
30
Schoen D. The Drug Shortage Crisis in America. Forbes.
www.forbes.com/sites/dougschoen/2012/02/13/the-drug-
shortage-crisis-in-america/. Accessed April 24, 2013.
31
Drug Store News, Neurological Disorders, www.
drugstorenews.com/sites/drugstorenews.com/files/
MedicinesInDevelopmentNeurologicalDisorders2013.pdf.
Accessed Au-gust 1, 2013.
32
Executive Order 13588, Reducing Prescription Drug
Shortages. The White House, Office of the Press Secretary.
www.whitehouse.gov/the-press-office/2011/10/31/executive-
order-reducing-prescription-drug-shortages. Accessed April
24, 2013.
Copyright 2013 American Medical Association. All rights reserved.
In producing this publication, the AMA Council on Long Range Planning and Development has consulted and cited sources believed to be
knowledgeable. However, the AMA does not warrant that the information is in every respect accurate and/or complete. The AMA assumes
no responsibility for use of the information contained in this publication. The AMA shall not be responsible for, and expressly disclaims
liability for, damages of any kind arising out of the use of, reference to, or reliance on, the content of this publication.
This publication is for informational purposes only. The AMA does not provide medical, legal, financial or other professional advice, and
readers are encouraged to consult a professional adviser for such advice.

1 | Public health infrastructure Health care trends
Executive summary
The health of Americans has improved dramatically
over the past few decades; however, the recent
recession and sequestration mandates which began
in March of 2013 resulted in significant budget cuts to
the funding of the public health infrastructure. More
reductions are imminent even though chronic disease
is becoming more common and the means for further
reducing health risks and promoting well-being are
becoming more complex.
Several provisions in the Affordable Care Act, such as
additional public health work force training, may
help address some of these issues. This legislation also
requires many health insurance plans to fully cover
certain preventive services without any cost-sharing
from patients.
However, some of the public health challenges remain
particularly stubborn. For instance, some progress
has been made against health inequities associated
with race, ethnicity or gender, but significant gaps
are holding steadfast despite great efforts to address
them.
Rates of obesity and overweight have stopped
growing, but are still very high. Tobacco use rates
are holding steady. In fact, the number of smokers
has remained unchanged for several years, although
smoking bans have resulted in less smoking because
there are fewer opportunities to light up. Changes
in how tobacco is taxed have led to a growth in the
consumption of pipe tobacco and large cigars.
Some infectious diseases once considered eliminated
are reemerging, as organisms develop resistance to
available drugs. Injury rates have decreased in many
areas, but various trends have the potential to change
that. While traffic fatalities have declined, the use of
electronic devices while driving is playing a larger role
in vehicular accidents. Suicide rates are increasing,
although the reasons are unknown.
Public health infrastructure
Health care trends

The mission of public health is to create conditions that
allow people to be healthy. While prevention is getting
more attention, and collaboration on health issues is
increasing with non-traditional partners, resources are
tight. Additional budget cuts are on the horizon even
though the burden of chronic disease is increasing and
methods for reducing risk and promoting health are
becoming more complex.1
Trends: Public health infrastructure
The deep recession of December 2007 to June 2009
led to significant cuts to public health funding at the
federal, state and local levels. These were compounded
by sequestration, which meant across-the-board cuts
to federal government spending as of March 1, 2013.
The public health system is further challenged by
the impending implementation of the International
Classification of Diseases, tenth edition; along with the
standing need to be prepared for disasters such as a
terrorist attack or a hurricane.
nn Median state and local public health funding
declined from $33.71 per capita in 2008 to $27.40 in
2012. A total of 29 states reduced their public health
budgets from fiscal year 2010–11 to fiscal year
2011–12. Budgets in 23 states decreased for two or
more years in a row and budgets in 14 states were
cut for three or more years consecutively.2
nn Centers for Disease Control and Prevention (CDC)
funding grew from $17.60 per capita in 2008 to
$20.28 in 2011 and then declined to $19.54 in 2012.
The annual budget decreased from a high of $7.31
billion in 2005 to $6.13 billion in 2012.3
Mandated
federal budget cuts—sequestration—meant that
as of March 1, 2013, CDC funding was cut by $580
million. This included a $100 million reduction in
funding for immunization and respiratory disease
and a $61.6 million cut to HIV/AIDS, viral hepatitis,
sexually transmitted infection and tuberculosis
prevention.4
About two-thirds of the CDC’s budget
goes to state and local public health departments,
Public health infrastructure
These data represent the median percentages of people at various weights in the 50 states, the District of Columbia, Guam, Puerto Rico and
U.S. Virgin Islands.
*Data for 2011 is not directly comparable to previous years because of changes in weighting methodology and the addition of cell phone
sampling
Source: Behavioral Risk Factor Surveillance System, Centers for Disease Control and Prevention

