toward a satellite account for health
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Toward a Satellite Account for Health. Ana Aizcorbe National Economic Accounts Data Users’ Seminar New York, NY October 15, 2007. The rapid growth in health care expenditures has raised difficult questions. How do health expenditures translate into improvements in health? - PowerPoint PPT PresentationTRANSCRIPT
Toward a Satellite Account for Health
Ana AizcorbeNational Economic Accounts Data Users’
SeminarNew York, NY
October 15, 2007
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The rapid growth in health care expenditures has raised difficult questions.
Source: Bureau of Economic Analysis
How do health expenditures translate into improvements in health?
What are the costs and benefits of treatments to society as a whole?
Expenditures on Health Care,Percent of GDP
7%
8%
9%
10%
11%
12%
13%
14%
15%
16%
1980 1984 1988 1992 1996 2000 2004
perc
ent
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The type of information needed to address these questions is not readily available.
For example,
Nominal expenditures broken down by disease to assess the benefit of treatment
Price measures that accurately reflect increases in the quality of treatments
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BEA plans to develop a Health Satellite Account to respond to these needs.
The satellite account will provide:
A reconciliation of health care spending estimates from the Centers for Medicare and Medicaid Services (CMS) and those from the Bureau of Economic Analysis,
Data on nominal expenditures by disease that are consistent with CMS’s National Health Expenditures Accounts, and
Improved price deflators.
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Price indexes: Increasing prices are an important driver of cost increases
PCE for medical care grew 9 % per year from 1980-2005.
Over ½ of that growth represents increases in prices, as measured in standard price indexes.
Decomposition of PCE Expenditures on Medical Care, 1980-2005
Population Growth, 1.1%
Inflation, 5.1%
Real PCE, 2.6%
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But existing price indexes have well-known problems.
Price Indexes for Medical Care
0
2
4
6
8
10
12
14
1980 1985 1990 1995 2000 2005
Perc
ent C
hang
e
BEA BLS MCPI
Sensitive to underlying assumptions:
BLS’ Medical Care Price Index (MCPI) focuses on consumer payments
BEA price index relies on indexes from the BLS PPI program
Both have problems accounting for
quality improvements, and reduced cost of treatment
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BEA’s satellite account will include a disease-based price index.
Disease-based price indexes will better account for changes in costs that arise from the substitution across treatment classes.
These disease-based indexes will be used to construct Price indexes for health expenditures by disease
and product class, as currently reported in the accounts, and
Industry contributions to changes in the price indexes .
The index will not address the problem of accounting for improvements in treatments. Difficult problem where there is no consensus on
the solution.
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Preliminary work on price indexes suggests the issue may be numerically important.
Treatment- vs Disease-Based Price Indexes(compound annual growth rates)
-2.0
0.0
2.0
4.0
6.0
8.0
Three US Cities (Song, et. al.) Nationwide Sample (Analysis Group)
Treatment Disease
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Progress and PlansTwo-year effort to study data sources and methods
Completed preliminary draft of study on disease-based price indexes.
Continued interaction with members of the academic and statistical communities
Participating in National Academies Panel on Health Accounts Working closely with David Cutler and Allison Rosen’s Health
Accounts Group Maintaining contact with colleagues at CMS, BLS, and other
statistical agencies.
Plan is to develop a detailed proposal for a BEA Health Satellite Account by the end of 2009.