The term telemedicine encompasses a wide range of telecommunications and information technologies and many clinical applications, although interactive video may be the most common medium. The first telemedicine programs were established almost 40 years ago, but the technology has grown considerably in the past decade. Despite the expansion of telemedicine, the volume of patients receiving services that use the technology remains relatively low (about 21000 in 1996). In part, this reflects the lack of a consistent coverage and payment policy and concerns about licensure, liability, and other issues. A considerable amount of federal funding has supported telemedicine in recent years, and legislators and federal, regional, and state policymakers are struggling with several crucial policy matters. Research on the effectiveness of telemedicine is somewhat limited, although the work that has been done thus far supports the hypothesis that, in general, the technology is medically effective. The cost-effectiveness of specific telemedicine applications has not yet been rigorously demonstrated.