Transcript Document

Decomposing Medical-Care Expenditure
Growth
Abe Dunn, Eli Liebman, and Adam Shapiro
September 11th, 2014
The views expressed in this paper are solely those of the authors and not necessarily
those of Bureau of Economic Analysis.
www.bea.gov
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Medical-Care Expenditures represents a large
fraction of Personal Consumer Expenditures
(PCE)
www.bea.gov
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Health spending and price research suggested by
CNSTAT Reports
▪
▪
At What Price?
Recommendation 6-1: BLS should select about 15 to 40 diagnoses from the
ICD (International Classification of Diseases), chosen randomly in proportion to
their direct medical treatment expenditures and use information from retrospective
claims databases to identify and quantify the inputs used in their treatment and to
estimate their cost.
Accounting for Health and Health Care
Recommendation 3.4: The Bureau of Economic Analysis, working with
academic researchers (and perhaps other agencies, such as the Centers for Medicare
& Medicaid Services and other parts of the Department of Health and Human
Services), should collaborate on work to move incrementally toward the goal of
creating disease-based expenditure accounts by attempting a “proof of concept”
prototype. Using a subgroup of the population with good data coverage, the
prototype would attempt to demonstrate that dollars spent in the economy on
medical care can be allocated into disease categories in a fashion that yields
meaningful information.
www.bea.gov
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BEAs new satellite account will focus on
medical care spending
Example of a Health Account
Inputs
Medical Care Spending
Market labor/capital
Volunteer labor
Outputs
Health status
Longevity
Quality of life
Time invested in own health
Other consumption items
Research and development
Quality of environment
Source: National Research Council. (2005). Beyond the Market: Designing Nonmarket Accounts for the United States.
Panel to Study the Design of Nonmarket Accounts, K.G. Abraham and C. Mackie, eds. Committee on National Statistics,
Division of Behavioral and Social Sciences and Education. Washington, DC: The National Academies Press.
www.bea.gov
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Contribution of our work is to redefine the output
of the medical care sector
For example
 Output = number of patients treated for cancer
 Expenditures = spending on the treatment of cancer
 Price = spending per patient treated for cancer
This has implications for the accounts.
www.bea.gov
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Implication 1:
Spending will be reported by disease classes
www.bea.gov
Table. Household Consumption Expenditures for Medical Care
Millions of Dollars
Current
2010
Goods
Prescription drugs
$
288,480
Services
$
Physician services
$
402,797
Paramedical services
$
Home health care
$
76,998
Medical laboratories
$
32,625
Other professional medical services
$
151,024
Hospitals
$
770,481
Total*
$
1,722,406
Proposed by Disease
2010
Infectious and parasitic
$
27,965
Neoplasms
$
127,504
Endocrine
$
120,468
Blood
$
11,830
Mental illness
$
94,881
Nervous system
$
114,945
Circulatory system
$
246,756
Respiratory system
$
108,423
Digestive system
$
99,751
Genitourinary system
$
69,179
Complications of pregnancy
$
55,499
Skin
$
23,418
Musculoskeletal system
$
191,565
Congenital anomalies
$
14,853
Certain perinatal conditions
$
5,273
Injury and poisoning
$
130,932
Symptoms and ill-defined
$
258,344
Residual codes and unclassified
$
20,819
Total Disease
$
1,722,406
* not included - eyeglasses, other medical products, Nonprescription drugs, Therapeutic
medical equipment, Nursing homes, and dental services
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Implication 2:
Redefining output also implies new price indexes.
▪ The new price indexes
are the change in average
expenditure per episode
for each disease
▪ They reflect any shifts in
services across industries
that alter the cost of
treating disease.
www.bea.gov
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Implication 2:
Redefining output also implies new price indexes.
▪ The new price indexes
are the change in average
expenditure per episode
for each disease
▪ They reflect any shifts in
services across industries
that alter the cost of
treating disease.
▪ Disease-based indexes can rise
slower than traditional service
price indexes with shifts in treatments
www.bea.gov
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Implication 2:
Redefining output also implies new price indexes.
▪ The new price indexes
are the change in average
expenditure per episode
for each disease
▪ They reflect any shifts in
services across industries
that alter the cost of
treating disease.
