Are Quality-Adjusted Medical Prices Declining for Chronic Disease? Evidence from Diabetes Care in Four Health Systems

Karen Eggleston, Brian K. Chen, Chih-Hung Chen, Ying Isabel Chen, Talitha Feenstra, Toshiaki Iizuka, Janet Tinkei Lam, Gabriel M. Leung, Jui-fen Rachel Lu, Beatriz Rodriguez-Sanchez, Jeroen N. Struijs, Jianchao Quan and Joseph Newhouse

No 25971, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Improvements in medical treatment have contributed to rising health spending. Yet there is relatively little evidence on whether the spending increase is “worth it” in the sense of producing better health outcomes of commensurate value—a critical question for understanding productivity in the health sector and, as that sector grows, for deriving an accurate quality-adjusted price index for an entire economy. We analyze individual-level panel data on medical spending and health outcomes for 123,548 patients with type 2 diabetes in four health systems. Using a “cost-of-living” method that measures value based on improved survival, we find a positive net value of diabetes care: the value of improved survival outweighs the added costs of care in each of the four health systems. This finding is robust to accounting for selective survival, end-of-life spending, and a range of values for a life-year or, equivalently, to attributing only a fraction of survival improvements to medical care.

JEL-codes: H51 I10 I18 (search for similar items in EconPapers)
Date: 2019-06
New Economics Papers: this item is included in nep-hea
Note: EH
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Citations: View citations in EconPapers (2)

Published as Karen Eggleston & Brian K. Chen & Chih-Hung Chen & Ying Isabel Chen & Talitha Feenstra & Toshiaki Iizuka & Janet Tin Kei Lam & Gabriel M. Leung & Jui-fen Rachel Lu & Beatriz Rodriguez-Sanchez & Jeroen N. Struijs & Jianchao Quan & Joseph P. Newhouse, 2020. "Are quality-adjusted medical prices declining for chronic disease? Evidence from diabetes care in four health systems," The European Journal of Health Economics, vol 21(5), pages 689-702.

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