The Value of Knowing: National Health Accounts

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The Value of Knowing National Health Accounts

• David M. Cutler, Harvard University

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Questions We Need to Answer

• US medical spending has doubled as a share of GDP
  since 1975. Is it worth it?
• Where should we spend our research dollars most
  productively?
• Which country is best at hockey?

3
What is Needed?

• A way to tell what is happening in the medical
  sector, and what its worth.

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The Health Sector

• Outputs
• Population health
• By demographic group

• Inputs
• Medical spending
• By disease
• Behaviors
• Smoking, obesity
• Environment
• Genetics

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The Analogy GDP

• Inputs Factor payments
• Wages paid to workers
• Raw materials
• Return to capital

• Output GDP
• Overall
• Consumption, investment, and government spending
• By industry

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What Were Up To

• Outputs
• Population health

• Inputs
• Medical spending
• Behaviors
• Environment
• Genetics

The industry in medical care is the disease
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More on the Rationale

• The BLS should develop a research program to
  look beyond its current "market basket" framework
  for the CPI
• We strongly endorse a move in the CPI away
  from the pricing of health care inputs to an
  attempt to price medical care outcomes.
• - The Boskin Commission

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The Idea of a Satellite Account
We recommend the development of satellite
accounts to report on selected activities not
included in the conventional accounts. Satellite
accounts can link to the existing economic
accounts as appropriate, but also expand into
areas that the NIPAs do not cover. - Beyond
the Market
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Medical Spending
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Medical Spending Big Challenges

• The industry
• MI vs. Diabetes
• Prevention vs. screening vs. treatment
• The data
• They dont give conditions unless people say they
  are why they sought care.
• We know what we spend on diabetes, but not what
  the average diabetic spends.
• The level of analysis
• What disease to attribute to an office visit for
  a hypertensive diabetic with a past MI?

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Cost Model Approach

• Annual spending condition categories e
• Note that this is a person-based method rather
  than an encounter-based method.

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Taking it Back Farther
CHD
Spending
Diabetes
Cancer
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Population Health
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Components of Population Health

• Mortality
• Quality of life

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1. Official mortality data are problematic

• Accuracy of diagnosis coding is in doubt
• Doesnt get at risk factors (obesity) or
  precursor diseases (diabetes)

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Mortality model approach

• Estimating models of mortality, similar to
  spending
• Prob die condition categories e
• With these and the disease / risk factor
  transition models, we will have a way to
  determine true cause of death

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2. Quality of Life
Health
Domain 1 Symptoms / Impairments
Domain 2 Symptoms / Impairments
Domain 3 Symptoms / Impairments
Disease 1
Disease 2
Disease 3
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Trend in Quality of Life, 1987-2004
Increased obesity
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Symptoms/impairments with largest decrements
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Disease Models
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A Catalog
CHD Huge improvements medical care plays big role (published in Health Affairs)
Stroke Large decline in mortality from stroke not clear why
Cancer Models have been developed need to use to answer this question
PNA Large decline in mortality, likely related to better medical care
Depression No change in lifetime prevalence but big reduction in current prevalence
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What Will We Learn? My Guesses

• By and large, technological advance has been very
  important and cost effective
• In recent years, obesity trends have
  significantly increased spending and lowered
  health
• May have overwhelmed technology in parts