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Feasible methods to estimate disease based price indexes

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  • Bradley, Ralph

Abstract

There is a consensus that statistical agencies should report medical data by disease rather than by service. This study computes price indexes that are necessary to deflate nominal disease expenditures and to decompose their growth into price, treated prevalence and output per patient growth. Unlike previous studies, it uses methods that can be implemented by the Bureau of Labor Statistics (BLS). For the calendar years 2005–2010, I find that these feasible disease based indexes are approximately 1% lower on an annual basis than indexes computed by current methods at BLS. This gives evidence that traditional medical price indexes have not accounted for the more efficient use of medical inputs in treating most diseases.

Suggested Citation

  • Bradley, Ralph, 2013. "Feasible methods to estimate disease based price indexes," Journal of Health Economics, Elsevier, vol. 32(3), pages 504-514.
    • Handle: RePEc:eee:jhecon:v:32:y:2013:i:3:p:504-514
    DOI: 10.1016/j.jhealeco.2013.01.005
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    References listed on IDEAS

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    1. Feenstra, Robert C, 1995. "Exact Hedonic Price Indexes," The Review of Economics and Statistics, MIT Press, vol. 77(4), pages 634-653, November.
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    4. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
    5. Ana Aizcorbe & Ralph Bradley & Ryan Greenaway-McGrevy & Brad Herauf & Richard Kane & Eli Liebman & Sarah Pack & Lyubov Rozental, 2011. "Alternative Price Indexes for Medical Care: Evidence from the MEPS Survey," BEA Working Papers 0069, Bureau of Economic Analysis.
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    7. David M. Cutler & Ernst R. Berndt, 2001. "Medical Care Output and Productivity," NBER Books, National Bureau of Economic Research, Inc, number cutl01-1.
    8. Aizcorbe, Ana & Nestoriak, Nicole, 2011. "Changing mix of medical care services: Stylized facts and implications for price indexes," Journal of Health Economics, Elsevier, vol. 30(3), pages 568-574, May.
    9. Xue Song & William D. Marder & Robert Houchens & Jonathan E. Conklin & Ralph Bradley, 2009. "Can A Disease-Based Price Index Improve the Estimation of the Medical Consumer Price Index?," NBER Chapters, in: Price Index Concepts and Measurement, pages 329-368, National Bureau of Economic Research, Inc.
    10. Ernst R. Berndt & Susan Busch & Richard Frank, 2001. "Treatment Price Indexes for Acute Phase Major Depression," NBER Chapters, in: Medical Care Output and Productivity, pages 463-508, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Ana Aizcorbe & Tina Highfill, 2015. "Medical Care Expenditure Indexes for the US, 1980-2006," BEA Working Papers 0121, Bureau of Economic Analysis.
    2. Erica L. Groshen & Brian C. Moyer & Ana M. Aizcorbe & Ralph Bradley & David M. Friedman, 2017. "How Government Statistics Adjust for Potential Biases from Quality Change and New Goods in an Age of Digital Technologies: A View from the Trenches," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 187-210, Spring.
    3. Abe C. Dunn & Scott D. Grosse & Samuel H. Zuvekas, 2016. "Adjusting Health Expenditures for Inflation: A Review of Measures for Health Services Research in the United States," BEA Papers 0109, Bureau of Economic Analysis.
    4. Dunn, Abe & Shapiro, Adam Hale & Liebman, Eli, 2013. "Geographic variation in commercial medical-care expenditures: A framework for decomposing price and utilization," Journal of Health Economics, Elsevier, vol. 32(6), pages 1153-1165.

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    More about this item

    Keywords

    Price indexes; Cost of living index; Superlative indexes;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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