Are Quality-Adjusted Medical Prices Declining for Chronic Disease? Evidence from Diabetes Care in Four Health Systems

38 Pages Posted: 1 Jul 2019 Last revised: 19 Jun 2021

See all articles by Karen Eggleston

Karen Eggleston

Stanford University - Walter H. Shorenstein Asia-Pacific Research Center (APARC)

Brian Chen

University of South Carolina

Chih-Hung Chen

Chang Gung University - Chang Gung Memorial Hospital

Ying Isabel Chen

National Taiwan University

Talitha Feenstra

National Institute for Public Health and the Environment (RIVM)

Toshiaki Iizuka

University of Tokyo

Janet Tinkei Lam

The University of Hong Kong

Gabriel Leung

University of Hong Kong - School of Public Health & Department of Community Medicine

Jui-fen Lu

Chang Gung University - Department and Graduate Institute of Business Administration; Chang Gung University - Health Care Management

Beatriz Rodriguez-Sanchez

University of Castilla-La Mancha

Jeroen Struijs

National Institute for Public Health and the Environment (RIVM)

Jianchao Quan

The University of Hong Kong

Joseph P. Newhouse

Harvard Medical School; Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Date Written: June 2019

Abstract

Improvements in medical treatment have contributed to rising health spending. Yet there is relatively little evidence on whether the spending increase is “worth it” in the sense of producing better health outcomes of commensurate value—a critical question for understanding productivity in the health sector and, as that sector grows, for deriving an accurate quality-adjusted price index for an entire economy. We analyze individual-level panel data on medical spending and health outcomes for 123,548 patients with type 2 diabetes in four health systems. Using a “cost-of-living” method that measures value based on improved survival, we find a positive net value of diabetes care: the value of improved survival outweighs the added costs of care in each of the four health systems. This finding is robust to accounting for selective survival, end-of-life spending, and a range of values for a life-year or, equivalently, to attributing only a fraction of survival improvements to medical care.

Suggested Citation

Eggleston, Karen and Chen, Brian and Chen, Chih-Hung and Chen, Ying Isabel and Feenstra, Talitha and Iizuka, Toshiaki and Lam, Janet Tinkei and Leung, Gabriel and Lu, Jui-fen and Rodriguez-Sanchez, Beatriz and Struijs, Jeroen and Quan, Jianchao and Newhouse, Joseph P., Are Quality-Adjusted Medical Prices Declining for Chronic Disease? Evidence from Diabetes Care in Four Health Systems (June 2019). Available at SSRN: https://ssrn.com/abstract=3411376

Karen Eggleston (Contact Author)

Stanford University - Walter H. Shorenstein Asia-Pacific Research Center (APARC) ( email )

Stanford, CA 94305
United States

Brian Chen

University of South Carolina ( email )

701 Main Street
Columbia, SC 29208
United States

Chih-Hung Chen

Chang Gung University - Chang Gung Memorial Hospital ( email )

No.199, Tunghwa Rd
Taipei
Taiwan

Ying Isabel Chen

National Taiwan University ( email )

1 Sec. 4, Roosevelt Road
Taipei 106, 106
Taiwan

Talitha Feenstra

National Institute for Public Health and the Environment (RIVM) ( email )

3720 BA Bilthoven
Netherlands

Toshiaki Iizuka

University of Tokyo ( email )

7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033
Japan

Janet Tinkei Lam

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

Gabriel Leung

University of Hong Kong - School of Public Health & Department of Community Medicine ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

Jui-fen Lu

Chang Gung University - Department and Graduate Institute of Business Administration ( email )

Tauyuan, Taiwan
China

Chang Gung University - Health Care Management ( email )

259 Wen-Hwa 1st Road
6F, Management Building
Kwei-Shan Tao-Yuan
Taiwan

Beatriz Rodriguez-Sanchez

University of Castilla-La Mancha ( email )

Spain

Jeroen Struijs

National Institute for Public Health and the Environment (RIVM) ( email )

3720 BA Bilthoven
Netherlands

Jianchao Quan

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

Joseph P. Newhouse

Harvard Medical School; Harvard Kennedy School (HKS) ( email )

Department of Health Care Policy
Boston, MA 02115
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
9
Abstract Views
352
PlumX Metrics