and these cuts are expected to trickle down and
have a significant impact. Without legislative
relief, sequestration is expected to continue
through 2021.5
nn The Affordable Care Act (ACA) created the
Prevention and Public Health Fund, the nation’s first
dedicated, mandatory funding stream for public
health and prevention activities. Previously, public
health funding had been discretionary. The fund
was originally supposed to gradually build from
$500 million in fiscal year 2010 to $2 billion per
year by fiscal year 2015. Budget cuts mean these
numbers were reduced by $6.25 billion from fiscal
year 2013 to fiscal year 2021.6
nn The deadline for the health system to convert to the
International Classification of Diseases, tenth edition,
or ICD-10, for the reporting of medical diagnoses
and inpatient procedures is Oct. 1, 2014. The
Department of Health and Human Services (HHS)
has extended the deadline several times because of
resistance from many physicians who say ICD-10 is
not needed and is a burden. Some physicians and
others in the health system say, however, the ICD-9
code sets are no longer workable for treatment,
reporting and payment processes. Additionally,
many hope the availability of more specific data
will better identify public health needs, epidemics
and bioterrorism events. The ICD-10’s more precise
codes also have the potential for fewer rejected
claims, improved benchmarking data, better quality
and care management, and enhanced public health
reporting.7
Trends: Public health work force
The deep recession also led to significant public health
staff cuts. Public health education and training are
expanding, in part because of several aspects of the
ACA, but the public health work force is significantly
challenged by an aging population.
nn A total of 27,778 employees work in local health
departments and 17,333 work in regional or district
offices.8
nn Between July 2008 and February 2012, 56 percent of
state and territorial health departments experienced
layoffs. About 58 percent experienced mandatory
furloughs and 62 percent had entire programs cut.
A total of 91 percent had to reduce services.9
nn The average number of vacant positions at state
health agencies is 288. Budget cuts and hiring
freezes mean state health agencies are only
recruiting for 15 percent of these open positions.10
nn Half of public health laboratories expect more than
15 percent of their work force to retire, resign or be
let go within 5 years.11
nn The number of public health schools accredited by
the Council on Education for Public Health grew
from 23 in 1991 to 49 in 2011.
• The number of applications to schools of public
health increased from 20,247 to 52,101 from
2001 to 2011.
• There were 28,443 students enrolled in
schools of public health in the fall of 2011.
This represents an 8 percent increase from fall of
2010 when 26,340 were enrolled.
• The number of public health school graduates
with prior MD degrees decreased from 781 in
2000–2001 to 634 in 2010–2011. The proportion
of graduates with prior MD degrees decreased
from 14 percent in 2000–2001 to 7 percent in
2010–2011.12

nn Public health education is playing a larger role in
medical school. In a survey by the Association of
American Medical Colleges, 21.8 percent of medical
students graduating in 2012 rated education about
public health as insufficient, a decrease from 34.2
percent in 2008. Approximately 13.5 percent of
medical students graduating in 2012 said education
on epidemiology was insufficient, a decrease from
19.6 percent in 2008. Additionally, 27.7 percent
graduating in 2012 said education in health
surveillance was inadequate, a decrease from 34.6
percent in 2008.13
nn The ACA includes several aspects addressing public
health work force issues including:
• An education loan repayment program for those
accepted by or employed full-time at a federal,
state, local or tribal governmental public health
agency or in a related training fellowship.
• Grants for accredited educational institutions to
provide training to mid-career public and allied
health professionals employed by federal, state,
tribal or local public health agencies.
• An elimination of the cap on the number of U.S.
Public Health Service Commissioned Corps. It
had previously been set at 2,800.
• An expansion of the number of CDC fellowship
training programs to alleviate state and local
health department shortages of professionals in
the areas of applied public health epidemiology,
public health lab science and public health
informatics.14
Trends: Health inequities
Disparities in health and health care related to gender,
race or ethnicity, education, income, disability,
geographic location or sexual orientation persist. For
the United States population to be healthy, the country
must change this situation.15
nn Life expectancy at birth for the total population in
2011 was 78.7 years, the same as in 2010.
• The difference between male and female life
expectancy at birth has generally decreased
since its peak of 7.8 years in 1979.
• The difference in life expectancy between whites
and blacks in 2011 was 3.7 years, a 0.1-year
decrease from the 2010 gap between the two
races.
nn After adjustment for age and sex, the percentage
of persons with a usual place to go for medical care
from January to September 2012 was 77.3 percent
for Hispanics, 88 percent for non-Hispanic whites
and 84.4 percent for non-Hispanic blacks.16
From
January to September 2002, these numbers were
76.7 percent for Hispanics, 90.2 percent for non-
Hispanic whites and 86.6 percent for non-Hispanics
blacks.17
nn After adjustment for age and gender, 7.1 percent of
Hispanics, 5.7 percent of non-Hispanic whites and
7.9 percent of non-Hispanic blacks failed to obtain
needed medical care due to cost from January to
September 2012.18
From January to September
2002, 5.4 percent of Hispanics, 4.3 percent of non-
Hispanic whites and 6.5 percent of non-Hispanic
blacks were unable to obtain needed medical care
because of finances.19
nn African Americans have the highest death rate and
shortest survival time for most cancers of any racial
and ethnic group in the United States. Although
the overall racial disparity in cancer death rates has
declined over the past few years, in 2009 the death
rate for all cancers combined continued to be 31
percent higher in African American men and 15
percent higher in African American women than in
white men and women, respectively.20

