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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.

Suggested Citation

  • Karen N. Eggleston & Nilay D. Shah & Steven A. Smith & Ernst R. Berndt & Joseph P. Newhouse, 2011. "Quality Adjustment for Health Care Spending on Chronic Disease: Evidence from Diabetes Treatment, 1999-2009," American Economic Review, American Economic Association, vol. 101(3), pages 206-211, May.
  • Handle: RePEc:aea:aecrev:v:101:y:2011:i:3:p:206-11
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.206
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    References listed on IDEAS

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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. 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, Oxford University Press, vol. 113(4), pages 991-1024.
    3. Viscusi, W Kip & Aldy, Joseph E, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 5-76, August.
    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. repec:reg:rpubli:282 is not listed on IDEAS
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    Cited by:

    1. Dunn, Abe & Shapiro, Adam Hale, 2015. "Does Medicare Part D save lives?," Working Paper Series 2015-4, Federal Reserve Bank of San Francisco.
    2. Anne E. Hall, 2015. "Adjusting the Measurement of the Output of the Medical Sector for Quality: A Review of the Literature," BEA Working Papers 0122, Bureau of Economic Analysis.

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