U.S. BLS Plans for Developing Disease Based Price Indexes. Michael W. Horrigan Associate Commissioner May 10 th 2010. Presentation Outline. Motivation Recommendations for producing disease based price indexes Issues and challenges in estimating disease based price indexes CPI approach
Michael W. Horrigan
May 10th 2010
Most of the savings accruing from the shift from inpatient to outpatient hospital goes to third party payments.
Hospital prices are rising more rapidly than physician or pharmaceutical prices, and an index based on total expenditures has a higher hospital weight than an index based on out of pocket payments. Therefore both indexes for out of pocket payments are less than the index for total expenditures.
Consumers pay a very small fraction of total inpatient expenses. A shift from inpatient to outpatient for a disease category increases the share of out of pocket expenditures for treating that particular disease category.
Diseases of the respiratory system
Diseases of the circulatory system
Diseases of the genitourinary system
Diseases of the musculoskeletal system and connective tissue
Diseases of the digestive system
Diseases of the blood and blood-forming organs
Complications of pregnancy, childbirth, and the puerperium
Diseases of the skin and subcutaneous tissue
Infectious and parasitic diseases
Injury and poisoning
Diseases of the nervous system and sense organs
Endocrine, nutritional, immunity disorders (includes diabetes and high cholesterol)
Pdit = Price of input service i used to treat disease d in period t.
Qdir = Quantity of input i used to treat disease d in period r.
When quantities are not updated:
When quantities are updated:
Price of Office Visit = $200 in period 1; = $220 in period 2.
Price of RX = $30 in period 1; = $33 in period 2.
The price of all inputs increase 10%.
Quantity of Office Visits = 4 in period 1 ; = 1 in period 2.
Quantity of RX = 0 in period 1 ; = 4 in period 2.
The price of all inputs are up 10%.
Disease Based Index: