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The Medical Treatment of Depression, 1991-1996: Productive Inefficiency, Expected Outcome Variations, and Price Indexes

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  • Ernst R. Berndt
  • Anupa Bir
  • Susan H. Busch
  • Richard G. Frank
  • Sharon-Lise T. Normand

Abstract

We examine the price of treating episodes of acute phase major depression over the 1991-1996 time period. We combine data from a large retrospective medical claims data base (MarketScanTM, from the MedStat Group) with clinical literature and expert clinical opinion elicited from a two-state Delphi procedure. This enables us to construct a variety of treatment price indexes that include variations over time in the proportion of off-frontier' production, as well as the corresponding variations in expected treatment outcomes. We also incorporate the fact that the no treatment option ( waiting list') frequently results in spontaneous remission of depressive symptoms. We find that in general the incremental cost of successfully treating an episode of acute phase major depression has generally fallen over the 1991-96 time period. Based on hedonic regression equations that account for the effects of changing patient mix, we find price reductions that range from about -1.66% to -2.13% per year. An implication of this is that, since expenditures on depression are thought to be increasing since at least 1991, the source of the spending increases is volume (quantity) increases, and not price increases.

Suggested Citation

  • Ernst R. Berndt & Anupa Bir & Susan H. Busch & Richard G. Frank & Sharon-Lise T. Normand, 2000. "The Medical Treatment of Depression, 1991-1996: Productive Inefficiency, Expected Outcome Variations, and Price Indexes," NBER Working Papers 7816, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:7816
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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. Berndt, Ernst R. & Cutler, David M. & Frank, Richard G. & Griliches, Zvi & Newhouse, Joseph P. & Triplett, Jack E., 2000. "Medical care prices and output," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 3, pages 119-180 Elsevier.
    4. Berndt, Ernst R. & Finkelstein, Stan N. & Greenberg, Paul E. & Howland, Robert H. & Keith, Alison & Rush, A. John & Russell, James & Keller, Martin B., 1998. "Workplace performance effects from chronic depression and its treatment," Journal of Health Economics, Elsevier, vol. 17(5), pages 511-535, October.
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    Cited by:

    1. Robert J. Gordon, 2006. "The Boskin Commission Report: A Retrospective One Decade Later," International Productivity Monitor, Centre for the Study of Living Standards, vol. 12, pages 7-22, Spring.
    2. Apostolos Tsiachristas† & René Goudriaan & Wim Groot, 2013. "The welfare effects of innovative pharmaceuticals: an international perspective from the Dutch experience," Applied Economics, Taylor & Francis Journals, vol. 45(9), pages 1219-1226, March.
    3. Driouchi, Ahmed, 2015. "New Health Technologies and Health Workforce in Developing Economies," MPRA Paper 67775, University Library of Munich, Germany.
    4. Charles I. Jones, 2016. "Life and Growth," Journal of Political Economy, University of Chicago Press, vol. 124(2), pages 539-578.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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