Accounting For Health Care: Integrating Price Index And Cost-Effectiveness Research

February 1, 1999


Personal health care expenditures in the National Health Accounts increased at an average annual rate of 10.2 percent per year between 1985 and 1992. Were health care prices also rising rapidly between 1985 and 1992? That is less clear.

Health expenditures are the product of price and quantity. Determining whether expenditure increases are caused by price increases requires a methodology for separating health care spending into price and quantity changes—into medical price inflation and increases in the output of health care. Economic statisticians lack an adequate methodology for this task.