▪ Disease-based indexes can rise
slower than traditional service
price indexes with shifts in treatments
▪ With increases in utilization, disease-based indexes can rise faster
than traditional price indexes
www.bea.gov
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Selected BEA and BLS research
 “Producing disease-based price indexes,” Bradley, Cardenas, Ginsburg, Rozental, Velez,
Monthly Labor Review, 2010
 “Alternative Price Indexes for Medical Care: Evidence from the MEPS Survey,” Aizcorbe,
Bradley (BLS), Herauf, Kane, Liebman, Pack, Rozental (BLS), BEA Working Paper, 2011
 “Changing Mix of Medical Care Services: Stylized Facts and Implications for Price
Indexes,” Aizcorbe and Nestoriak, Journal of Health Economics, May 2011
 “Household Consumption Expenditures for Medical Care: An Alternate Presentation,”
Aizcorbe, Liebman, Cutler, and Rosen, Survey of Current Business, June 2012
 “Feasible methods to estimate disease based price indexes,” Bradley, Journal of Health
Economics, 2013
 Calculating Disease-Based Medical Care Expenditure Indexes for Medicare Beneficiaries:
A Comparison of Method and Data Choices, Hall and Highfill, BEA Working Paper, 2014
 Decomposing Medical-Care Expenditure Growth, Dunn, Liebman, Shapiro, BEA Working
Paper
 Defining Disease Episodes and the Effects on the Components of Expenditure Growth,
Dunn, Liebman, Rittmueller, and Shapiro, BEA Working Paper, 2014
www.bea.gov
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Decomposing Medical-Care Expenditure Growth by
Dunn, Liebman, and Shapiro
▪
What are the sources of expenditure growth in
the private health care market from 2003-07?
▪
Privately insured health care – 60 percent more
spending than Medicare (NHEA).
▪
Use large claims data to analyzes the sources of
expenditure growth.
www.bea.gov
Expenditure Decomposition
▪
What are the sources of expenditure
growth?

Demographics

Prevalence

Expenditures per Episode


www.bea.gov
Service Prices
Service Utilization
Expenditure Decomposition
Exp. Per Capita
Demog. Shift
Adj. Exp. Per Capita
ECI – Expenditure Per Capita Index
DECI – Demographically-adjusted Expenditure per Capita Index
DEM – Demographic Component of Expenditure Growth
www.bea.gov
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Expenditure Decomposition
Adj. Exp. Per Capita
MCE
Prevalence
SPI
SUI
PREV – Treated Prevalence Index
MCE – Medical Care Expenditure Index (Expenditures per Episode)
SPI – Service Price Index
www.bea.govSUI
– Service Utilization Index
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Data
▪
Commercially-insured patients from the
MarketScan® Data from Truven Health.
Over 4 million enrollees per year.
Analyze years 2003-07.
Process claims using ETG Symmetry grouper
from Optum.
Each enrollee in the database is:
▪
▪
▪
▪
1. Not in a capitated plan.
2. Has a drug benefit plan.
3. Included only if the individual is enrolled for the full
year.
www.bea.gov
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Sample & Weights
▪ Sample
 Fixed MarketScan Data Contributor
▪ Weights
1. Weighted by region, age and sex to
match changing population
demographics.
2. Weighted by region, age, and sex, fixed
demographics
www.bea.gov
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Summary Statistics
Expenditure
Enrollees
Expenditure per Capita (Enrollee)
Episodes
Expenditure per Episode
Percent Male
Average Age
< Age 17
Age 18 - Age 24
Age 25 - Age 34
Age 35 - Age 54
> Age 55
www.bea.gov
2003
2007
$471.5 Billion $611.6 Billion
180,578,000 182,530,000
$2,611
$3,350
489,330,264 539,528,197
$964
$1,134
49.5
49.6
32.3
32.9
27.3%
26.3%
9.6%
9.6%
14.7%
14.7%
36.2%
35.6%
12.2%
13.8%
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Sources of Expenditure Growth
▪ Expenditures driven by service prices and
prevalence. Utilization per episode is flat.
▪ After deflating these figures, growth is
primarily driven by prevalence, not
expenditures per episode (i.e. disease price).
www.bea.gov
Decomposition
Decomposition of Aggregate Expenditure Growth,
Nominal and Real
30%
25%
20%
15%
10%
5%
0%
Nominal
Deflated
-5%
www.bea.gov Demographic Shifts
Treated Prevalence
Service Price Index
Service Utilization Index
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Expenditure Growth Pattern Is Not Uniform Across
Diseases.
▪ Within Disease Category Differences
 e.g. cardiology related conditions:
 Prevalence growth is high for many early-stage
illnesses.
 i.e. hypertension, high cholesterol, obesity and
diabetes.