nn Incidence rates for all cancers combined went up in
African Americans from the mid-1970s to the early
1990s. Rates were higher and increased faster in
males than in females. Since the early 1990s, rates
generally decreased in males and held steady in
females. From 2000 to 2009, overall cancer incidence
rates declined faster in African American males (1.4
percent per year) compared to white males (1.2
percent per year). The declines in overall cancer
incidence largely involved cancers of the lung and
prostate. Incidence rates declined slightly among
white females (0.3 percent per year) and were stable
among African American females from 2000–2009.21
Trends: Obesity
After several decades of rapid growth, rates of
obesity and overweight have started to plateau.
This is significant because even a small weight loss
(or no gain) at the individual or population level
makes a significant difference in health and related
expenditures. The research shows a strategy of primary
prevention focusing on avoiding further gain can help
improve health and reduce medical costs and is an
achievable goal.22
nn In 2012, 29 percent of adults were obese. This was
not significantly different from the 2011 estimate
of 28.7 percent, but higher than the 19.4 percent
recorded in 1997.23
nn During 2007–2010, adults consumed an average
11.3 percent of total daily calories from fast food,
a decrease from 12.8 percent for 2003–2006.24
The prevalence of obesity among preschool-aged
children in low-income families increased from
13.1 percent in 1998 to 15.2 percent in 2003. The
prevalence of extreme obesity increased from 1.8
percent in 1998 to 2.2 percent in 2003. However,
the prevalence of obesity decreased slightly to 14.9
percent in 2010. Similarly, the prevalence of extreme
obesity decreased to 2.1 percent in 2010.25
nn As of Oct. 1, 2010, 39 states representing 78 percent
of the nation’s population had enacted policies on
foods for sale in schools.26
nn If obesity rates continue their current trajectory,
obesity rates for adults could reach or exceed 44
percent in every state and exceed 60 percent in 13
states. In addition:
• The number of new cases of type 2 diabetes,
coronary heart disease, stroke, hypertension and
arthritis could increase 10 times between 2010
and 2020—and then double again by 2030.
• Obesity-related health care costs could increase
by more than 10 percent in 43 states and by
more than 20 percent in nine states.27

Trends: Tobacco
After many years of decline, the number of people
who regularly smoke or use other forms of tobacco is
holding steady, but per capita consumption continues
to go down. This means there are just as many smokers
but they are not lighting up as much because smoking
bans have become more widespread.
nn Tobacco is the leading cause of preventable and
premature death, killing an estimated 443,000
Americans each year. Cigarette smoking costs the
nation $96 billion in direct medical costs and $97
billion in lost productivity annually.28
nn A total of 19 percent of adults smoked cigarettes in
2011—this was not a statistically significant change
from the 19.3 percent recorded in 2010.
• During 2005–2011, a slight overall decline in
current smoking prevalence was noted.
• The largest decline in current smoking
prevalence occurred in adults aged 18–24 years
(from 24.4 percent to 18.9 percent).
• Among daily smokers, the proportion who
smoked more than 30 cigarettes per day
declined significantly, from 12.6 percent in 2005
to 9.1 percent in 2011.
• The proportion of those who smoked one to nine
cigarettes per day increased significantly, from
16.4 percent to 22.0 percent.29
nn Consumption of pipe tobacco and large cigars
increased substantially since the federal tobacco
excise tax on cigarette tobacco went up in 2009.
This change made pipe tobacco less expensive than
roll-your-own tobacco and manufactured cigarettes.
Large cigars were less heavily taxed than small
cigars and manufactured cigarettes.
• From 2000 to 2011 total cigarette consumption
declined from 435.6 billion to 292.8 billion,
a 32.8 percent decrease. Per capita cigarette
consumption declined from 2,076 in 2000 to
1,232 in 2011, a 40.7 percent decrease.
• Conversely, total consumption of non-cigarette
combustible products such as pipes and cigars
increased from 15.2 billion cigarette equivalents
in 2000 to 33.8 billion in 2011, a 123.1 percent
increase. Per capita consumption increased
from 72 in 2000 to 142 in 2011, a 96.9 percent
increase.
• Roll-your-own cigarette equivalent consumption
decreased by 56.3 percent, whereas pipe tobacco
consumption increased by 482.1 percent. The
largest changes occurred from 2008 to 2011,
when roll-your-own consumption decreased
from 10.7 billion to 2.6 billion (a 75.7 percent
decrease), whereas pipe tobacco consumption
increased from 2.6 billion to 17.5 billion (a 573.1
percent increase).
• From 2000 to 2011 consumption of small cigars
decreased 65 percent. Large cigar consumption
increased 233.1 percent. The largest changes
occurred from 2008 to 2011, when small cigar
consumption decreased from 5.9 billion to 0.8
billion (an 86.4 percent decrease), whereas large
cigar consumption increased from 5.7 billion to
12.9 billion (a 126.3 percent increase).30
nn An analysis of the tobacco laws of the 50 largest U.S.
cities found that the number covered by local and/
or state comprehensive smoke-free laws—meaning
that smoking is banned in public spaces and
enclosed workspaces without exception—increased
from one city (2 percent) in 2000 to 30 cities (60
percent) in 2012.31
nn The ACA expanded access to smoking cessation
treatment. Private health plans are required to
cover tobacco counseling with no cost-sharing from
patients. Medicare and Medicaid will cover tobacco
use cessation for all beneficiaries. The ACA also
provides support for state 1-800 quit lines.32

