of quality change and health output will enable construction of improved measures of medical care productivity.2

Finally, health is important to measure because it is an input to other outputs. Healthier people earn more than less healthy people and stay in the labor force longer (see Costa, 2003; Case et al., 2002). In understanding the sources of growth in national income, we need to account for changes in health. In all these ways, a more systematic monitoring of the population’s health states, and the factors that have an impact on those states, can advance research and policy.

Recommendation 6.1: A health satellite account should be produced by the Bureau of Economic Analysis in collaboration with the Centers for Medicare and Medicaid Services of the U.S. Department of Health and Human Services.

In this chapter we discuss a framework for developing health accounts and highlight the central choices to be confronted and the work to be done before such accounts can become a reality. While answers are not provided for every possible question, we illustrate what choices are possible and how empirical evidence can inform those choices. In the sections below, we discuss some conceptual issues underlying the idea of health accounts and describe the input and output components of a health account. In the process, we attempt to lay out the major research areas that need to be developed to inform production of such accounts.


As with several of the other areas of nonmarket activity we have examined, we recommend the formation of a satellite account for health—one that does not replace the current NIPAs or components therein, but exists alongside them. In addition to augmenting the picture provided by the NIPAs, development of a satellite health account could uncover approaches and encourage the development of data that improve the way medical care is measured in the conventional accounts.

As discussed earlier in this report, the key to national income accounting is the delineation of inputs and outputs. The total value of output reflects the dollar value of sales on the production side and the dollar value of payments to factors of production on the income side. Since nearly all transactions captured in the NIPAs are market transactions, prices and quantities exist for most items. Money paid by one person to purchase a good or service becomes realized as income to another so, aside from issues relating to measurement of the return capital, the total value of output should be equal to the total value of the inputs used in its production.


BLS, adopting recommendations from the National Research Council (2002a), is pursuing new experimental health care price indexes. For a full description of how BLS calculates the medical care component of the Consumer Price Index (CPI), see http://www.bls.gov/cpi/cpifact4.htm.

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