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AHRQ Annual Report on Research and Management, FY 2004

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Chapter 6. AHRQ Strategic Goals (continued)

Goal 2: Efficiency

AHRQ strives to help Americans achieve wider access to effective health care services and reduce health care costs by developing strategies to improve access and foster appropriate use of health care services. The goal is for the services provided to be of the highest quality, with the best possible outcomes, at the lowest possible cost. AHRQ directs many of its activities toward improving efficiency through the design of systems that assure safe and effective treatment and reduce waste and cost.

According to the most recent data from the MEPS, health care costs continue to escalate. Total expenditures for health care services in 2002 were $810 billion compared with $726 billion in 2001—an increase of 11.6 percent. Health insurance premiums are also increasing. In 2002, the average annual total premium for single coverage was $3,189, a 10.4 percent increase over 2001. Family coverage averaged $8,469 in 2002, a 12.8 percent increase over 2001.

Given the increasing costs of health care, it is vitally important for us to find ways to become more efficient and effective in providing high-quality health care. AHRQ research is at the forefront of this effort to improve health care efficiency and effectiveness. For example:

  • Hospitalists—physicians who usually care for patients only while they are hospitalized—tend to be more efficient than other physicians in providing inpatient care to general medical patients, and general internists appear to be more efficient than endocrinologists and rheumatologists. Such efficiency translates to shorter hospital stays and lower costs. Total costs for patients cared for by general internists were $1,100 lower than for patients treated by endocrinologists and $431 lower than for patients cared for by rheumatologists.
  • While the use of muscle relaxants is very common among patients suffering from acute low back pain, they do not appear to speed recovery of function. Patients who used muscle relaxants took 19 percent longer to reach functional recovery as those who did not. Slower functional recovery among those taking muscle relaxants could be related directly to the medications, or it could be due to factors indirectly related to muscle relaxant use, such as greater time spent in bed after the injury.
  • Trauma centers can reduce posttraumatic stress disorder (PTSD) symptoms and alcohol abuse/dependence among patients by using a trauma support specialist to coordinate care in a collaborative care (CC) approach that includes case management, medication, and psychotherapy. The CC patients received stepped care that consisted of continuous post-injury case management tailored to the needs of the individual trauma survivor, motivational interviews targeting alcohol abuse/dependence, and evidence-based medication and/or cognitive behavioral therapy for patients with persistent PTSD at 3 months after injury. Over time, CC patients had significantly fewer symptoms than patients receiving usual care with regard to alcohol abuse/dependence. Patients in the CC group demonstrated no changes in PTSD from baseline to 12 months, but patients in the usual care group had a 6 percent increase in PTSD during the year. The CC group showed on average a 24 percent decrease in the rate of alcohol abuse/dependence, while the usual care group had on average a 13 percent increase during the year.
  • The incidence of diabetes is increasing among adults 30 to 59 years of age in the United States. Compared with older people who have diabetes, these younger diabetes patients are substantially less likely to receive important preventive care services such as eye and foot exams. Young adults have a greater lifetime risk of developing complications of diabetes such as eye and kidney disease and circulatory problems that can lead to amputation. An AHRQ-funded study showed that 85 percent of young adults had seen a health care provider for diabetes in the past year. Yet, except for professional foot examinations (to detect nonhealing wounds that can lead to infection, gangrene, and amputation) and testing of blood sugar levels, young (18 to 44 years) and middle-aged (45 to 64 years) patients received fewer preventive services than older patients.
Addressing Challenges to Care

The combination of rapid advances in medical knowledge and increased use of evidence-based decisionmaking in medicine holds great promise for improving health care. Developments in genomics, pharmaceuticals, informatics, and other technologies promise increased longevity and better health and functioning. Health care, however, can only be as good as the systems that provide it.

Much of the health care provided in the United States is delivered within large and often fragmented systems with complex funding streams. Although the United States has an excellent health care system in many ways, it also exhibits waste and inefficiency which in turn exacerbates health care costs, affects affordability, and creates access problems. Low income individuals from both rural and urban areas and those who lack health insurance are particularly likely to experience these problems. For example, one AHRQ-funded study found that Medicare patients who have supplemental private insurance and are hospitalized for heart attack are more likely than patients with Medicare only or Medicare and public insurance to undergo revascularization (bypass surgery or coronary angioplasty). Patients with Medicare plus supplemental private insurance coverage were 69 percent more likely than those with Medicare only insurance to undergo coronary angioplasty and 53 percent more likely to undergo bypass surgery. They were also 23 percent less likely to die in the hospital.