Trends: Infectious disease
Several decades ago infectious disease was regarded
as defeated by antibiotics, vaccines and improved
hygiene. But the challenges we face now are greater
than ever. Bacteria have emerged with resistance—
not just to first or second line antibiotics but to all
available. New pathogens are jumping from animals
to humans. The battle against infectious diseases is
further complicated by an anemic drug pipeline and
reduced trust in vaccines.
nn In 2012, 9,951 new tuberculosis cases were reported
in the United States, an incidence of 3.2 cases per
100,000. This represents a decrease of 6.1 percent
from the incidence reported in 2011 and is the 20th
consecutive year of declining rates.
• A total of 127 cases of multidrug-resistant TB
(MDR TB) were reported in 2011. Another 109
were reported in 2010. The percentage of MDR
TB cases among persons without a previous
history of some form of TB was 1.3 percent in
2011. For persons with a previous history of
some form of TB, the prevalence of MDR TB was
8.2 percent in 2011.33
• In February 2013 researchers in South Africa
identified a TB strain they described as totally
drug resistant (TDR TB) that was not susceptible
to four first-line and six second-line drugs. In a
molecular analysis of 309 drug-susceptible and
342 MDR TB isolates collected from 2008 to 2009,
researchers found 92 percent of 236 MDR TB
strains belonged to an atypical Beijing genotype
that was resistant to 10 anti-TB drugs. India, Iran
and Italy also have published reports of TDR TB.34
nn Carbapenem-resistant Enterobacteriaceae (CRE)
germs are not very common, but they have
increased from 1 percent to 4 percent of health care-
associated infections in the past decade.
• CRE is resistant to nearly every antibiotic
available. This pathogen’s ability to spread and
confer resistance to other bacteria raises the
concern that potentially untreatable infections
could appear in otherwise healthy people.
• The U.S. is at a critical time in which CRE
infections could be controlled if addressed
in a rapid, coordinated and consistent effort
by doctors, nurses, lab staff, medical facility
leadership, health departments/states, policy
makers and the federal government. 35
nn Clostridium difficile infection (CDI) is the most
common cause of health care-associated diarrhea
among adults in the United States and is associated
with significant morbidity and mortality. During
the past decade, the epidemiology of CDI changed,
including a rise in the rate and severity of infection
related to the emergence of a hypervirulent strain as
well as an increase in disease among outpatients in
community settings.36
• CDI prevention activities are on the rise but not
yielding large improvements. Seventy percent of
1,087 respondents to a survey by the Association
for Professionals in Infection Control and
Epidemiology have adopted interventions since
March of 2010 to address this problem. Only 42
percent saw a decline in CDI rates. A total of 43
percent have not seen a decline in their rates.37
• Antimicrobial stewardship programs are slowly
increasing. Sixty percent of respondents to this
survey have these programs at their facilities,
compared with 52 percent in 2010. Because
antimicrobial use is one of the most important
risk factors for CDI, stewardship programs that
promote judicious use of antimicrobials should
be encouraged.38
• About 40.7 percent of patients with community-
associated CDI had low-level outpatient health
care exposure. Approximately 35.9 percent had
not taken antibiotics. Of the group that had not
been on antibiotics, 31 percent had been on
proton pump inhibitors.39
• Evidence indicates probiotics are safe and
effective for preventing CDI-related diarrhea.40
• Using hydrogen peroxide vapor to
decontaminate hospital rooms reduces the risk
of transmitting any multidrug-resistant organism
by 64 percent.41
• Alcohol-based hygiene products do not
kill CDI spores, and, in outbreak situations,
frequent hand washing with soap and water is
recommended.42

