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A systematic examination of quality-adjusted price index alternatives for medical care using claims data

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  • Dauda, Seidu
  • Dunn, Abe
  • Hall, Anne

Abstract

We investigate alternative methods for constructing quality-adjusted medical price indexes both theoretically and empirically using medical claims data. The methodology and assumptions applied in the formation of the index have substantive effects on the magnitude of the quality-adjusted price changes. A method based on utility theory produces the most robust and accurate results, while alternative methods used in recent work overstate inflation. Based on Medicare claims data for three medical conditions, we find declining prices across each condition when properly adjusted for quality.

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  • Dauda, Seidu & Dunn, Abe & Hall, Anne, 2022. "A systematic examination of quality-adjusted price index alternatives for medical care using claims data," Journal of Health Economics, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:jhecon:v:85:y:2022:i:c:s0167629622000819
    DOI: 10.1016/j.jhealeco.2022.102662
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    More about this item

    Keywords

    Price index; Quality adjustment; Medical spending;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • I10 - Health, Education, and Welfare - - Health - - - General

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