Expenditures - Health Care

More than two decades ago a well-known study on heart attack treatments provided evidence suggesting that, when appropriately adjusted for quality, medical care prices were actually declining (Cutler et al. 1998). Our paper revisits this subject by leveraging estimates from more than 8,000 cost-effectiveness studies across a broad range of conditions and treatments. We find large quality-adjusted price declines associated with treatment innovations. To incorporate these quality-adjusted indexes into an aggregate measure of inflation, we combine an unadjusted medical-care price index, quality-adjusted price indexes from treatment innovations, and proxies for the diffusion rate of new technologies. In contrast to official statistics that suggest medical care prices increased by 0.53 percent per year relative to economy-wide inflation from 2000 to 2017, we find that quality-adjusted medical care prices declined by 1.33 percent per year over the same period.

Health care spending for the nursing home sector has been an understudied topic despite institutionalized long-term care patients often facing higher mortality rates, having numerous and serious comorbidities, and accounting for over $194 billion dollars in personal health care expenditure just in 2018. Research on this population is increasing in importance as the U.S. population ages, but data limitations have constrained investigations in this area. To improve measurement for this significant sector of health care, this study utilizes Medicaid Analytic eXtract (MAX) Long-Term Care (LT) claims for 2000–2005, 2008, and 2011, and focuses on long-term care dual MedicareMedicaid residents. Diagnoses from each claim are used to appropriate total costs to 260 Clinical Classification Software (CCS) categories. The long-term care population share of spending for many of these conditions greatly exceeds that of the general non-institutionalized U.S. population. The result shows two broad condition categories dominate spending for this population: circulatory and mental health conditions, each category accounting for about 20 percent of long-term care expenditures in 2011. Among circulatory conditions, treated prevalence for severe circulatory conditions (for example, strokes) has fallen while treated prevalence for early-stage circulatory conditions (for example, high cholesterol) has risen. Approximately 43 percent of residents received a mental health diagnosis in 2011 and conditions such as anxiety, mood disorders, and dementia have grown in importance over the study period. Overall, this paper demonstrates how these methods and MAX LT file may be used to track spending-by-disease for this increasingly important sector.

We evaluate the economic effects of the COVID-19 pandemic on consumer spending using daily card transaction data. Overall, we find large effects of this pandemic on sectors such as accommodations and restaurants, which by the second week of March, show declines of around 80 percent and 70 percent, respectively. However, these declines were partly offset by the large 100 percent immediate increase in food and beverage store sales. For select goods and services in our data, we find an aggregate decline in spending of around 13.7 percent for March, and we estimate an aggregate “pandemic effect”—the effect of the pandemic on consumer spending after mitigation measures have had time to take hold—of around –27.8 percent.

The administrative costs of providing health insurance in the US are very high, but their determinants are poorly understood. We advance the nascent literature in this field by developing new measures of billing complexity for physician care across insurers and over time, and by estimating them using a large sample of detailed insurance “remittance data” for the period 2013–15. We found dramatic variation across different types of insurance. Fee-for-service Medicaid is the most challenging type of insurer to bill, with a claim denial rate that is 17.8 percentage points higher than that for fee-for-service Medicare. The denial rate for Medicaid managed care was 6 percentage points higher than that for fee-for-service Medicare, while the rate for private insurance appeared similar to that of Medicare Advantage. Based on conservative assumptions, we estimated that the health care sector deals with $11 billion in challenged revenue annually, but this number could be as high as $54 billion. These costs have significant implications for analyses of health insurance reforms.