4
Summary, Perspective, and Prospects for Moving Forward

At the end of the day, members of the steering committee (and others) noted several areas of topical guidance for which much agreement among workshop participants was demonstrated; several of these areas include actions for the Bureau of Economic Analysis (BEA) and other agencies to consider. Participants supported the idea that BEA’s satellite account, and any subsequent revision to the medical care component of the national income and product accounts (NIPAs), should not involve a revision of scope. Rather, the new framework should stay within the market-oriented boundaries of the national accounts and explicitly extend to a nonmarket component. BEA’s new work is primarily intended to provide an alternative way of measuring medical care prices and quantities, and the agency’s motivation is to improve measurement within the existing NIPAs. BEA presenters acknowledged that the work could eventually affect overall measured rates of inflation and productivity and, in turn, real gross domestic product growth rates.

Barbara Fraumeni, Jack Triplett, and others were pleased that BEA is pushing forward with work on the full structure of the accounts—both the expenditures and industry sides—and were reassured to learn that the agency had a strategy for updating the industry accounts. Because the medical care sector is complicated, it is important that work progresses in parallel with expenditure-side revisions from the start.

Workshop participants also agreed that the methodological focus on episodes of treatment as the unit of measurement was the right one. They supported the notion that treatments could be meaningfully priced, in the sense that treatment is the service concept that consumers (patients) demand, and can be coordinated with current national income and product accounting processes.



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4 Summary, Perspective, and Prospects for Moving Forward At the end of the day, members of the steering committee (and others) noted several areas of topical guidance for which much agreement among workshop participants was demonstrated; several of these areas include actions for the Bureau of Economic Analysis (BEA) and other agencies to consider. Participants supported the idea that BEA’s satellite account, and any subsequent revision to the medical care component of the national income and product accounts (NIPAs), should not involve a revision of scope. Rather, the new framework should stay within the market-oriented boundaries of the national accounts and explicitly extend to a nonmarket component. BEA’s new work is primarily intended to pro- vide an alternative way of measuring medical care prices and quantities, and the agency’s motivation is to improve measurement within the existing NIPAs. BEA presenters acknowledged that the work could eventually affect overall measured rates of inflation and productivity and, in turn, real gross domestic product growth rates. Barbara Fraumeni, Jack Triplett, and others were pleased that BEA is push- ing forward with work on the full structure of the accounts—both the expen- ditures and industry sides—and were reassured to learn that the agency had a strategy for updating the industry accounts. Because the medical care sector is complicated, it is important that work progresses in parallel with expenditure-side revisions from the start. Workshop participants also agreed that the methodological focus on episodes of treatment as the unit of measurement was the right one. They supported the notion that treatments could be meaningfully priced, in the sense that treatment is the service concept that consumers (patients) demand, and can be coordinated with current national income and product accounting processes. 

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 STrATEgiES fOr A BEA SATElliTE HEAlTH CArE ACCOuNT Participants demonstrated different preferences regarding specifically how to track expenditures and output (and eventually outcomes) associated with medical treatments. Whether by encounter, by episode, or by person, all agreed that the appropriate concept depends a great deal on the specific application. For example, for price index work, a person-based approach may not be as appropri- ate as an episode-based approach. If the goal is to broadly compare costs and health improvements within a given disease on a micro level, as is done in cost- effectiveness studies and decision analysis, a person-based regression approach might be right. BEA participants noted that more research is needed on the virtues and limitations of various methods. Participants embraced BEA’s two-stage strategy for implementing the satel- lite account that involves first getting expenditures classified, then moving on to quality change issues. There was general acknowledgment that, because such information serves as a building block for many kinds of health data systems, creating new ways of organizing and tracking health care expenditures is an immediate priority. This work should prove useful for both the experimental health accounting and national income and product accounting purposes, as well as for price and productivity measurement. Once the nominal flows for the sector have been figured out correctly, BEA can then move on to estimating improved disease-based price indexes. Although the plan is to defer integration of some aspects of price work until a greater consensus about methods emerges, participants emphasized the impor- tance of thinking about quality change from the beginning. Ideally, the satellite account should move forward in coordination with work proceeding elsewhere in the health economics literature, which implies focusing on outcome trends. Ultimately, moving beyond measurement only of medical care inputs will allow researchers to gain greater insights into traditional economic issues, such as productivity growth and quality change in medical care. This underscores the importance of drawing on expertise from medical researchers to help evaluate trends in treatment outcomes. Participants also agreed that medical care deflators or indexes should reflect price changes associated with changes in inputs—for example, moving from surgical to drug treatment or inpatient to outpatient settings; ideally, they would also be able to assess whether quality has improved, deteriorated, or remained constant. If quality changes, for better or worse, that should be reflected in the calculation of real output. Both BEA and the Bureau of Labor Statistics (BLS) presented research showing progress in this area but noted that the capability to adjust price indexes to reflect trends in outcomes is still a long way off, and the agencies would be relying heavily on the academic community to point the way. Several participants suggested that BEA (and BLS) should do more to docu- ment their plans and progress. Requests were made for two papers from BEA: one that discusses the accounting system and proposed changes to it; and another that

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 SuMMArY, PErSPECTiVE, AND PrOSPECTS describes what can and cannot be done now and what the agency would like to tackle in the future—namely, the quality change issue. One of the most difficult issues that arises in health accounting and price indexing work is comorbidity; when patients require medical care for multiple conditions, the task of assigning expenditures to predefined categories accurately becomes much more compli- cated. This will be a key topic in these papers. Data needs for advancing health accounting were identified at several points throughout the day. Dale Jorgenson emphasized the need to consider a wide range of possible data sources to underpin the satellite health care account. His sug- gestion to BEA and BLS was that they work out a way of coordinating their data infrastructures as efficiently as possible. He made the point that a solution will need to be found for combining data on providers’ prices with the information collected from claims and suggested that kind of work be put on the table for BEA. Ana Aizcorbe agreed that exploiting multiple data sources was a key task, but she noted a number of difficulties, among them the barriers to linking provider data on expenditures with data on patients. A lot could be done with claims data for the insured population if, for no other reason, because of their enormous size and coverage. BEA staff agreed that using the Medical Expenditure Panel Survey (MEPS) as the backbone of the data infrastructure, and then claims information in a supplemental role wherever gaps appear, was a reasonable strategy. Many participants noted the importance of anticipating how alternative strategies will play out once the research program is in full swing. To monitor quality change in medical care for purposes of price measure- ment, accurate data on outcomes for treatments—defined in parallel with the expenditure categories—would be needed. Mark McClellan spoke about mea- suring treatment outcomes in this context. Among participants, there seemed to be complete agreement that quality adjustment of price indexes for the satellite health care accounts is extremely important, and also that it is very hard to do. Gail Wilensky noted two specific types of data needs that will need to be com- bined: (1) individual observations in a national probability sample (e.g., MEPS), which provides good measures for conditions that occur frequently enough in a relatively small sample and for which a good reliable statistical basis can be formed, and (2) registries or other specialized data for those rarer conditions that would otherwise require very large data sets to provide that information. In closing comments, Wilensky summarized the role of BEA’s program, noting that many of the key tasks will involve long-term research commitments. Because of this, using a mechanism such as a satellite account—in which experi- mental strategies can be explored while not interfering with the workings of the regular national accounts—offers a good strategy for balancing the need for addi- tional information with the need to maintain methodologies that have a proven historical record.