nn Foodborne illness is an ongoing problem, but it’s
unclear whether the number of people sickened
by what they eat is increasing or if detection of
outbreaks has improved. Approximately 48 million
people are hit by foodborne illnesses annually,
although the exact cause has changed over the
years. Cases of campylobacter infection went up 14
percent in 2012 in comparison to 2006–2008. The
incidence of vibrio increased 43 percent during this
time period. The numbers for E. coli O157, listeria,
salmonella and Yersinia were unchanged.43
nn The number of new antibiotics annually approved
for marketing in the United States continues to
decrease. There has been some progress in the
development of new antibacterial drugs that
target infections caused by resistant gram negative
bacteria, but progress remains alarmingly elusive. 44
nn Some arboviruses are becoming more prevalent in
the United States. West Nile virus emerged in 1999
with 62 human cases. A total of 5,674 were recorded
in 2012.45
In 2009 and 2010, 22 cases of locally-
acquired dengue fever, a disease endemic in Latin
American and Southeast Asia, were recorded in Key
West, Fla.46
nn The Global Polio Eradication Initiative was
established in 1988 by the World Health Assembly
to interrupt transmission of wild poliovirus.
Completion of this initiative was declared a
programmatic emergency of public health in
January 2012.47
• Polio remains endemic in Nigeria, Afghanistan
and Pakistan, but these efforts have been
hampered by an ongoing lack of trust. This issue
was further compounded by the fact that a sham
vaccination campaign was used as part of the
hunt for Osama Bin Laden. After this came to
light, Pakistan expelled aid workers. Eight polio
vaccination workers were killed. The United
Nations suspended polio eradication efforts in
this country.48
nn Not receiving the HPV vaccine because of“safety
concerns/side effects”increased from 4.5 percent in
2008 to 7.7 percent in 2009 to 16.4 percent in 2010.
Although parents report health care professionals
increasingly recommend all vaccines, including HPV,
the intent to not vaccinate for HPV increased from
39.8 percent in 2008 to 43.9 percent in 2010. 49
nn Adolescent vaccination coverage increased from
2006 to 2011, although the rate of increase differed
by vaccine. The average annual percentage point
increase from 2007 to 2010 was 12.8 for ≥1 dose of
Tdap, 10.1 for ≥1 dose of MenACWY, and among
females, 7.9 for ≥1 dose of HPV.
• Among females and males who initiated the
HPV series, 70.7 percent and 28.1 percent,
respectively, received three doses, as of 2011.50
nn Since the introduction of rotavirus vaccines in 2006
in the United States, medically-attended acute
gastroenteritis caused by this virus has become less
common and norovirus has become a more pressing
problem. Norovirus is associated with nearly one
million health care visits annually. Norovirus was
detected in 21 percent of young children seeking
medical attention for acute gastroenteritis in 2009
and 2010. The virus also was detected in 4 percent
of healthy controls. Rotavirus was identified in 12
percent of children with acute gastroenteritis in
2009 and 2010.51
nn Influenza vaccine manufacturing has improved, and
the CDC recommends all Americans six months and
older receive it annually. Every year, approximately
20 percent of Americans get the flu. Between 3,000
and 49,000 Americans die from flu-related illnesses,
and an average of 226,000 are hospitalized. The
flu costs more than $10 billion in direct medical
expenses and more than $16 billion in lost
earnings.52
• The percentage of adults over 65 who had
received an influenza vaccination during the past
12 months was 64.6 percent in the third quarter
of 2012, a modest increase from 62.9 percent in
the third quarter of 2002.

• For those 50–64, the numbers went from 33.1
percent in the third quarter of 2002 to 43.3
percent in the third quarter of 2012. Influenza
vaccination rates for 18 to 49 year olds went from
16.3 percent in the third quarter of 2002 to 33.1
percent in the third quarter of 2012. 53,54
• For children aged 6 months–17 years, the
percentage that had received an influenza
vaccination during the past 12 months was 48.9
percent for Hispanic children, 43.3 percent for
non-Hispanic white children and 46.3 percent for
non-Hispanic black children.55
• In February 2012 the Food and Drug
Administration (FDA) approved FluMist
Quadrivalent, the first influenza vaccine to
contain four strains of the virus.56
• In November 2012 the FDA approved Flucelvax,
the first seasonal influenza vaccine licensed
in the United States produced using cultured
animal cells instead of fertilized chicken eggs.
Cell culture technology had already been in
use for several decades to produce other U.S.
licensed vaccines.57
• In April 2013 the FDA approved a new seasonal
flu vaccine using recombinant DNA and a
modified baculovirus (a virus that infects insects)
to produce a safe and effective human flu
vaccine. This is the first flu vaccine developed
using this technology.58
• On Feb. 28, 2013, HHS awarded a $44 million,
33-month contract to Romark Laboratories of
Tampa, Fla. to support advanced development
of Nitazoxanide to treat influenza in adults and
teens. Influenza viruses have become resistant
to two of the four drugs approved to treat the
flu, and resistance to the remaining two drugs
has begun to emerge. Nitzaoxamide is already
approved in the U.S. to treat two waterborne
parasites. Several other new drugs also are in
development.59
nn The CDC recommended routine HIV testing of adults
and adolescents in 2006, and the U.S. Preventive
Services Task Force followed suit in April 2013. This
would make HIV testing a fully covered preventive
service under the ACA.60
• CDC estimates 1,148,200 persons aged 13 years
and older are living with HIV infection, including
207,600 who are unaware of their infection. Over
the past decade, the number of people living
with HIV has increased, while the annual number
of new HIV infections has remained relatively
stable.61
• For the period from January to September 2012,
the percentage of adults who had ever been
tested for HIV was 34.7 percent. This was less
than—but not significantly different from—the
2011 estimate of 35.9 percent. The percentage
of adults who had ever been tested for HIV
increased from 31.8 percent in 1997 to 39.8
percent in 2009.62
• From 2000 to 2010, HIV disease death rates
decreased approximately 70 percent for both
black and white men aged 25–44 years. Rates
decreased by 53 percent for black men aged
45–54 years and 34 percent for white men aged
45–54 years. Throughout the period, HIV disease
death rates for black men were at least six times
the rates for white men.63
• From 2000 to 2010, HIV disease death rates
went down 61 percent for black women and 67
percent for white women aged 25–44 years. For
women aged 45–54 years, the rates only started
going down later in the decade. In that age
group, rates decreased by 37 percent from 2006
to 2010 for black women and by 33 percent from
2007 to 2010 for white women. From 2000–2010,
HIV disease death rates for black women were at
least 12 times the rates for white women.64
• In the United States, an estimated 48,100 new
HIV infections occurred in 2009. Of these, 27
percent were in heterosexual men and women
who did not inject drugs. Another 64 percent
were in men who have sex with men including 3
percent of those who also inject drugs.65