In this complex and sometimes confusing health care marketplace, all participants in the health care system—employers, insurers, providers, consumers, and Federal and State policymakers—need objective, science-based information they can rely on to help them make critical decisions about health care costs and financing and ways to enhance access to care.

For many years, AHRQ has been supporting research to meet this need. The Agency addresses critical health policy issues through ongoing development and updating of nationally representative databases, the production of public use data products, and research analyses conducted by AHRQ staff and extramural researchers.

Improving Access to Care

Identifying ways to improve access to care—particularly for low-income individuals, minorities, and other priority populations—has been a major focus for AHRQ research for many decades. Findings from AHRQ-supported research on access to care include:

  • Many States try to entice young generalist physicians into rural and medically underserved areas with financial support-for-service programs. These programs provide financial support such as scholarships, service-option loans, loan repayment, direct financial incentives, and resident support programs to medical students, residents, and practicing physicians in exchange for a period of service in underserved areas. One study found that the programs as a whole placed physicians in small and needy rural towns and counties, where physicians estimated that nearly half of their patients were insured by State Medicaid programs for the poor or were without health insurance. Compared with other young, nonobligated generalist physicians, those serving obligations to State programs practiced in demonstrably needier areas and cared for more Medicaid and uninsured patients (48.5 vs. 28.5 percent). On the other hand, State-obligated physicians were more satisfied than nonobligated physicians, and 9 out of 10 indicated that they would enroll in their programs again. Obligated physicians also remained longer in their practices than nonobligated physicians, with respective group retention rates of 71 percent versus 61 percent at 4 years and 55 versus 52 percent at 8 years. Retention rates were highest for loan repayment, direct incentive, and service-option loan programs.
  • Beginning in 1990, California's Medicaid program, MediCal, expanded prenatal care coverage to more low-income women. The result was a substantial reduction in inadequate use of prenatal care. The proportion of live-born infants whose mothers had inadequate prenatal care (first physician visit after the fourth month of pregnancy) decreased from 20 percent in 1990 to 14 percent in 1995 and 12 percent in 1998. Also, the proportion of pregnant women who had no insurance or were self-paying fell from 13.1 percent in 1990 to 4.2 percent in 1995 and 3.6 percent in 1998. These improvements could be attributable to easier enrollment (due to a shortened application form) and expanded eligibility, which enabled more newly enrolled pregnant women to initiate prenatal care within the first trimester.
  • Medicare bases its payments on the diagnosis-related group (DRG) that correlates with a patient's discharge diagnosis. An AHRQ-funded study showed that hospital costs in one hospital were 23 percent higher for elderly Medicare patients with low functional status, even after adjustment for DRG payments and patient characteristics. If this finding holds true in other hospitals, DRG-based payments provide hospitals a financial incentive to avoid patients dependent in activities of daily living (ADLs, for example, dressing, bathing, or transferring from bed to chair). DRG-based payments also disadvantage hospitals with more ADL dependent patients, whose care costs are higher than their diagnosis alone would indicate. Hospital costs were higher in patients dependent in ADLs on admission than in patients independent in ADLS on admission ($5,300 vs. $4,060). Mean hospital costs remained higher in ADL-dependent patients than in ADL independent patients in an analysis that adjusted for DRG ($5,240 vs. $4,140) and in multivariate analyses adjusting for age, race, sex, clinical factors, and admission from a nursing home, as well as for DRG ($5,200 vs. $4,220).

Researchers Examine Access To Physicians

HMOs usually limit the size of their physician networks. This has raised concerns that individuals who switch health plans or jobs (which usually involves changing health plans) may have to leave preferred physicians. However, a recent AHRQ-funded study found that people who switch HMOs have a reasonable likelihood (50 percent chance) of being able to retain their physician.

The researchers used data from electronic HMO provider lists of more than 500,000 physicians and 6,000 hospitals to quantify the extent of provider overlap (the probability that a physician in any given plan is also in a competing plan) in U.S. metropolitan markets. The national measure of overlap is 0.48, indicating that the probability that a given HMO enrollee's physician is also in a competing HMO is 48 percent, or about half.

