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Price Indexes for Acute Phase Treatment of Depression

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  • Ernst R. Berndt
  • Susan H. Busch
  • Richard G. Frank

Abstract

Although broad trends in medical spending in the U.S. over the last decade have received widespread attention from policymakers, very little attention has focused on the components of those changes. For many other industries, economists typically divide nominal expenditures by an official government price index to decompose these expenditures into price and quantity components. In this paper we construct a new price index for the treatment of one illness depression. Making use of results from the published clinical literature and from official treatment guideline standards, we identify therapeutically similar treatment bundles. These bundles can then be linked and weighted to construct price indexes for specific forms of major depression. In doing so, we construct CPI and PPI-like medical price indexes that deal with prices of treatment episodes rather than prices of discrete inputs, that are based on transaction rather than list prices, that take quality changes and expected outcomes into account employ current, time-varying expenditure weights in the aggregation computations. We find that regardless of which index number procedure is employed time period the treatment price index for the acute phase of major depression has hardly changed remaining at 1.00 or falling slightly to around 0.97. This index grows considerably less rapidly than the various official PPIs -- thus the price index for the treatment of the acute phase of major depression has fallen over the 1991-95 time period. A hedonic approach to price index measurement yields broadly similar results. These results imply that given a budget for treatment of depression accomplished in 1995 than in 1991. Our results suggest that at least in the case of acute phase major depression, aggregate spending increases are due to a larger number of effective treatments being provided.

Suggested Citation

  • Ernst R. Berndt & Susan H. Busch & Richard G. Frank, 1998. "Price Indexes for Acute Phase Treatment of Depression," NBER Working Papers 6799, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:6799
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    References listed on IDEAS

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    1. repec:bin:bpeajo:v:27:y:1996:i:1996-3:p:201-267 is not listed on IDEAS
    2. repec:bin:bpeajo:v:27:y:1996:i:1996-3:p:133-199 is not listed on IDEAS
    3. Paul A. Armknecht & Daniel H. Ginsburg, 1992. "Improvements in Measuring Price Changes in Consumer Services: Past, Present, and Future," NBER Chapters,in: Output Measurement in the Service Sectors, pages 109-157 National Bureau of Economic Research, Inc.
    4. Ernst R. Berndt & Zvi Griliches, 1993. "Price Indexes for Microcomputers: An Exploratory Study," NBER Chapters,in: Price Measurements and Their Uses, pages 63-100 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Ralph Kozlow, 2000. "International Accounts Data Needs: Plans, Progress, and Priorities," BEA Papers 0009, Bureau of Economic Analysis.
    2. Rowena Jacobs, 2009. "Investigating Patient Outcome Measures in Mental Health," Working Papers 048cherp, Centre for Health Economics, University of York.
    3. Jason M. Fletcher, 2008. "Adolescent depression: diagnosis, treatment, and educational attainment," Health Economics, John Wiley & Sons, Ltd., vol. 17(11), pages 1215-1235.
    4. Ernst R. Berndt & David M. Cutler & Richard Frank & Zvi Griliches & Joseph P. Newhouse & Jack E. Triplett, 2001. "Price Indexes for Medical Care Goods and Services -- An Overview of Measurement Issues," NBER Chapters,in: Medical Care Output and Productivity, pages 141-200 National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs

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