Trends: Injury
Morbidity and mortality from various injuries has
declined in many areas, but there are several factors
that may change these trends. Safety improvements
have resulted in the decline of traffic fatalities, but
distracted driving is making the roads more dangerous.
Increasing availability of opioid medications for
legitimate treatment of pain has resulted in a greater
number of poisonings from these substances. Gun
ownership has gone down, but, paradoxically, firearm-
related fatalities have gone up. The reasons behind the
recent increase in suicides are unclear.
nn Poisoning deaths increased from 19,741 in 1999
to 42,917 in 2010. Injury from poison grew from
742,606 in 2001 to 1,275,044 in 2011.66
This is
primarily a result of an increase in unintentional
poisoning by painkillers and other medications.67
nn There were 63,012 non-fatal firearm injuries in 2001
for an age-adjusted case rate of 21.68 per 100,000
population. This increased to 73,883 in 2011 for an
age-adjusted case rate of 23.64 per 100,000.68
nn A total of 28,874 people were killed by firearms in
1999 for an age-adjusted rate of 10.30 per 100,000.
Although the total number of people killed by
firearms in 2010 increased to 31,672, the age-
adjusted rate decreased to 10 per 100,000, which
was due, in part, to a population growth of nearly
three million people from 1999 through 2010.69
• This is despite the fact that gun ownership
declined from a household average of 50 percent
in the 1970s to 49 percent in the 1980s, 43
percent in the 1990s and 35 percent in the 2000s.
In 2012 the share of American households with
guns was 34 percent.70
nn Seatbelt use reached 86 percent in 2012, a
significant increase from the 84 percent noted in
2011 and 58 percent in 1994.71
nn In 2011, 32,367 people died in motor vehicle traffic
crashes—the lowest number since 1949, when there
were 30,246 fatalities. This was a 1.9-percent decline
from the number of people killed in 2010, which
was 32,999.
• An estimated 2.22 million people were injured in
motor vehicle traffic crashes, compared to 2.24
million in 2010.
• The fatality rate per 100 million vehicle miles
traveled fell to a historic low of 1.10 in 2011. The
overall injury rate grew by 1.3 percent from 2010
to 2011.
• Motorcyclist fatalities increased in 2011 to 4,612,
accounting for 14 percent of total motor vehicle
fatalities for the year. Bicyclist fatalities increased
by 8.7 percent, while injuries went down by 7.7
percent from 2010 to 2011.72
nn Fatalities in distraction-affected crashes increased
by 1.9 percent (3,267 fatalities in 2010 to 3,331
fatalities in 2011). The number of people injured in
distraction-affected crashes declined by 7 percent
(from 416,000 injured people in 2010 to 387,000
injured people in 2011).
• The percentage of drivers text-messaging
or visibly manipulating hand-held devices
increased significantly for a second year in a
row from 0.9 percent in 2010 to 1.3 percent in
2011. Driver hand-held cell phone use stood at 5
percent in 2011.73
nn The overall suicide rate increased from 10.4 to 12.1
per 100,000 population between 2000 and 2010, a
16 percent increase.
• The majority of the increase was attributable to
suicide by hanging/suffocation (52 percent) and
by poisoning (19 percent).
• Suicide by hanging/suffocation increased by 104
percent among those aged 45–59 years and rose
steadily in all age groups except those aged ≥70
years.
• The largest increase in suicide by poisoning (85
percent) occurred among those aged 60–69
years.
• Suicide by firearm decreased by 24 percent
among those aged 15–24 years, but increased by
22 percent among those aged 45–59 years.74

