Are Medical Prices Declining?

David Cutler, Mark McClellan, Joseph Newhouse and Dahlia Remler

No 5750, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We address long-standing problems in measuring health care prices by estimating two medical care price indices. The first, a Service Price Index, prices specific medical services, as does the current CPI. The second, a Cost of Living Index, measures the net valuation of treating a health problem. We apply these indices to heart attack treatment between 1983 and 1994. Because of technological change and increasing price discounts, the current CPI overstates a chain-weighted price index by three percentage points annually. For plausible values of an additional life-year, the real Cost of Living Index fell about 1 percent annually.

Date: 1996-09
Note: AG PR PE
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Citations: View citations in EconPapers (43)

Published as "Are Medical Prices Declining? Evidence for Heart Attack Treatments", Quarterly Journal of Economics, Vol. 108, no. 4 (November 1998).

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