 Prevalence growth is relatively low for late stage
illnesses.
 i.e. ischemic heart disease.
www.bea.gov
Decomposition by Disease Category
Disease Category (2003 Spending Share)
Decomposition of Per Capita Expenditure Growth:
Overall Expenditures and Selected Conditions
Overall (100%)
-1%3%
Ortho. (16.6%)
3%
Cardio. (12.2%)
-8%
10%
12%
7%
Gastro. (9.1%)
4%
Gyneco. (7.1%)
2%1%
Preventative (2.3%)
-10%
www.bea.gov
2%
14%
14%
4%
2%
15%
11%
17%
19%
0%
1%
29%
Demographic
Shifts10%Prevalence
0%
20% Service Prices
30%
14%
11%
Service
40%Utilization50%
60%
Decomposition by Disease Category
Orthopedics & Rheumatology
Cardiology
Gastroenterology
Gynecology
Endocrinology
Otolaryngology
Neurology
Psychiatry
Pulmonology
Dermatology
Obstetrics
Urology
Hematology
Hepatology
Preventive & Administrative
Ophthalmology
Nephrology
Infectious diseases
Neonatology
Isolated signs & symptoms
Late effects, environmental trauma
Chemical dependency
Total
www.bea.gov
2003
Expenditure
per Capita
$434
$317
$238
$185
$177
$165
$151
$124
$120
$118
$112
$96
$65
$61
$60
$43
$36
$35
$28
$19
$14
$13
$2,611
2007
Expenditure
per Capita
$579
$373
$317
$228
$248
$188
$201
$150
$151
$152
$140
$122
$86
$70
$99
$53
$50
$49
$40
$21
$18
$18
$3,350
2003 Share
of Total
Expenditure
16.6%
12.2%
9.1%
7.1%
6.8%
6.3%
5.8%
4.8%
4.6%
4.5%
4.3%
3.7%
2.5%
2.3%
2.3%
1.6%
1.4%
1.3%
1.1%
0.7%
0.5%
0.5%
100%
Share of
Expenditure
Growth
19.6%
7.5%
10.6%
5.8%
9.5%
3.1%
6.7%
3.4%
4.2%
4.7%
3.7%
3.5%
2.8%
1.2%
5.2%
1.4%
1.9%
1.9%
1.6%
0.3%
0.6%
0.7%
100%
ECI
1.33
1.18
1.33
1.23
1.40
1.14
1.33
1.20
1.26
1.29
1.25
1.27
1.32
1.15
1.64
1.25
1.39
1.41
1.43
1.12
1.30
1.42
1.28
Dem
1.03
1.07
1.04
1.02
1.05
1.00
1.03
1.04
1.00
1.02
0.99
1.05
1.04
1.03
1.02
1.06
1.06
1.03
1.12
1.01
1.02
1.00
1.03
2007 Indexes
DECI PREV MCE
1.30 1.12 1.17
1.11 1.04 1.06
1.29 1.11 1.17
1.22 1.01 1.20
1.34 1.27 1.07
1.14 1.03 1.11
1.30 1.10 1.19
1.16 1.01 1.16
1.26 1.13 1.12
1.28 1.08 1.18
1.26 1.08 1.17
1.22 1.12 1.11
1.28 1.11 1.15
1.12 0.99 1.12
1.62 1.29 1.26
1.19 1.13 1.05
1.33 1.49 0.90
1.38 1.15 1.18
1.32 1.14 1.17
1.11 1.00 1.11
1.27 0.96 1.34
1.41 1.38 1.06
1.25 1.10 1.14
SPI
1.14
1.15
1.17
1.19
1.16
1.12
1.20
1.20
1.13
1.15
1.15
1.13
1.21
1.17
1.14
1.08
0.91
1.12
1.13
1.10
1.29
1.09
1.15
SUI
1.02
0.92
1.00
1.01
0.93
0.99
0.99
0.97
0.99
1.02
1.02
0.98
0.95
0.95
1.11
0.98
1.00
1.06
1.03
1.02
1.04
0.98
0.99
Cardiology
Ischemic heart disease 1
Hypertension 1
Diabetes 1
Ischemic heart disease 2
Hyperlipidemia, other 1
www.bea.gov
2003
Expenditure
per Capita
2007
Expenditure
per Capita
$55
$48
$43
$30
$26
$54
$64
$68
$32
$37
2007 Indexes
ECI DEM DECI PREV MCE
0.98 1.07 0.91 0.95 0.96
1.33 1.06 1.27 1.14 1.11
1.58 1.09 1.48 1.28 1.16
1.07 1.08 0.99 1.09 0.91
1.43 1.08 1.35 1.29 1.05
SPI
1.14
1.13
1.17
1.09
1.16
SUI
0.86
1.01
1.01
0.84
0.95
Orthopedics and Rheumatology
Joint degeneration, localized - back 1
Joint derangement - knee & lower leg 2
Joint degeneration, localized - knee & lower leg 1
Joint degeneration, localized - neck 1
Joint degeneration, localized - back 2
www.bea.gov