Predicted impacts for patients
nn More patients will find themselves dealing with
obesity-related medical conditions such as diabetes,
cardiovascular disease and orthopedic issues.
nn The most recent recession officially ended in June
2009, but the economy has still not fully recovered.
Public health budgets are likely to remain tight for
some time, reducing available services.
nn Tobacco laws are likely to become more restrictive.
Taxes on tobacco products will most likely escalate
in order to further reduce use.
nn Patients will find physicians less willing or able
to write a prescription for an antibiotic, unless
it is absolutely necessary, in order to reduce the
development of resistance.
nn Patients will have to choose between several
influenza vaccines every year until one conferring
lifetime protection is developed.
nn Under the ACA, many patients will have benefit
plans that fully cover HIV testing with no co-pays
or co-insurance.
nn More laws will be passed seeking to reduce
the chance that a driver will be distracted by a
cellphone or other electronic devices.
Predicted impacts for physicians
nn Rates of obesity and overweight have plateaued
but are still high. Additionally, it is unclear whether
current numbers are a temporary lull or are a true
trend change. Physicians will need to be vigilant
about the possibility of their patients’weights
escalating and continue to help many shed excess
pounds.
nn Physicians also will need to treat more obesity-
related medical conditions including diabetes,
cardiovascular disease and orthopedic issues.
nn Public health leaders are looking to improve
connections with physicians. This means doctors
may be the target of greater outreach from the
public health system, but budget cuts mean public
health resources may be in short supply.
nn The number of physicians getting formal public
health education decreased. Physicians who do
have public health training may find themselves in
high demand. Efforts to incorporate public health
education in medical school curriculum as well as
residency training are expected to increase.
nn Significant health and health care disparities have
long been identified. Work is underway to identify
the sources of these differences and ways to address
them. Physicians may find themselves asked to
change their practices in subtle ways to reduce
disparities on the basis of gender, race or ethnicity,
education, income, disability, geographic location or
sexual orientation.
nn Physicians in some areas of the country will need
access to medical interpreters in order to affect
health care disparities.
nn Physicians who can speak more than one language
will find themselves in high demand.
nn Tobacco cessation is a fully-covered benefit under
most health plans because of ACA. Physicians will
need to learn how to provide cessation counseling
and become familiar with related medications.
nn The rise of antibiotic-resistant bacteria will make
infection-control even more important in the health
care setting.

nn Antibiotic-resistant germs have the potential to
make even the most common and safest surgical
procedures more hazardous.
nn With HIV testing recommended for everyone,
regardless of perceived risk, physicians will have to
talk to more patients about this infection. Physicians
who do not usually treat people with HIV may
find that they have some among their patient
population. With pre-exposure prophylaxis now
available, physicians also will have to counsel HIV-
negative partners.
nn Physicians will be called on to take various steps to
reduce abuse of prescription medications.
nn In response to escalating suicide rates, public health
agencies and medical societies will look to involve
physicians in preventing suicide among their
patients.
nn Google Flu Trends and social media will become
early-warning or just-in-time tracking systems for
influenza and other diseases, helping physicians
prepare their offices for outbreaks before they occur.

