A Satellite Account of U.S. Health Care Spending: Plans and progress Brian C. Moyer Associate Director for Industry Accounts 12 th OECD-NBS Workshop on National Accounts Paris, France October 27-31, 2008

2 Health care spending as a percent of GDP Source: U.S. Bureau of Economic Analysis

3 Health care spending in BEA’s accounts  National income and product accounts  Consumer spending on health care  Investment in health care equipment  Contribution of health care to real GDP growth  Industry accounts  Input-output accounts—detailed transactions for the health care industries  GDP-by-industry accounts—real value added for the health care industries

4 Conceptual model of a national health account InputsOutputs  Medical Care Market labor/capital Volunteer labor  Time invested in own health  Other consumption items  Research and development  Quality of the environment  Health status Longevity Quality of life  Financial externalities Source: Beyond the Market: Designing Nonmarket Accounts for the United States (National Research Council, 2005)

5 BEA’s Health Care Spending Satellite Account Focuses on three primary areas:  Reconcile National Health Expenditure Accounts and National Income and Product Account measures  Develop disease-based statistics for health care spending  Develop disease-based price indexes for health care spending

6 Treatment substitution: An example Assumptions: No price change for either type of treatment No change in number of patients Problem: As patients use outpatient services, Nominal expenditures fall Treatment prices show no change “Real” spending falls, even though quantities did not Previous studies suggest this issue is numerically important. price time In patient Out patient Cost of Cataract Surgery

7 Disease-based price indexes: Early research Features of index: Constructed using large claims database for HMO patients Price = revenue from all sources Price is defined as price per patient treated for a homogeneous condition Dollars are allocated to conditions using “episode groupers” “Providers” are identified using “place of service” variable Source: Aizcorbe and Nestoriak (2008) Comparison of disease- and provider-based indexes Disease-based Provider-based

8 Accounting framework: Initial thoughts  Consumer spending organized by type of disease  Primary caregiving industry provides health care services using inputs from other health care industries, such as hospitals, laboratories, and pharmacies  Productivity gains allocated across industries

9 Routing of industry transactions Other industries provide Intermediate inputs  Industry that provides health care 