IDEAS home Printed from https://ideas.repec.org/p/bea/papers/0109.html
   My bibliography  Save this paper

Adjusting Health Expenditures for Inflation: A Review of Measures for Health Services Research in the United States

Author

Listed:
  • Abe C. Dunn
  • Scott D. Grosse
  • Samuel H. Zuvekas

    (Bureau of Economic Analysis)

Abstract

Objective. To provide guidance on selecting the most appropriate price index for adjusting health expenditures or costs for inflation. Data Sources. Major price index series produced by federal statistical agencies. Study Design. We compare the key characteristics of each index and develop suggestions on specific indexes to use in many common situations and general guidance in others. Data Collection/Extraction Methods. Price series and methodological documentation were downloaded from federal websites and supplemented with literature scans. Principal findings. The gross domestic product implicit price deflator or the overall Personal Consumption Expenditures (PCE) index are preferable to the Consumer Price Index (CPI-U) to adjust for general inflation, in most cases. The Personal Health Care (PHC) index or the PCE health-by-function index are generally preferred to adjust total medical expenditures for inflation. The CPI medical care index is preferred for the adjustment of consumer out-of-pocket expenditures for inflation. A new, experimental disease-specific Medical Care Expenditure Index is now available to adjust payments for disease treatment episodes. Conclusions. There is no single gold standard for adjusting health expenditures for inflation. Our discussion of best practices can help researchers select the index best suited to their study.

Suggested Citation

  • Abe C. Dunn & Scott D. Grosse & Samuel H. Zuvekas, 2016. "Adjusting Health Expenditures for Inflation: A Review of Measures for Health Services Research in the United States," BEA Papers 0109, Bureau of Economic Analysis.
    • Handle: RePEc:bea:papers:0109
    as