1
Maylahn C, Fleming D, Birkhead G. Health Departments in a
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2
Levi J, Segal LM, St. Laurent R, Lang A. Investing In
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3
Ibid.
4
FY 2013 Full Year CR Operating Plan. Centers for Disease
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Information/appropriations_budget_form_pdf/FY2013_CDC_
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5
El-Sayed A. Sequestering Public Health. The 2x2 Project. http://
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6
Prevention and Public Health Fund. American Public Health
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4F57-B1A5-CA1C1102090C/0/APHA_PPHF_factsheet_
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7
ICD-10 101: What It Is and Why It’s Being Implemented.
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1, 2013.
8
ASTHO Profile of State Public Health, Volume 2. Association of
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Jarris P. Impact of Reduced Public Health Capacity.
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10
ASTHO Profile of State Public Health, Volume 2. Association of
State and Territorial Health Officials. www.astho.org/profiles/.
11
Centers for Disease Control and Prevention. National
assessment of capacity in public health, environmental, and
agricultural laboratories - United States, 2011 [Abstract].
Morbidity and Mortality Weekly Report. 2013 Mar 8;62(9):161-4.
www.ncbi.nlm.nih.gov/pubmed/23466434. Accessed
April 12, 2013.
12
Annual Data Report 2011. Association of Schools
of Public Health. www.asph.org/userfiles/
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Accessed March 19, 2013.
13
Medical School Graduation Questionnaire, 2012, All Schools
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www.aamc.org/download/300448/data/2012gqallschoolssu
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14
Summary of Public Health Work Force Provisions in the
Patient Protection and Affordable Care Act. Association
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15
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16
National Center for Health Statistics. Early Release of Selected
Estimates based on Data from the January–September 2012
National Health Interview Survey. www.cdc.gov/nchs/nhis/
released201303.htm. Accessed April 29, 2013.
17
Estimates based on Data from the January-September 2002
National Health Interview Survey. www.cdc.gov/nchs/data/
nhis/earlyrelease/earlyrelease200303.pdf. Accessed May 6,
2013.
18
Estimates based on Data from the January–September 2012
National Health Interview Survey. www.cdc.gov/nchs/data/
nhis/earlyrelease/earlyrelease200303.pdf. Accessed April 29,
2013.
19
Early Release of Selected Estimates based on Data from the
January-September 2002 National Health Interview Survey.
National Center for Health Statistics. www.cdc.gov/nchs/data/
2013.
20
Cancer Facts & Figures for African Americans 2013-2014.
American Cancer Society. www.cancer.org/acs/groups/
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21
Ibid.
22
F as in Fat: How Obesity Threatens America’s Future. Trust for
America’s Health. www.healthyamericans.org/report/100/.
23
January–September 2012 National Health Interview Survey.
National Center for Health Statistics. www.cdc.gov/nchs/nhis/
released201303.htm. Accessed April 29, 2013.
24
Caloric Intake From Fast Food Among Adults: United States,
2007–2010. National Center for Health Statistics. www.cdc.
gov/nchs/data/databriefs/db114.pdf. Accessed April 29, 2013.
25
Pan L, Blanck HM, Sherry B, Dalenius K, Grummer-Straun
L. Trends in the Prevalence of Extreme Obesity Among US
Preschool-Aged Children Living in Low-Income Families,
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www.cdc.gov/mmwr/preview/mmwrhtml/mm6203a7.htm.
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QuickStats: Human Immunodeficiency Virus (HIV) Disease
Death Rates Among Women Aged 25-54 Years, by Race
and Age Group – National Vital Statistics System, United
States, 2000-2010. Morbidity and Mortality Weekly Report.
2013;62(09);175. www.cdc.gov/mmwr/preview/mmwrhtml/
mm6209a9.htm. Accessed May 17, 2013.
65
Ibid.
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WISQARS Nonfatal Injury Reports. Atlanta: National Center for
Injury Prevention and Control; 2013. http://webappa.cdc.gov/
sasweb/ncipc/nfirates2001.html. Updated March 28, 2013.
67
Prevent unintentional poisoning. Centers for Disease Control
and Prevention. www.cdc.gov/features/poisonprevention/.
68
WISQARS Nonfatal Injury Reports. Atlanta: National Center for
Injury Prevention and Control; 2013. http://webappa.cdc.gov/
sasweb/ncipc/nfirates2001.html. Updated March 28, 2013.
69
WISQARS Fatal Injury Reports, National and Regional,
1999-2010. Atlanta: National Center for Injury Prevention
and Control; 2013. http://webappa.cdc.gov/sasweb/ncipc/
nfirates2001.html. Updated March 28, 2013. Accessed April
23, 2013.
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Tavernise S, Gebeloff R. Share of Homes With Guns Shows
4-Decade Decline. The New York Times. www.nytimes.
com/2013/03/10/us/rate-of-gun-ownership-is-down-survey-
shows.html. Accessed April 23, 2013.
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Seat Belt Use in 2012—Overall Results. National Highway
Traffic Safety Administration. www-nrd.nhtsa.dot.gov/
Pubs/811691.pdf. Accessed March 11, 2013.
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2011 Motor Vehicle Crashes: Overview, National Highway
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Administration. www-nrd.nhtsa.dot.gov/Pubs/811701.pdf.
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Driver Electronic Device Use in 2011. National Highway Traffic
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Copyright 2013 American Medical Association. All rights reserved.
In producing this publication, the AMA Council on Long Range Planning and Development has consulted and cited sources believed to be
knowledgeable. However, the AMA does not warrant that the information is in every respect accurate and/or complete. The AMA assumes
no responsibility for use of the information contained in this publication. The AMA shall not be responsible for, and expressly disclaims
liability for, damages of any kind arising out of the use of, reference to, or reliance on, the content of this publication.
This publication is for informational purposes only. The AMA does not provide medical, legal, financial or other professional advice, and
readers are encouraged to consult a professional adviser for such advice.

1 | Health care resources and physician payment Health care trends
Executive summary
The current supply of physicians is unlikely to meet
the future demands of the U. S. health care system.
The new physician pipeline is constrained by limits on
residency slots. More physicians are working part-time.
Potential shortfalls in the physician work force are
further compounded by a growth in the number of
people with health insurance coverage in the wake of
the Affordable Care Act and by an aging population.
Additionally, the distribution of physicians across the
country is uneven, which has resulted in problems with
health care access for patients in some areas.
Work force diversity has improved, although the
physician population still does not reflect the diverse
population of the United States.
The rate of physician satisfaction with the medical
profession is declining. Some physicians are leaving
clinical medicine long before retirement and many are
not recommending medicine to future generations.
Studies are just beginning to identify the roots of this
malaise, as well as some potential solutions.
Non-physician provider supply and scope of
practice expansion may alleviate some of the impact
of physician shortages. Nurse practitioners and
physician assistants are increasingly providing patient
care and playing a significant role in health care teams.
However, non-physician providers also are shying
away from primary care and rural areas that are most
affected by physician shortages. Additionally, efforts
to expand the scope of practice of nurse practitioners
have been a source of conflict.
Meanwhile, modes of practice are changing for
physicians continuing to care for patients and for
new physicians entering the profession. Solo and
small practices are becoming less common as more
physicians are becoming employees of hospitals and
large health systems.
Although fee-for-service remains the dominant
physician payment model, emerging physician
payment models linked to various quality, cost of
care and other metrics are becoming more prevalent.
Trends in employed physician payment include a
shift away from a fixed pay package towards greater
reliance on quality measures to determine the total
salary. Additionally, the impacts of federal regulation
on physician payment are significant and may lead to
further reductions in the future.
Although hospitals and other health care facilities
may be employing more physicians, these institutions
are experiencing financial challenges as more care is
shifting from inpatient to outpatient settings.
Health care resources
and physician payment
Health care trends

Health care spending growth at slowest rate in 52 years

Health care spending growth at slowest rate in 52 years

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