Overlap varies with both plan and market attributes. Group/staff-model plans have virtually no overlap, since their providers are all part of the health plan staff. Other plan types have high levels of overlap, while younger plans, for-profit plans, and plans in small markets also have greater overlap.

Impact of Payment and Organization on Cost, Quality, and Equity

How services are organized and financed has a significant impact on the services an individual receives. In order to be successful, efforts to improve the quality and efficiency of health care in the United States must be based on a thorough understanding of how the Nation's health systems work and how different organizational and financial arrangements affect health care. AHRQ has a broad portfolio of research focused on identifying the impact that costs have on the quality of health care and outcomes, as well as ways to lower health care costs without negatively affecting the quality and safety of care.

Increasing Access To Physicians In Underserved Areas

AHRQ-supported research influenced the Mississippi State Legislature to offer and later improve programs to attract health care professionals to medically underserved areas. The research was used to demonstrate to State legislators that if they included a loan repayment program in their legislation, they would be more successful in both service participation and completion rates. The bill that was passed and became law in 2001 included a loan repayment program for doctors, dentists, and nurse practitioners. Prior to that, the law only covered scholarships. In addition, in 2003, the requirement for years of service was lowered for each program to make them more in line with those offered in other States. The bill was passed by the full legislature in 2003 and the minimum service requirement for the scholarship program was reduced from 10 to 6 years and for the loan repayment program from 8 to 6 years. The loan repayment reform also provides participating physicians and dentists with the option to receive additional loan repayment credits for an additional 4 years and nurse practitioners with the option to receive an award for 3 additional years.

Recent findings from AHRQ-funded studies on cost, quality, and equity include:

  • One study provides preliminary support for efforts by health maintenance organizations (HMOs) and State legislators to cover home testing equipment such as blood glucose monitors and test strips for patients with type 1 and type 2 diabetes. According to the study findings, when an HMO provided free blood glucose monitors (at a cost of up to $100 each) to people with diabetes, more patients self-monitored their blood glucose (SMBG) which, in turn, increased regular use of diabetes medications and reduced high blood glucose levels. Compared with rates 2 years before policy initiation, SMBG rates 2 years afterwards showed a significant increase in SMBG among insulin-treated patients. Test strip use increased 75 percent during the first 6 months after the policy began. Those who increased test-strip use showed significant improvements in using medication regularly 6 months after initiation.
  • When employers switch from a one-tier prescription drug plan that has the same copayment for all drugs to a three-tier plan that has a much higher copayment for nonpreferred brand-name prescription drugs, a substantial number of enrollees may stop taking their medications instead of switching to less expensive medications. In three-tiered drug benefit plans, copayments increasingly escalate for generic (tier-1), preferred brand name (tier-2), and nonpreferred brand name (tier-3) drugs. In this study, more members who initially were taking tier-3 statins to lower cholesterol than those in the comparison group switched to lower-cost tier-1 or tier-2 medications (49 percent vs. 17 percent), but more of them also stopped taking statins entirely (21 vs. 11 percent).
  • Another AHRQ-funded study indicates that increasing patients' copayments for prescription medications tends to decrease their use of eight classes of therapeutic drugs. In the study, doubling copayments in a typical two-tier drug plan resulted in an approximately 45 percent reduction in the use of antiinflammatory drugs and antihistamines, a drop of approximately 35 percent in the use of cholesterol-lowering medications and drugs to treat ulcers and asthma, and a decrease of about 25 percent in the use of medicines for high blood pressure, depression, and diabetes.
  • Perceived copayments for emergency department (ED) care can lead some patients to delay or avoid emergency care. Over half (57 percent) of those surveyed underestimated their ED copayment by $20 or more. One-fifth (20 percent) of adults who thought their copayment was $20 or higher said they had delayed or avoided emergency care compared with only 6 percent who thought their copayment was less than $20. Among patients who reported having any ED copayment, 11 percent said they either delayed or avoided emergency care.
Use of academic detailing to lower medication costs

AHRQ-supported research helped to establish the importance of academic detailing, a way of working with physicians to help control drug costs using educational programs. Influenced by this research, AdvancePCS, the Nation's largest provider of health improvement services, developed pharmacy benefit management tools that saved its health plans $1.62 billion, with per-member-per-month costs increasing only 4.5 percent, significantly lower than the 17 percent national average reported by the National Institute for Health Care Management. Today, it has a nationwide clinical consulting program with 150 licensed pharmacists contacting 20,000 physicians annually. The pharmacists meet with doctors in face-to-face interventions, send direct mail and faxes, and use telephone calls to enhance doctors' prescribing knowledge while increasing their formulary compliance. One of AdvancePCS's preferred provider organizations increased its savings by 22 percent after AdvancePCS implemented similar utilization and formulary management programs. The company also completed a study of the savings impact from the clinical consulting program. The analysis demonstrated that face-to-face physician education generated more than $300,000 in direct drug cost savings for a single client across two therapeutic classes.