    Download full text from publisher

    File URL: https://www.bea.gov/system/files/papers/Adjusting-for-inflationDunnZuvekasGrosse.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bradley, Ralph, 2013. "Feasible methods to estimate disease based price indexes," Journal of Health Economics, Elsevier, vol. 32(3), pages 504-514.
    2. David M. Cutler & Ernst R. Berndt, 2001. "Introduction to "Medical Care Output and Productivity"," NBER Chapters, in: Medical Care Output and Productivity, pages 1-12, National Bureau of Economic Research, Inc.
    3. Kokoski, Mary, 2010. "Getting Real: Price Deflation of Nominal Values," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 1(01), pages 1-11, July.
    4. Ana Aizcorbe & Tina Highfill, 2015. "Medical Care Expenditure Indexes for the US, 1980-2006," BEA Working Papers 0121, Bureau of Economic Analysis.
    5. Kokoski, Mary, 2010. "Getting Real: Price Deflation of Nominal Values," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 1(1), pages 1-11, July.
    6. David E. Lebow & Jeremy B. Rudd, 2003. "Measurement Error in the Consumer Price Index: Where Do We Stand?," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 159-201, March.
    7. Congressional Budget Office, 2014. "The Distribution of Household Income and Federal Taxes, 2011," Reports 49440, Congressional Budget Office.
    8. Congressional Budget Office, 2014. "The Distribution of Household Income and Federal Taxes, 2011," Reports 49440, Congressional Budget Office.
    9. Kokoski Mary, 2010. "Getting Real: Price Deflation of Nominal Values," Journal of Benefit-Cost Analysis, De Gruyter, vol. 1(1), pages 1-11, July.
    10. 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, President and Fellows of Harvard College, vol. 113(4), pages 991-1024.
    11. David M. Cutler & Ernst R. Berndt, 2001. "Medical Care Output and Productivity," NBER Books, National Bureau of Economic Research, Inc, number cutl01-1, March.
    12. Congressional Budget Office, 2014. "The Distribution of Household Income and Federal Taxes, 2011," Reports 49440, Congressional Budget Office.
    13. Aizcorbe, Ana & Nestoriak, Nicole, 2011. "Changing mix of medical care services: Stylized facts and implications for price indexes," Journal of Health Economics, Elsevier, vol. 30(3), pages 568-574, May.
    14. Congressional Budget Office, 2014. "The Distribution of Household Income and Federal Taxes, 2011," Reports 49440, Congressional Budget Office.
    15. Joseph P. Newhouse, 2001. "Medical Care Price Indices: Problems and Opportunities / The Chung-Hua Lectures," NBER Working Papers 8168, National Bureau of Economic Research, Inc.
    16. Clinton P. McCully & Brian C. Moyer & Kenneth J. Stewart, 2007. "A Reconciliation between the Consumer Price Index and the Personal Consumption Expenditures Price Index," BEA Papers 0079, Bureau of Economic Analysis.
    17. Abe Dunn & Eli Liebman & Lindsey Rittmueller & Adam Shapiro, 2014. "Defining Disease Episodes and the Effects on the Components of Expenditure Growth," BEA Working Papers 0108, Bureau of Economic Analysis.
    18. Braithwait, Steven D, 1980. "The Substitution Bias of the Laspeyres Price Index: An Analysis Using Estimated Cost-of-Living Indexes," American Economic Review, American Economic Association, vol. 70(1), pages 64-77, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John Komlos, 2016. "Growth of Income and Welfare in the U.S. 1979-2011," CESifo Working Paper Series 5880, CESifo.
    2. Seidu Dauda & Abe C. Dunn & Anne E. Hall, 2019. "Are Medical Care Prices Still Declining? A Systematic Examination of Quality-Adjusted Price Index Alternatives for Medical Care," BEA Working Papers 0166, Bureau of Economic Analysis.
    3. Marianne Bitler & Hilary Hoynes & Elira Kuka, 2017. "Child Poverty, the Great Recession, and the Social Safety Net in the United States," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 36(2), pages 358-389, March.
    4. Erica L. Groshen & Brian C. Moyer & Ana M. Aizcorbe & Ralph Bradley & David M. Friedman, 2017. "How Government Statistics Adjust for Potential Biases from Quality Change and New Goods in an Age of Digital Technologies: A View from the Trenches," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 187-210, Spring.
    5. Peter Temin, 2016. "The American Dual Economy," International Journal of Political Economy, Taylor & Francis Journals, vol. 45(2), pages 85-123, April.
    6. Branko Milanovic, 2022. "After the Financial Crisis: The Evolution of the Global Income Distribution Between 2008 and 2013," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 43-73, March.
    7. Jesse Bricker & Alice Henriques & Jacob Krimmel & John Sabelhaus, 2016. "Measuring Income and Wealth at the Top Using Administrative and Survey Data," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 261-331.
    8. Hager, Sandy Brian, 2015. "Public Debt as Corporate Power: Mapping the New Aristocracy of Finance," Working Papers on Capital as Power 2015/01, Capital As Power - Toward a New Cosmology of Capitalism.
    9. Jeff Larrimore & Jacob Mortenson & David Splinter, 2021. "Household Incomes in Tax Data: Using Addresses to Move from Tax-Unit to Household Income Distributions," Journal of Human Resources, University of Wisconsin Press, vol. 56(2), pages 600-631.
    10. Robert Grafstein, 2018. "The problem of polarization," Public Choice, Springer, vol. 176(1), pages 315-340, July.
    11. Alan J. Auerbach, 2017. "Tax Reform in an Era of Budget Stress, Inequality, and International Mobility," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 153(2), pages 103-122, April.
    12. Hager, Sandy Brian, 2015. "Corporate Ownership of the Public Debt: Mapping the New Aristocracy of Finance," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 13(3), pages 505-523.
    13. Alan J. Auerbach & Laurence J. Kotlikoff & Darryl Koehler, 2023. "US Inequality and Fiscal Progressivity: An Intragenerational Accounting," Journal of Political Economy, University of Chicago Press, vol. 131(5), pages 1249-1293.
    14. Periklis Gogas & Rangan Gupta & Stephen M. Miller & Theophilos Papadimitriou & Georgios Antonios Sarantitis, 2015. "Income Inequality: A State-by-State Complex Network Analysis," Working Papers 201534, University of Pretoria, Department of Economics.
    15. Jesse Bricker & Peter Hansen & Alice Henriques Volz, 2018. "How Much has Wealth Concentration Grown in the United States? A Re-Examination of Data from 2001-2013," Finance and Economics Discussion Series 2018-024, Board of Governors of the Federal Reserve System (U.S.).
    16. Kate Ho & Ariel Pakes & Mark Shepard, 2016. "The Evolution of Health Insurer Costs in Massachusetts, 2010-12," NBER Working Papers 22835, National Bureau of Economic Research, Inc.
    17. Peter Temin, 2015. "The American Dual Economy: Race, Globalization, and the Politics of Exclusion," Working Papers Series 26, Institute for New Economic Thinking.
    18. Alan J. Auerbach & Laurence J. Kotlikoff & Darryl Koehler & Manni Yu, 2017. "Is Uncle Sam Inducing the Elderly to Retire?," Tax Policy and the Economy, University of Chicago Press, vol. 31(1), pages 1-42.
    19. Jacob Funk Kirkegaard, 2015. "The True Levels of Government and Social Expenditures in Advanced Economies," Policy Briefs PB15-4, Peterson Institute for International Economics.
    20. Michael T. Owyang & Hannah Shell, 2016. "Taking Stock: Income Inequality and the Stock Market," Economic Synopses, Federal Reserve Bank of St. Louis, issue 7, pages 1-2.

    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bea:papers:0109. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Andrea Batch (email available below). General contact details of provider: https://edirc.repec.org/data/beagvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.