while the proportion of uninsured people
rose from 15 to 17 percent over the same
period.
Medical costs in the United States in-
creased rapidly during the 1990’s. While con-
sumer prices in general rose about 32 percent
from 1990 to 2000, the price index of medical
goods and services increased 60 percent.
Medical expenditures as a percentage of
gross domestic product (GDP) increased
from 11.9 percent in 1990 to 13.3 percent in
2000—a higher percentage than any other
country. For Canada, the proportion was rela-
tively constant at around 9 percent. In eco-
nomic jargon, the demand for medical care was
price-inelastic. Because most medical expenditures
were made through insurance, consumers were rela-
tively indifferent to price. Only about one-fifth of
medical expenditures were out-of-pocket.
The supply of medical services was also quite price-
inelastic. Medical education remained lengthy,
stressful, and incredibly expensive. Many new doc-
tors began their professional careers with student
loan debts of $100,000 or more. Between 1990 and
2000, the number of physicians in the United States
increased from 615,000 to 814,000, with the ratio of
physicians to population increasing from 0.25 per-
cent (or 2.5 per thousand) to 0.29 percent. In Can-
ada, the ratio was slightly higher in 1990 but failed to
increase over the decade. Most other high-income
countries had more physicians per capita. In 2000,
for instance, comparative data on twenty-seven
other countries showed that eighteen had more
than the United States and twenty-two had more
than Canada.
One of the many deterrents to entering medical
practice was the high premiums for malpractice in-
surance—often $100,000 a year. Whereas in many
professions, retired people can continue working
part-time or as volunteers, insurance considerations
largely ruled out this option for doctors.
The high earnings of U.S. physicians attracted
many doctors from other countries. Among the
roughly 200,000 additional physicians in the United
States over the decade, roughly one-third were
foreign-educated physicians. By 2000, this group
constituted about one-fourth of all physicians in
the United States.
The rapid rise in medical costs meant that insur-
ance premiums also increased. The proportion of
employers offering medical insurance benefits de-
clined, and the proportion of people without insur-
ance increased. The predicament of the uninsured
or underinsured became a major focus of political
attention. During Bill Clinton’s first term as presi-
dent, his wife Hillary headed a team that attempted
to put together a program to expand federal govern-
ment medical insurance. No such program was
adopted, however.
Medicare and Medicaid did not simply pay pa-
tients’ medical bills. They pressured suppliers to ac-
cept far less than list price—that is, the nominal
billed amounts. As a result, suppliers looked for ways
to increase list price. This meant that patients not
covered by insurance were hit by bills that were far
greater than those paid by insurance programs. In-
creasingly, uninsured patients came to rely on hospi-
tal emergency rooms, which were obligated under
law to treat all persons. This in turn created financial
difficulties for many hospitals.How Canada Pays Like that of the United States,
Canada’s medical system has relied on doctors and
hospitals that are independent parts of the market
economy. However, there has long been a national
health program (also called Medicare). Each prov-
ince determines its own program, but the national
government has set major guidelines and provides
half the financing. Basic physician and hospital
treatments have been provided to patients without
direct charge.
During the 1990’s, because coverage did not ex-
tend to such areas as pharmaceuticals and dental
and optical care, about one-third of medical expen-
ditures were privately paid, and the majority of Cana-
dians had some form of private health insurance.410 Health care The Nineties in America
Deaths per 100,000 Persons Aged 65 and
Older in the U.S., 1990 and 1999Year Heart Cancer StrokeRespiratory
ConditionsAll
Causes*
1990 2,109 1,149 45 508 5,396
1999 1,772 1,133 434 482 5,238
* Includes items not enumerated.
Source:U.S. Department of Health and Human Services,Health,
United States, 2002, p. 69.