Medical Expenditure Panel Survey

AHRQ's Medical Expenditure Panel Survey is the only national source of annual data on the specific health services that Americans use, how frequently the services are used, the cost of the services, and the methods of paying for those services. In addition to collecting detailed information from American households, MEPS also collects data from medical providers and establishments. As a result, the survey is unparalleled in its degree of detail.

MEPS is designed to help us understand how the growth of managed care, changes in private health insurance, and other dynamics of today's market-driven health care delivery system have affected, and are likely to affect, the kinds, amounts, and costs of health care that Americans use. MEPS provides the foundation for estimating the impact of changes on different economic groups or special populations such as the poor, elderly, veterans, the uninsured, or racial/ethnic groups.

Since 1977, when data from the first expenditure survey became available, AHRQ's expenditure surveys have been an important and unique resource for public and private-sector decisionmakers. Over the years, this rich data source has become more comprehensive and timely. Design enhancements have improved the survey's analytic capacities, allowing for analyses over an extended period of time with greater statistical power and efficiency. The ability of MEPS to examine differences in the cost, quality, and access to care for minorities, ethnic groups, and low-income individuals provided critical data for the National Healthcare Quality Report and the National Healthcare Disparities Report, which present baseline views of the quality of health care and differences in use of services.

Collecting MEPS Data

AHRQ fields a new MEPS panel each year. Two calendar years of information are collected from each household in a series of five rounds of data collection over a 2-1/2-year period. These data are linked with additional information collected from respondents' medical providers and employers. This series of data collection activities is repeated each year on a new sample of households, resulting in overlapping panels of survey data.

The data from earlier surveys have quickly become a linchpin for the Nation's economic models and projections of health care expenditures and use. The level of detail these surveys supply permits the development of public and private-sector economic models to project national and regional estimates of the impact of changes in financing, coverage, and reimbursement, as well as estimates of who benefits and who bears the cost of a change in policy.

MEPS establishment surveys have been coordinated with the National Compensation Survey conducted by the Bureau of Labor Statistics through AHRQ's participation in the Inter-Departmental Work Group on Establishment Health Insurance Surveys. Based on the Department's survey integration plan, MEPS linked its household survey and the National Center for Health Statistics' National Health Interview Survey, achieving savings in sample frame development and enhancements in analytic capacity.

AHRQ has moved from conducting a medical expenditure survey every 10 years to following a cohort of families on an ongoing basis. Doing so has four primary benefits:

  1. Decrease the cost per year of data collected.
  2. Provides more timely data on a continuous basis.
  3. Creates for the first time the ability to assess changes over time.
  4. Permits the correlation of these data with the national health accounts, which measure spending for health care in the United States by type of service delivered (e.g., hospital care, physician services, nursing home care, and other types of care) and source of funding for those services (private health insurance, Medicare, Medicaid, out-of-pocket spending, and so on).
Public Use Data Files and Other MEPS Products

AHRQ ensures that MEPS data are readily available and consistent with privacy policies for use in research and policymaking. MEPS data are released in a variety of ways as described below:

  • Data files. MEPS data populate a number of analytical databases. Several public use data files that facilitate national estimates of expenditures for health care services are released annually.
  • Printed data. AHRQ publishes MEPS data in tabular form on a range of topics. Printed publications include methodology reports, findings, statistical briefs, and chartbooks.
  • Web site. AHRQ maintains a Web site specific to MEPS at Data files and other MEPS products are made available to the research community and other interested audiences. MEPS maintains an E-mail address for technical assistance.
  • MEPSnet ( AHRQ has developed a set of statistical tools to allow immediate access to MEPS microdata in a nonprogramming environment. From the MEPSnet section of the MEPS Web site, through a series of interactive queries, the most inexperienced user can generate national estimates in a few seconds.
  • LISTSERV™. The purpose of the MEPS LISTSERV™ is to allow free exchange of questions and answers about the use of the MEPS database.
  • Training. AHRQ conducts workshops—ranging in length from a few hours to several days—to educate policymakers, researchers, and other users about the range of questions that MEPS can answer and how the data can be used.
  • Data Center. AHRQ's Center for Financing, Access, and Cost Trends (CFACT) operates an on-site data center to facilitate researchers' access to data that cannot otherwise be publicly released for reasons of confidentiality.
Recent Key Findings from the MEPS Household Component
National Health Care Expenses
  • Health care expenses among the community population were $810.7 billion in 2002, with slightly less than a third (31.6 percent) of the expenses related to hospital inpatient services.
  • Prescription medicine expenses accounted for 18.6 percent of community population spending on health care, and the mean expense for these medicines among those with expenses was $812.
  • Total emergency room expenses were $27.9 billion (3.4 percent of total expenses). This was relatively small compared with other ambulatory medical care expenses ($78.9 billion for hospital outpatient services and $180.0 billion for office-based medical provider services).
  • Private medical insurance—the largest third-party payer—covered 39.7 percent of total payments. Medicare and Medicaid—the primary public programs—together paid 32.8 percent of the total.
  • Uninsured people under age 65 with health care expenses had relatively lower mean expenditures ($1,491), while those aged 65 and older on Medicare and other public insurance had relatively higher expenditures ($10,222).
Prescription Drug Costs
  • In 1987, approximately 57 percent of the U.S. civilian noninstitutionalized population purchased 1.2 billion prescribed medicines for total expenditures of $34.7 billion (in 2001 dollars); in 2001, approximately 65 percent of the population purchased almost 2.5 billion prescribed medicines at a total expenditure of $134.1 billion.
  • For those with a prescribed medicine purchase, the average total expenditures for prescribed medicines increased from approximately $253 in 1987 (in 2001 dollars) to $730 in 2001.
  • The total amount paid out of pocket towards the purchase of prescribed medicines increased from approximately $19.7 billion in 1987 (in 2001 dollars) to $59 billion in 2001.
  • For those with a prescribed medicine purchase, the average total amount paid out of pocket for prescribed medicines more than doubled from 1987 to 2001—from approximately $144 in 1987 (in 2001 dollars) to $321 in 2001.
Chronic Conditions


  • The percentage of adults who reported having diabetes increased nearly one and one-half times when comparing 1987 to 2001 (4.1 percent versus 6.0 percent).
  • In 2001, adults with diabetes were more than three times as likely to be extremely obese as with adults without diabetes and over one and one-half times as likely to be obese.
  • In 2001, adults with diabetes were more likely than people not diagnosed with the disease to have asthma, and they were nearly three times as likely to have hypertension.
  • In 2001, adults with diabetes were over three times as likely to have heart disease and more than four times as likely to have a stroke as people not reporting the condition.
  • The percentage of adults who reported having diabetes and taking a prescribed medicine to treat diabetes increased when comparing 1987 (83.3 percent) to 2001 (92.9 percent).

High Cholesterol

  • The percentage of adults who reported having high cholesterol was over five times as high in 2001 (7.8 percent) as in 1987 (1.4 percent).
  • Of the percentage of adults who reported having high cholesterol, those who reported taking a prescribed medicine to treat high cholesterol more than doubled from 1987 (39.1 percent) to 2001 (89.7 percent).


  • More than 45.3 million adults (21.3 percent of the population) reported that they had been told at two or more different health care visits that they had hypertension.
  • The percentage of adults ever diagnosed with hypertension was 1.4 times greater for those with less than a high school education as for those with a college education (25.3 percent and 17.6 percent, respectively).
  • The percentage of overweight, obese, and morbidly obese (combined) adults ever diagnosed with hypertension was twice that of healthy weight adults (26.7 percent and 13.2 percent, respectively).


