Are quality-adjusted medical prices declining for chronic disease? Evidence from diabetes care in four health systems

Eur J Health Econ. 2020 Jul;21(5):689-702. doi: 10.1007/s10198-020-01164-1. Epub 2020 Feb 20.

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: Japan, The Netherlands, Hong Kong and Taiwan. 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 fraction of benefits attributable to medical care. Since the estimates do not include the value from improved quality of life, they are conservative. We, therefore, conclude that the increase in medical spending for management of diabetes is offset by an increase in quality.

Keywords: Health expenditures; Medical spending; Net value; Productivity; Quality adjustment.

Publication types

  • Comparative Study

MeSH terms

  • Adolescent
  • Adult
  • Aged
  • Aged, 80 and over
  • Chronic Disease
  • Diabetes Mellitus, Type 2 / economics*
  • Diabetes Mellitus, Type 2 / mortality*
  • Female
  • Health Expenditures / statistics & numerical data*
  • Hong Kong / epidemiology
  • Humans
  • Japan / epidemiology
  • Male
  • Middle Aged
  • Netherlands / epidemiology
  • Quality of Health Care / economics*
  • Risk Factors
  • Taiwan / epidemiology
  • Young Adult