2003
Expenditure
per Capita
$42
$30
$25
$22
$18
2007
Expenditure
Per Capita
$56
$37
$43
$28
$26
2007 Indexes
ECI DEM DECI PREV MCE
1.32 1.03 1.29 1.15 1.12
1.24 1.02 1.22 1.09 1.12
1.68 1.12 1.56 1.24 1.26
1.26 1.02 1.23 1.14 1.08
1.43 1.06 1.37 1.24 1.11
SPI
1.18
1.07
1.15
1.14
1.17
SUI
0.98
1.05
1.09
0.98
0.96
Gastroenterology
Inflammation of esophagus 1
Gastroenterology diseases signs & symptoms 1
Non-malignant neoplasm of intestines & abdomen 1
Hernias, except hiatal 1
Appendicitis 1
www.bea.gov
2003
Expenditure
per Capita
2007
Expenditure
per Capita
$27
$23
$20
$10
$9
$29
$33
$27
$12
$12
2007 Indexes
ECI DEM DECI PREV MCE
1.09 1.02 1.07 1.06 1.01
1.41 1.03 1.39 1.16 1.20
1.34 1.08 1.26 1.16 1.08
1.19 1.03 1.16 1.02 1.14
1.41 0.99 1.42 1.15 1.24
SPI
1.12
1.15
1.08
1.19
1.20
SUI
0.92
1.05
1.02
0.96
1.02
Neoplasms
Neoplasm of breast
Neoplasm of pulmonary system
Neoplasm of rectum or anus
Neoplasm of prostate
Neoplasm of skin, major
All neoplasms
www.bea.gov
Malignant
Non-Malignant
Malignant
Non-Malignant
Malignant
Non-Malignant
Malignant
Non-Malignant
Malignant
Non-Malignant
Malignant
Non-Malignant
All other diseases
2003
Expenditure
per Capita
2007
Expenditure
per Capita
$50
$11
$16
$1
$13
$2
$13
$4
$10
$15
$162
$107
$2,247
$77
$12
$21
$1
$21
$3
$20
$6
$14
$19
$240
$133
$2,856
2007 Indexes
ECI DEM DECI PREV MCE
1.53 1.06 1.47 1.07 1.37
1.04 1.01 1.03 0.85 1.21
1.27 1.09 1.17 0.95 1.23
1.12 1.03 1.09 1.04 1.05
1.55 1.09 1.46 0.97 1.51
1.73 1.09 1.64 1.52 1.08
1.55 1.15 1.40 1.09 1.29
1.56 1.13 1.43 1.06 1.35
1.35 1.08 1.28 1.08 1.18
1.27 1.03 1.25 1.13 1.10
1.48 1.08 1.40 1.08 1.30
1.24 1.03 1.21 1.11 1.11
1.27 1.03 1.24 1.10 1.13
SPI
1.27
1.18
1.28
0.97
1.45
1.06
1.17
1.15
1.11
1.11
1.25
1.15
1.15
SUI
1.33
1.03
1.40
1.08
0.99
1.04
1.07
1.19
1.04
1.00
1.05
0.98
0.99
Conclusion
▪ Over the 2003-07 period for the commercial
sector:
 Expenditures primarily driven by service price
growth, but service price growth does not
greatly exceed overall inflation.
 Treated prevalence growth plays an important
role in real growth in output.
 Tends in the components of expenditure growth
are disease-specific.
www.bea.gov
BEA Health Account
▪ Release survey article of Health Care Satellite
Account around December of this year.
http://www.bea.gov/national/health_care_satellite
_account.htm
▪ Account will incorporate expenditure estimates
from full population, not just commercial sector.
▪ Account will report estimates over a longer
horizon 2000 to 2010.
www.bea.gov
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Future Satellite Account Work
▪
▪
▪
▪
▪
▪
New release in 2015 with 2011 and 2012 estimates
Creating a longer time series and current estimates
Evaluate the impact on Industry accounts
Evaluate the impact Income accounts
Evaluate Quality Adjustment
Continue to evaluate data sources – MEPS, MarketScan®,
Medicare, along with Medicaid and others.
▪ Integrate/incorporate/compare BEA/HSA with BLS PPI or
CPI disease-based indexes (once created)
www.bea.gov
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