  • In 2001, over 59 percent of the U.S. adult community population was overweight (body mass index ([BMI] of 25.0 to 29.9), obese (BMI of 30.0 to 39.9), or extremely obese (BMI 40 or more).
  • For both males and females, there was an increase in the percentage of individuals who were obese between 1987 and 2001, a relative 76 percent and 78 percent increase, respectively.
  • All race/ethnic categories of the adult population showed an increase in obesity from 1987 to 2001. Blacks were the most likely to be obese in 1987 and 2001, 19.7 percent and 32.5 percent, respectively.
  • Adults with higher levels of education (some college) were the least likely to be obese (20.8 percent) in 2001.
  • Adults with higher incomes (400 percent or more of the Federal poverty level) were the least likely to be obese in 1987 and 2001, 11.3 percent and 20.7 percent, respectively.
  • Adults with public only health insurance were the most likely to be obese in both 1987 (22.8 percent) and 2001 (31.1 percent).
Health Insurance
  • In early 2003, 16.6 percent of the U.S. civilian noninstitutionalized population (47.3 million people) was uninsured. Among those less than age 65, 18.8 percent of Americans (47 million people) were uninsured.
  • Among the U.S. civilian noninstitutionalized population under 65, 35.7 percent of Hispanics and 20.8 percent of black non-Hispanic were uninsured during the first half of 2003, compared with 14.5 percent of white non-Hispanic.
  • Among people under 65, Hispanics accounted for 28.2 percent of the uninsured civilian noninstitutionalized population even though they represented only 14.8 percent of the overall population this age.
  • Young adults ages 19-24 were the age group at the greatest risk of being uninsured, with 36.4 percent of this group lacking health insurance.
  • From 1996 to 2003, the percentage of uninsured children declined from 15.7 percent to 11.9 percent.
  • The percentage of children covered by public-only health insurance increased between 1996 and 2003, from 21.3 percent to 27.5 percent. At the same time, the number of children covered by public-only insurance increased by 6.2 million, from 13.8 million to 20.0 million.
  • Younger children were more likely to rely on public-only health insurance. In 2003, 34.0 percent of children aged 0-3 were covered by public-only health insurance compared with 22.6 percent of children aged 13-17.
  • Hispanic children were the most likely to be uninsured in each year from 1996 to 2003 (20.8 percent in 2003).
  • In 2003, 47.3 percent of children with poor or fair health status were covered by public-only health insurance.
Recent Key Findings from the MEPS Insurance Component
Employee Contributions to Employer-Sponsored Health Insurance Coverage
  • The portion of private-sector employees enrolled in single coverage health insurance plans who did not contribute to the plan premium fell from 37.6 percent in 1997 to 26.6 percent in 2002.
  • There was also a decline for those enrolled in family coverage; 18.5 percent of employees enrolled in family plans made no contribution to their premium in 1997 versus 14.8 percent in 2002.
  • Among enrolled employees (which includes those contributing to their premium and those not contributing), the percentage of the total single premium they contributed rose from 15.6 percent in 1997 to 17.7 percent in 2002. Conversely, however, the percentage contributed overall toward the premium by those enrolled in family plans did not change significantly over the 5-year period.
Employee Copays and Deductibles for Employer-Sponsored Health Insurance
  • Actual dollar employee contributions were up across the board between 1997 and 2002, with dollar contributions rising about four to six times faster than the overall inflation rate.
  • From 1999 to 2002, the average annual deductible per single enrollee with a deductible increased from $335 to $409. Although there was significant variation in the average single deductible by size of employer and economic sector (public, private) the average single deductible increased for employees in all these employer groups.
  • The average annual family deductible per family enrollee with a deductible increased from $772 to $920 during the period 1999 to 2002. There were significant differences in the level of this deductible by size of employer and economic sector (public and private). Family deductibles increased for employees in all these employer groups.
  • From 1999 to 2002, the percentage of enrollees in employer-sponsored health insurance who had no dollar or percentage copay for a physician office visit fell from 7.9 percent to 5.1 percent. There were significant reductions across economic sectors (public and private) and small and large employers.
  • The average dollar copay for a physician office visit increased from $13.30 to $15.01 over the period 1999 to 2002. This copay varied significantly by type of employer, but it increased for each economic sector (public and private) and size of employer.
Enrollment Rates for Employer-Sponsored Health Insurance
  • There was a general decline in all measures of coverage for employer-sponsored health insurance among current workers in the private sector between 1999 and 2002. The percentages of employees who worked where health insurance was offered, those eligible who worked where health insurance was offered, and those eligible who enrolled were generally lower in 2002 than in 1999 for small, medium, and large firms.
  • The overall enrollment rate in the private sector dropped significantly from 57.6 percent in 1999 to 55.1 percent in 2002. Of the three sizes of firms, only the large firms did not have a significant drop in the overall enrollment rate.
  • Of particular note was a large decrease in the percentage of employees in small firms who worked where health insurance was offered: 67.6 percent in 1999 versus 63.5 percent in 2002. Over the same time period, the percentage of eligible employees who enrolled at small firms decreased from 80.5 percent to 78.5 percent.
  • In medium firms, there was also a significant decrease from 77.1 percent to 74.5 percent in the percentage of employees eligible for health insurance where it was offered.
Healthcare Cost and Utilization Project

