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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.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.206
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 101 (2011)
Issue (Month): 3 (May)
Pages: 206-11

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Handle: RePEc:aea:aecrev:v:101:y:2011:i:3:p:206-11

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  1. Beaulieu Nancy & Cutler David M & Ho Katherine & Isham George & Lindquist Tammie & Nelson Andrew & O'Connor Patrick, 2006. "The Business Case for Diabetes Disease Management for Managed Care Organizations," Forum for Health Economics & Policy, De Gruyter, vol. 9(1), pages 1-38, December.
  2. Aldy, Joseph E. & Viscusi, W. Kip, 2003. "The Value of Statistical Life: A Critical Review of Market Estimates throughout the World," Working paper 282, Regulation2point0.
  3. repec:reg:rpubli:282 is not listed on IDEAS
  4. Claudio Lucarelli & Sean Nicholson, 2009. "A Quality-Adjusted Price Index for Colorectal Cancer Drugs," NBER Working Papers 15174, National Bureau of Economic Research, Inc.
  5. 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, MIT Press, vol. 113(4), pages 991-1024, November.
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