A Health Report Card for the Nation

David CutlerHarvard University

ASHE Presentation, June 6, 2006

The Missing Ingredient in Health Reform… Health Is Medicare Part D worth it? How big a problem are medical costs? Where should we invest additional money?

All of these are questions about the balance between health and money.

Health Measurement

There is an enormous literature on health assessment for cost-effectiveness analysis. This is a good start, but: It doesn’t add up to any total Efficacy v. effectiveness Double counting (medical spending for a

diabetic who has an MI) Undercounting (surgeries get better over time)

An Analogy

Suppose we wanted to know how the economy is doing, but all we know about is: Frozen custard sales in WI Auto industry employment in MI CEO wages

We need to pull it all together

The Analogy: National Income and Product Accounts World War I exposed fundamental macro questions

How much could the military take without creating supply shortages?

How much could employment grow without creating inflation?

After the war, a group of economists started to gather systematic data on the economy to prepare for future questions Led by Wesley Mitchell (Columbia) and Edwin Gay

(Harvard Business School), who founded the National Bureau of Economic Research

Work fell to Willford King and Simon Kuznets

The Analogy: National Income and Product Accounts (continued) In 1932, the Senate responded to the

Depression by ordering the Commerce Department to report on the state of the economy in 1929, 1930, and 1931 Simon Kuznets was loaned to the Commerce

Department to do this. The first National Income and Product

Accounts took two years to produce Commerce department decided to

institutionalize this.

The Analogy: National Income and Product Accounts (continued) Simon Kuznets ultimately broke with the

Department of Commerce over the treatment of non-market activities (Kuznets was in favor; BEA was opposed).

Issue of non-market activities is still front and center.

The Analogy: National Income and Product Accounts (continued) National Health Accounts are the natural

adjunct to National Income and Product Accounts

Recommendation 6.1: A health satellite account should be produced by the Bureau of Economic Analysis in collaboration with the Centers for Medicare and Medicaid Services of the U.S. Department of Health and Human Services.

Abraham and Mackie, Beyond the Market: Designing Nonmarket Accounts for the United States,

National Academy of Sciences, 2005.

Outline

National Health Accounts: A Conceptual Basis

The process of constructing accounts Health Accounts: A First Pass Population health assessment

National Health Accounts: A Conceptual Basis

The Health Economy

Inputs Medical care Time investment Other consumption

(cigarettes) R&D Environment

Outputs Health (QALE) External (income)

effects from being healthier

An Analogy: National Income and Product AccountsInputs Labor Capital Raw materials

Outputs Total sales

Line      2002       2003   

1 Gross domestic product 10,481 10,988

2 Personal consumption expenditures 7,385.3 7,757.4

3    Durable goods 911.3 941.6

4    Nondurable goods 2,086.0 2,209.7

5    Services 4,388.0 4,606.2

6 Gross private domestic investment 1,589.2 1,670.6

7    Fixed investment 1,583.9 1,673.0

12    Change in private inventories 5.4 -2.4

13Net exports of goods and services

-426.3 -495.0

20Government consumption expend-itures and gross investment

1,932.5 2,054.8

21    Federal 679.5 757.2

24    State and local 1,253.1 1,297.6

Line     2002  

    2003  

 

1 National income 9,290.8 9,707.8

2 Compensation of employees 6,019.1 6,203.0

3    Wage and salary accruals 4,974.6 5,100.2

6    Supplements to wages and salaries 1,044.5 1,102.8

9 Proprietors' income with IVA and CCAdj 797.7 846.9

12 Rental income of persons with CCAdj 173.0 164.2

13 Corporate profits with IVA and CCAdj 904.2 1,069.9

14    Taxes on corporate income 195.0 224.9

15    Profits after tax with IVA and CCAdj 709.1 845.0

18 Net interest and miscellaneous payments 582.4 583.2

19 Taxes on production and imports 760.1 788.7

20 Less: Subsidies 1 38.2 48.2

21 Business current transfer payments(net) 89.8 95.2

25Current surplus of government  enterprises 1 2.8 5.0

Current National Health Accounts

Inputs Medical spending by:

Payer Recipient of funds

Outputs

Issues

Want outcomes too

Need to relate inputs to outputs The ‘disease’ is the natural way to do this.