To help fulfill its mission of providing information on the U.S. health care system, AHRQ develops and sponsors over 50 annual hospital-related databases through the Healthcare Cost and Utilization Project (HCUP). HCUP is a Federal-State-Industry partnership to build a standardized, multi-State health data system. Through HCUP, AHRQ develops databases, software tools, and statistical reports to inform public- and private-sector policymakers, health system leaders, and researchers.

The multi-State databases contain discharge-level information in a uniform format designed to ensure patient privacy. The resulting HCUP databases facilitate tracking and research on a broad range of health policy and health services issues at the national, regional, State, and local market levels, including:

  • Quality of health care.
  • Cost of health services.
  • Access to health care.
  • Medical practice patterns.
  • Hospital utilization patterns, including use by special populations.
  • Disparities analyses.
  • Diffusion of medical technology.
  • Effects of regulation and market forces on hospitals.

The more than 50 annual HCUP databases consist of:

  • The Nationwide Inpatient Sample (NIS) with inpatient data from a national sample of over 1,000 hospitals.
  • The State Inpatient Databases (SID) contain the universe of inpatient discharge abstracts from participating States.
  • The State Ambulatory Surgery Databases (SASD) contain data from ambulatory care encounters from hospital-affiliated and sometimes freestanding ambulatory surgery sites.
  • The State Emergency Department Databases (SEDD) contain data on hospital-affiliated emergency departments for visits that do not result in hospitalizations.

In addition, AHRQ produces the Kids' Inpatient Database (KID), a nationwide sample of pediatric inpatient discharges, available for 1997 and 2000.


AHRQ created HCUPnet, an Internet-based tool, to facilitate access to hospital care trend data for the Nation and for individual States. The new, improved version of HCUPnet launched in 2004 allows users to identify, track, analyze, and compare statistics on hospital utilization, outcomes, costs and charges. HCUPnet guides users in tailoring specific online queries about hospital care. With a click of a button, users receive answers within seconds (

Recent findings from HCUP Data
  • Between 1994 and 2000, rates of preventable hospitalizations improved for certain health conditions. The most striking improvements were hospital admission rates for:
    • Treatment of angina without a procedure dropped by 71 percent.
    • Uncontrolled diabetes without complications declined nearly 30 percent.
    • Adult asthma and pediatric gastroenteritis each decreased by 20 percent.

    In contrast, between 1994 and 2000, admission rates rose for other conditions as follows:

    • Chronic obstructive pulmonary disease increased by 20 percent.
    • Hypertension rose by 13 percent.
    • Bacterial pneumonia increased by 9 percent.
  • About 19 percent of individuals with an initial preventable admission have at least one additional preventable readmission within 6 months. The likelihood of readmission is higher for blacks and Hispanics than for whites and members of other racial groups.
  • Between 1993 and 2002, the number of discharges from U.S. hospitals increased 9 percent (from 34.7 million to 37.8 million); the average length of stay dropped 19 percent (from 5.7 days to 4.6 days); the average charge increased 75 percent (unadjusted for inflation, from $9,800 to $17,000); and the percent of cases admitted through the emergency department increased 40 percent (from 33 percent of all admissions to 43 percent).
HCUP User Seminars

AHRQ sponsors seminars throughout the year on how to use AHRQ's Healthcare Cost and Utilization Project (HCUP). The following conferences were held in 2004:

  • The Healthcare Cost and Utilization Project: Data and Tools to Support Health Services Research. This introductory Web seminar helps new users learn about HCUP, how to obtain it, and the technical assistance offered through AHRQ.
  • 4th National Conference on Quality Health Care for Culturally Diverse Populations. This seminar focused on HCUP efforts to improve the coding and collection of race and ethnicity data.
  • National Association of Health Data Organizations (NAHDO) Annual Meeting. This seminar covered the use of inpatient and outpatient administrative data to examine injury surveillance.
Use of HCUP Data

A variety of Federal agencies, national health care organizations, States and health care journalists rely on HCUP data to examine practices and trends and guide health care decisionmaking. For example:

  • HCUP NIS and SID data were used in AHRQ's 2004 National Healthcare Quality Report and National Healthcare Disparities Report. These two reports are part of a comprehensive effort to measure the quality of health care in America.
  • The National Institute on Deafness and Other Communication Disorders (NIDCD) used both NIS and KID data to develop measurable objectives for hearing.
  • SAMHSA used the HCUP NIS in its report on national expenditures for mental health, and alcohol and other drug abuse treatment.
  • The National Institute of Child Health and Human Development (NICHD) used HCUP statistics on children's hospitalizations in developing its priorities for research and expenditures under the Best Pharmaceuticals for Children Act.
  • Healthy People 2010, the Department's framework for prevention in the United States, used HCUP data in developing baseline measures for three ambulatory-care-sensitive conditions—pediatric asthma, uncontrolled diabetes, and immunization-preventable pneumonia and influenza.
  • CMS used data from HCUPnet to examine Medicaid and Medicare hospital charges.
  • Newsweek, the Wall Street Journal, and the New York Times used data from HCUPnet in articles to highlight in-hospital procedures and the costs associated with hospital care.
Quality Indicators

AHRQ developed the Quality Indicators, measure sets that can be used in conjunction with any hospital discharge data, as a tool to assess quality and safety of care at the hospital, State, and national levels.

The AHRQ QIs comprise the Inpatient Quality Indicators (IQIs), the Prevention Quality Indicators (PQIs), and the Patient Safety Indicators (PSIs).

  • The IQIs reflect quality of care inside hospitals and include inpatient mortality for medical conditions and surgical procedures; utilization of procedures for which there are questions of overuse, underuse, or misuse; and volume of procedures for which there is evidence that a higher volume of procedures may be associated with lower mortality. The 31 indicators are specific to hospital care for heart disease and surgery, hip repair, pneumonia, childbirth, and other conditions and procedures.
  • The PQIs reflect ambulatory-care-sensitive conditions and identify hospital admissions that evidence suggests could have been avoided, at least in part, through high-quality outpatient care. There are 16 PQIs covering conditions such as diabetes, asthma, heart disease, pneumonia, and selected pediatric conditions.
  • The PSIs also reflect quality of care inside hospitals but focus on potentially avoidable complications and iatrogenic events. There are 26 indicators that address such topics as birth trauma, complications of anesthesia, transfusion reaction, accidental puncture and laceration, and postoperative infections.
Use of the AHRQ Quality Indicators
Public Reporting and Payment

Although the AHRQ Quality Indicators were originally developed for quality improvement purposes, some public and private purchasers and data organizations have begun to use them for hospital-level public reporting and pay-for-performance initiatives, and many others are considering doing so. To respond to user requests for guidance on using the AHRQ QIs for these expanded purposes, in 2004 AHRQ released Guidance for Using the AHRQ Quality Indicators for Hospital-level Public Reporting or Payment (

  • Texas, New York, and Colorado have incorporated the QIs into their public reporting efforts.
  • Both the public and private sectors are incorporating the QIs in pay-for-performance efforts. The CMS-supported Premier Hospital Quality Incentive Demonstration is using the PSIs to measure quality performance of 277 hospitals and to recognize and financially reward hospitals that demonstrate high quality performance. In the private sector, the Anthem Blue Cross Blue Shield of Virginia Quality-In-Sights® Hospital Incentive Program relies on the PSIs to monitor specific performance objectives and align high performance with financial incentives.
Internal Quality Improvement

Many States are using the AHRQ QIs for internal quality improvement efforts.

  • The Pennsylvania Health Care Cost Containment Council (PHC4), an independent State agency, used the AHRQ QIs in its research brief, Avoidable Hospitalizations in Pennsylvania. The report focuses on 16 conditions measured by AHRQ's PQIs.
  • The State of Maine used AHRQ's PQIs in their State Health Plan to determine its rates of preventable diseases such as heart disease, diabetes, and asthma.
  • The Missouri Hospital Association issued reports to their members with the IQIs and PSIs, joining many other State associations who are generating QI reports for their membership.

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