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Quality Adjustment for Health Care Spending on Chronic Disease: Evidence from Diabetes Treatment, 1999-2009

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  • Karen N. Eggleston
  • Nilay D. Shah
  • Steven A. Smith
  • Ernst R. Berndt
  • Joseph P. Newhouse

Abstract

Although US health care expenditures reached 17.6 percent of GDP in 2009, quality measurement in this important service sector remains limited. Studying quality changes associated with 11 years of health care for patients with diabetes, we find that the value of reduced mortality and avoided treatment spending, net of the increase in annual spending, was $9,094 for the average patient. These results suggest that the unit cost of diabetes treatment, adjusting for the value of health outcomes, has been roughly constant. Since input prices have not been declining, our results are consistent with productivity improvement in health care.

Suggested Citation

  • Karen N. Eggleston & Nilay D. Shah & Steven A. Smith & Ernst R. Berndt & Joseph P. Newhouse, 2011. "Quality Adjustment for Health Care Spending on Chronic Disease: Evidence from Diabetes Treatment, 1999-2009," American Economic Review, American Economic Association, vol. 101(3), pages 206-211, May.
    • Handle: RePEc:aea:aecrev:v:101:y:2011:i:3:p:206-11
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    References listed on IDEAS

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    1. Nancy Beaulieu & David M. Cutler & Katherine Ho, 2006. "The Business Case for Diabetes Disease Management for Managed Care Organizations," NBER Chapters, in: Frontiers in Health Policy Research, Volume 9, National Bureau of Economic Research, Inc.
    2. Viscusi, W Kip & Aldy, Joseph E, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 5-76, August.
    3. repec:reg:rpubli:282 is not listed on IDEAS
    4. David M. Cutler & Mark McClellan & Joseph P. Newhouse & Dahlia Remler, 1998. "Are Medical Prices Declining? Evidence from Heart Attack Treatments," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 991-1024.
    5. A. J. Culyer & J. P. Newhouse (ed.), 2000. "Handbook of Health Economics," Handbook of Health Economics, Elsevier, edition 1, volume 1, number 1.
    6. Claudio Lucarelli & Sean Nicholson, 2009. "A Quality-Adjusted Price Index for Colorectal Cancer Drugs," NBER Working Papers 15174, National Bureau of Economic Research, Inc.
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    Cited by:

    1. John A. Romley & Abe Dunn & Dana Goldman & Neeraj Sood, 2020. "Quantifying Productivity Growth in the Delivery of Important Episodes of Care within the Medicare Program Using Insurance Claims and Administrative Data," NBER Chapters, in: Big Data for Twenty-First-Century Economic Statistics, pages 297-338, National Bureau of Economic Research, Inc.
    2. Abe Dunn & Adam Hale Shapiro, 2019. "Does Medicare Part D Save Lives?," American Journal of Health Economics, MIT Press, vol. 5(1), pages 126-164, Winter.
    3. Rodrigo R. Soares & Rudi Rocha & Michel Szklo, 2021. "American Delusion: Life Expectancy and Welfare in the US from an International Perspective," Working Papers 13, Instituto de Estudos para Políticas de Saúde.
    4. Anne E. Hall, 2015. "Adjusting the Measurement of the Output of the Medical Sector for Quality: A Review of the Literature," BEA Working Papers 0122, Bureau of Economic Analysis.
    5. Tina Highfill & Elizabeth Bernstein, 2019. "Using disability adjusted life years to value the treatment of thirty chronic conditions in the U.S. from 1987 to 2010: a proof of concept," International Journal of Health Economics and Management, Springer, vol. 19(3), pages 449-466, December.
    6. Karen Eggleston & Brian K. Chen & Chih-Hung Chen & Ying Isabel Chen & Talitha Feenstra & Toshiaki Iizuka & Janet Tin Kei Lam & Gabriel M. Leung & Jui-fen Rachel Lu & Beatriz Rodriguez-Sanchez & Jeroen, 2020. "Are quality-adjusted medical prices declining for chronic disease? Evidence from diabetes care in four health systems," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(5), pages 689-702, July.
    7. Lucarelli, Claudio & Nicholson, Sean & Tilipman, Nicholas, 2022. "Price Indices and the Value of Innovation with Heterogenous Patients," Journal of Health Economics, Elsevier, vol. 84(C).

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