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Calculating Disease-Based Medical Care Expenditure Indexes for Medicare Beneficiaries

Calculating Disease-Based Medical Care Expenditure Indexes for Medicare Beneficiaries

A Comparison of Method and Data Choices

Chapter:
(p.113) 4 Calculating Disease-Based Medical Care Expenditure Indexes for Medicare Beneficiaries
Source:
Measuring and Modeling Health Care Costs
Author(s):
Anne E. HallTina Highfill
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226530994.003.0005

Disease‐based medical care expenditure indexes studied in recent literature produce widely different results for medical care inflation and also vary in the datasets and methods used, making comparison difficult. In this paper, using two data sources and two different methods for calculating expenditure indexes for the Medicare population, we compare the indexes produced and establish some results that may help in choosing indexes for this population. We compare two methods: the primary diagnosis method and a regression‐based method. The former is preferable because of its transparency but makes stringent demands of the data. We find that when the methods are applied to the same datasets, the primary diagnosis method produces higher average annual aggregate growth rates. This implies the regression‐based method should be employed with caution. We compare expenditure indexes produced from the Medicare Current Beneficiary Survey and the Medical Expenditure Panel Survey. Each has its advantages. The optimal index may be a hybrid of the primary diagnosis method applied to Medicare claims and a regression‐based index for pharmaceutical spending. We discuss further research, such as comparing our results with indexes created with commercial groupers, and what data to use for Medicare private plan enrollees.

Keywords:   health care, economic measurement, medicare, inflation, national accounting

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