in principle be tracked by type, then quality adjusted and weighted appropriately (Triplett, 2001, p. 1). The current lack of pricing by treatment is, to some extent, a data collection issue. As shown in Table 6-1, data are currently collected by institution and not by treatment. Quality adjustment at the treatment level is another difficult issue. Yet research by Cutler et al. (1998), Shapiro and Wilcox (1996), Triplett (1999), and others has been moving in this direction over the past decade, and solutions to difficult productivity and pricing issues are emerging.

The treatment-based cost-of-disease approach is more consistent with the way the rest of the market-oriented NIPAs are designed: “if the medical care sector is the industry, then the treatments are the products the industry produces” (Triplett, 2001, pp. 3-4). While recognition is growing that treatments and outcomes—not time with the doctor, days in the hospital, and so on—are the conceptually relevant units, measurement of the appropriate quantities and prices is, at this point, very incomplete. The Aging-Related Diseases (ARD) Study of the Organisation of Economic Co-operation and Development (OECD) has begun cataloging information on the cost of treatments in a few areas such as heart disease, stroke, and breast cancer (Triplett, 2002). Research on cost-of-disease accounts is progressing in several countries, including the United States, Canada, the United Kingdom, Australia, and the Netherlands. This kind of work begins with a reorganization of data from the national economic accounts into expenditures by international disease classification codes. Much of this work in the United States is being done by the National Center for Health Statistics (NCHS).

A Broader Approach

Research on disease and treatment-cost frameworks has great potential to improve the usefulness of national health care accounts. For a health (not health care) account that would fit into a set of satellite nonmarket accounts, however, one would want to go much further. Specifically, in accord with the rest of this report, we advocate an account that (1) includes both market and nonmarket inputs and outputs, (2) estimates input and output values independently, and (3) defines outputs that are linked to utility as directly as possible.

While the treatment-based approach described above redefines medical sector output in a way that is appropriate for the NIPAs, it does not necessarily advance the objective of measuring inputs and outputs independently. For example, the technique for pricing heart disease treatment may simply sum up the costs of inputs, such as those associated with angioplasty, hospital time, and pharmaceuticals. Most of the data in the ARD Study capture input costs since prices are generally not charged directly on the basis of complete medical treatments. In a prospective payment system, one might be able to obtain reasonably good cost estimates for most one-time procedures that do not result in complications (e.g., a bypass operation, or the delivery of a baby), but one does not get a quote for,

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