Introducing the New BEA Health Care Satellite Account Abe Dunn, Lindsey Rittmueller, and Bryn Whitmire SEM Conference, Paris 24 July 2015
bea.gov Health care is a large and increasing share of GDP %
bea.gov Health Care Satellite Account (HCSA) The goal of the satellite account is to improve our understanding of health care spending in the U.S. by developing disease-based statistics Development advocated by many health economic experts Scitovsky (1964) “An Index of the Cost of Medical Care – A Proposed New Approach” Cutler, McClellan, Newhouse and Remler (1998) “Are Medical Prices Declining? Evidence from Heart Attack Treatments” Frank, Berndt, Busch (1999) “Price Indexes for the Treatment of Depression” Two reports of the National Academy of Sciences’ Committee on National Statistics 3
bea.gov Contribution of our work is to redefine the output of the health care sector For example Output = number of patients treated for breast cancer Expenditures = spending on the treatment of breast cancer Price = average spending per treated patient for breast cancer 4
bea.gov Implication 1: Health care spending will be reported by disease classes 5
bea.gov Implication 2: Redefining output also implies new price indexes The new price indexes are the change in average expenditure per episode for each disease 6
bea.gov Implication 2: Redefining output also implies new price indexes The new price indexes are the change in average expenditure per episode for each disease Disease-based indexes can rise slower than traditional service price indexes with shifts in treatments 7
bea.gov Implication 2: Redefining output also implies new price indexes The new price indexes are the change in average expenditure per episode for each disease Disease-based indexes can rise slower than traditional service price indexes with shifts in treatments Disease-based indexes can also rise faster than traditional service price indexes 8
bea.gov HCSA presents two alternatives covering the period 1.“MEPS Account” – using Medical Expenditure Panel Survey (MEPS) 2.“Blended Account” – MEPS, MarketScan ® claims data, and Medicare claims data 9
bea.gov Key points The Blended Account produces more stable and less volatile disease-based statistics 10
bea.gov “Big Data” Motivation – Disease-Based Price Indexes 11
bea.gov Key points The Blended Account produces more stable and less volatile disease-based statistics Improves our understanding of health care spending trends 12
bea.gov Key points The Blended Account produces more stable and less volatile disease-based statistics Improves our understanding of health care spending trends Disease-based indexes better reflect the pricing of health care treatments and will allow for evaluation of quality change 13
bea.gov Organization Methods Data Results Next steps 14
bea.gov 15 Allocating expenditures across disease categories Many potential strategies for disease allocation No consensus on “best” method Currently applies a simple method with widespread use: Apply a primary diagnosis approach using the Clinical Classification Software (CCS) (263 categories) Uses “person-based” approach when primary diagnosis approach is not possible
bea.gov Medical Care Expenditure Indexes (MCEs) 16
bea.gov MEPS Data Nationally representative sample with approximately 30,000 individuals All sources of spending and associated CCS diagnosis codes Raw MEPS data files used (pool 2 years of data) 17
bea.gov MarketScan ® and Medicare Claims Data Commercially-insured patients from the MarketScan ® Data from Truven Health More than 2 million enrollees in each year Convenience sample application of population weights Medicare patients from 5 percent random sample of enrollees Approximately 2 million enrollees each year Prescription drug expenditures per episode imputed using MEPS for sample period Excludes Medicare Advantage enrollees application of population weights 18
bea.gov Construction of Blended Account Use population weights from MEPS to fold in data from different sources 19
bea.gov Construction of Blended Index After claims data is incorporated, the Blended Account is constructed identically to the MEPS Account Expenditures and MCE indexes are computed for each of the 263 CCS categories Report 18 Disease Categories (CCS Chapters) and aggregate 20
bea.gov MCE MEPS, and MCE Blended yields faster growth than PCE (2009=100) 21
bea.gov Effects on Annual Real Growth Rates *Based on Estimates PCE Health by Function Actual PCE Health 3.3% Using MCE MEPS 2.4% Using MCE Blended 2.0% Overall PCE Actual PCE 2.1% Using MCE MEPS 1.9% Using MCE Blended 1.8% GDP Actual GDP 1.6% Using MCE MEPS 1.5% Using MCE Blended 1.5% 22
bea.gov Total Spending by Disease Category 23
bea.gov Trends in disease-based price indexes are volatile using the MEPS index 24
bea.gov Trends in disease-based price indexes are volatile using the MEPS index 25
bea.gov 26 Increases in cost per case contributed 64 percent to per capita spending growth
bea.gov Decomposition of the Contributions to Annual Spending Growth 27
bea.gov Decomposition of the Contributions to Per Capita Spending Growth for
bea.gov Per Capita Spending Growth for Select CCS Categories 29
bea.gov Conclusion Improves our understanding of spending trends Another step in broader goal to improve health statistics A lot more work to be done… 30
bea.gov Next steps Representativeness (e.g., Medicare Advantage and Commercial HMO enrollees) Expenditure allocation Coverage over time Quality adjustment 31
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bea.gov EXTRA SLIDES 33
bea.gov 34 Recent slow down in the annual growth in nominal health spending ( )
bea.gov Differences between an MCE and PPI Examples: (Ceteris Paribus)MCEPPI Change from high cost inpatient visit to lower cost outpatient visit ↓ - Higher intensity procedures used in physician offices ↑ - Change from restrictive insurance plan to generous plan ↑ - Higher prices for physician office procedures ↑↑ 35
bea.gov Disease allocation methods General strategies for disease allocation: 1.Encounter-based approach (e.g., primary diagnosis method) 2.Episode-based approach 3.Person-based approach BEA has not settled on a “best” method Apply a primary diagnosis approach using the CCS classification system (263 Clinical Classification Software (CCS) categories) Simplicity and widespread use 36
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bea.gov Total Spending by Disease category (Using Blended method for 2010) 38 Top 5 categories account for 51 percent of spending
bea.gov Increases in cost per case contributed 73 percent to per capita spending growth? 39 71%
bea.gov Effect of HMO Inclusion - MarketScan 40
bea.gov Effects of Severity Adjustment 41
bea.gov Coverage over time Historic estimates Aizcorbe and Highfill (2015) – back to 1980 Timely estimates BLS work – Bradley (2014) 42
bea.gov Recent research shows growth in a disease-based price index can rise faster or slower than the PCE price index 43 Source: Aizcorbe and Highfill, “Medical Care Expenditure Indexes for the US, ”
bea.gov Quality Adjustment – Heart Attacks (AMI) 44
bea.gov Schedule and Future Work Schedule SCB release of updated data for HCSA for 2011 and 2012 (later in 2015) Future work Continue to work with other agencies and health experts on consistent measures of disease-based spending and prices Creating a longer time series and current estimates Evaluate the impact on Industry accounts Continue to evaluate data sources – MEPS, MarketScan ®, Medicare, Medicaid, nursing homes, and others Evaluate impact of severity Evaluate quality adjustment 45
bea.gov Implication for Industry Accounts: New Price Indexes imply change in Value Added and Gross Output Real Value Added = Gross Output – Intermediate inputs Input prices will stay the same for intermediate commodities Use new disease-based price index for all affected disaggregated sectors Our current method in the Health Care Satellite Account allocates spending proportionally across all industries Productivity in certain health sectors will change More research is needed to evaluate other methods to incorporate these new indexes 46
bea.gov Industry Example: Average Annual Real Growth Rates between 2000 and 2010 for Gross Output and Value Added 47