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Developing a Framework for Decomposing Medical-Care Expenditure Growth: Exploring Issues of Representativeness

In: Measuring Economic Sustainability and Progress

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  • Abe Dunn
  • Eli Liebman
  • Adam Hale Shapiro

Abstract

Medical care expenditures have been rising rapidly over time and in 2009 health care accounted for 17.9 percent of GDP, but there are many areas where we have an incomplete understanding of spending growth in this sector. This is especially true of the commercial sector, where our primary data sources are often non-random convenience samples (i.e. available claims data from contributing insurers and employers). The goal of this paper is to better understand issues related to using convenience samples to obtain nationally representative estimates of the various components of expenditure growth. Using a multitude of weighting strategies, including weighted and unweighted estimates, we ?find similar qualitative results with higher prevalence and increases in medical care service prices being the key drivers of spending growth. Utilization per episode - which was relatively ?flat for both weighted and unweighted estimates - made no signi?cant contribution to growth in spending. However, applying population weights provide quantitative results that align better with aggregate price and expenditure measures, including BEA price measures and commercial expenditure per capita estimates from the NHEA, and may be more useful for certain policy and projection purposes.
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Suggested Citation

  • Abe Dunn & Eli Liebman & Adam Hale Shapiro, 2014. "Developing a Framework for Decomposing Medical-Care Expenditure Growth: Exploring Issues of Representativeness," NBER Chapters, in: Measuring Economic Sustainability and Progress, pages 545-574, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:12841
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    References listed on IDEAS

    as
    1. Abe Dunn & Eli Liebman & Adam Hale Shapiro, 2016. "Decomposing Medical Care Expenditure Growth," NBER Chapters, in: Measuring and Modeling Health Care Costs, pages 81-111, National Bureau of Economic Research, Inc.
    2. 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.
    3. Irving Shapiro & Matthew D. Shapiro & David Wilcox, 2001. "Measuring the value of Cataract Surgery," NBER Chapters, in: Medical Care Output and Productivity, pages 411-438, National Bureau of Economic Research, Inc.
    4. Abe Dunn & Eli Liebman & Adam Hale Shapiro, 2015. "Implications of Utilization Shifts on Medical‐care Price Measurement," Health Economics, John Wiley & Sons, Ltd., vol. 24(5), pages 539-557, May.
    5. Abe C. Dunn & Adam Shapiro & Eli Liebman, 2011. "Geographic Variation in Commercial Medical Care Expenditures: A Decomposition Between Price and Utilization," BEA Working Papers 0075, Bureau of Economic Analysis.
    6. 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.
    7. Matthew D. Shapiro & David W. Wilcox, 1996. "Mismeasurement in the Consumer Price Index: An Evaluation," NBER Chapters, in: NBER Macroeconomics Annual 1996, Volume 11, pages 93-154, National Bureau of Economic Research, Inc.
    8. Berndt, Ernst R. & Cutler, David M. & Frank, Richard G. & Griliches, Zvi & Newhouse, Joseph P. & Triplett, Jack E., 2000. "Medical care prices and output," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 3, pages 119-180, Elsevier.
    9. A. J. Culyer & J. P. Newhouse (ed.), 2000. "Handbook of Health Economics," Handbook of Health Economics, Elsevier, edition 1, volume 1, number 1.
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    Cited by:

    1. Abe Dunn & Eli Liebman & Adam Hale Shapiro, 2016. "Decomposing Medical Care Expenditure Growth," NBER Chapters, in: Measuring and Modeling Health Care Costs, pages 81-111, National Bureau of Economic Research, Inc.
    2. Abe Dunn & Eli Liebman & Adam Hale Shapiro, 2015. "Implications of Utilization Shifts on Medical‐care Price Measurement," Health Economics, John Wiley & Sons, Ltd., vol. 24(5), pages 539-557, May.
    3. Liebman, Eli & Lawler, Emily C. & Dunn, Abe & Ridley, David B., 2023. "Consequences of a shortage and rationing: Evidence from a pediatric vaccine," Journal of Health Economics, Elsevier, vol. 92(C).
    4. Abe Dunn & Eli Liebman & Lindsey Rittmueller & Adam Shapiro, 2014. "Defining Disease Episodes and the Effects on the Components of Expenditure Growth," BEA Working Papers 0108, Bureau of Economic Analysis.

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    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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