Bureau of Economic Analysis (BEA). The NIPAs present gross domestic product (GDP), the measure of the nation’s overall market output, as well as its major components (consumption, investment, government spending, and net exports). The NIPAs provide essential information about economic growth, trends in the mix of goods and services produced and purchased, international trade balances, and the course of business cycles.

The NIPA are used extensively in economic decision making. For example, the Federal Reserve Board and executive branch agencies monitor various indicators in the accounts for purposes of carrying out monetary and fiscal policy. Because the NIPAs are a data-integrating system, they can show shortcomings, lacunae, and inconsistencies in the outputs of other statistical agencies, so they also play a central organizing role in economic measurement. Many excellent sources of information about the NIPAs exist so in this report we do not go into further detail about their construction and attributes.2

BEA includes in the NIPAs a set of industry accounts, which distribute GDP among major industries and sectors of the economy. They show industry output and also input usage. Medical care provider industries (hospitals and so forth) are included in the BEA industry accounts. In addition, one can extract from GDP components estimates of total spending on medical care and on the major elements of medical care—for example, household and government spending on hospital care. Total spending on medical care is larger than the total output of the medical care–providing industries in the industry accounts, largely because direct purchases of pharmaceuticals and medical devices by households cannot be allocated to the conventional medical care provider industries (hospitals and so forth—see below for additional discussion).

It has long been recognized that GDP is a measure of output, not a measure of welfare. Moreover, the NIPAs are organized around market output—that is, activities in which money changes hands or that are sufficiently similar to market activities that market data can be used to make an imputation (the most important imputation is the one for the value of owner-occupied housing). Nomarket activities, such as unpaid time spent caring for ill persons and personal investments in one’s own health, are not included in GDP. To measure the costs and benefits of such activities, alternative accounts—ones that include elements outside the limits of the present NIPA system—have been proposed. The medical care account we describe is predominantly, though not exclusively, a market-output type of account. The health account is largely nonmarket in character.


Any economic account incorporates an economic framework. The two accounts we consider in this report are not exceptions. The medical care account


The BEA website provides a wealth of information on the methodologies, content, and scope of the NIPA. For example, http://bea.gov/national/pdf/NIPA_primer.pdf provides a good introduction to the accounts.

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