Ideal National Health Accounts

Inputs Medical spending by:

Disease Time investment Other consumption

(cigarettes) R&D Environment

Outputs Health by:

Disease

What Do We Need To Do

1. Measure the population’s health

2. Attribute that to particular conditions

3. Measure spending by condition

4. Build models that link conditions and their treatments to costs and outcomes.

I have been working on this with

Allison Rosen, U of Michigan Susan Stewart, Harvard and NBER Rebecca Woodward, Harvard and NBER Hsou May, U of Michigan Emily Shelton, U of Michigan And others

A More Complex Version: Including Non-Fatal Health

Conceptual Basis

We operationalize health as QALE. How many years of quality adjusted life can a

person today expect to live? The population is healthier today if the average

person has a larger QALE. In making this comparison, we hold the

population age and gender distribution constant at the 2000 level.

Conception of non-fatal health

Health

Disease 1

Domain 1:Symptoms / Impairments

Domain 2:Symptoms / Impairments

Domain 3:Symptoms / Impairments

Disease 2 Disease 3

Step 1: Relate self-reported general health to symptoms and impairments

Ordered probit regression model. Scale each symptom/impairment to a 0-1

QALY metric using the estimated range of the self-rated health scale

Hold constant disutility of each symptom/ impairment as calculated in 2000. Note: these don’t change much over time.

Source: Stewart, Woodward, Rosen, and Cutler, “A Proposed Method for Monitoring U.S. Population Health: Linking Symptoms, Impairments, Chronic Conditions, and Health Ratings,” NBER WP 11358.

Step 2: Relate symptoms and impairments to diseases

Probit regression model. Calculate impact of each disease on each

symptom/impairment using regression coefficient and prevalence of that disease. Impact of diseases do change.

Data Sources

NMES (1987) and MEPS (2000) MCBS (includes institutionalized) NHANES (disease measurement) Disease-specific data:

SEER Framingham Heart Study …

Comparable Symptoms/Impairments(NMES 1987 – MEPS 2000)

Primary activity limitations

Social/secondary activity limitations

Walking

Bending/lifting

Self-care

Depressive symptoms

Anxiety symptoms

Vision problems

Hearing problems

Would like to have cognitive functioning.

Symptoms/impairments with largest decrements

0.00

0.05

0.10

0.15

0.20

0.25

Primar

y Acti

vity

Social

/Sec

onda

ry

Self-c

are

Walk

ing

Bend/

Lift

Depre

ssive

Anxiou

s

Vision

Hearin

g

Dec

rem

en

t o

n 0

to

1 s

ca

le

Change in Health, 1987-2000

0.00.51.01.52.02.53.03.54.04.5

Overall Overall White Black White Black

Males FemalesLE/QALE At Birth Weighted average of LE/QALE at each age

Life Expectancy

QALE

QALE increase by impairment

-1.000

0.000

1.000

2.000

3.000

4.000

5.000

Overall Males Females

depressive symptoms

hearing

secondary activity

anxiety symptoms

vision

bending/lifting

walking

primary role activity

increased LE

Impairment Question Wording

  NMES  MEPS NMES MEPS

Primary Activity

Health keeps you from working at a job, doing work around the house, or going to school

Limited in any way in the ability to work at a job, do housework, or go to school because of an impairment or a physical or mental health problem

 

14% 10%

Walking Any trouble walking one block because of your health

Difficulty walking about 3 city blocks or about a quarter of a mile

13% 8%

Bending Trouble bending, lifting, or stooping because of your health

Difficulty bending down or stooping from a standing position to pick up an object from the floor or tie a shoe

12% 8%

Vision Any difficulty seeing (with glasses if you wear them)

Any difficulty seeing (with glasses or contacts, if used)

10% 4%

If health care explains 50% of health improvement

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

Birth Age 15 Age 45 Age 65

QALE LE Only

Conclusions

The population is healthier in 2000 than in 1987.

Gains larger for men and for Blacks

QALE gains are due more to: LE increases for men primary activity, walking improvements for women

QALE increase is about twice LE increase.

The productivity of medical care appears to be high.

Summary

National health measurement is necessary and possible

Health has improved immensely, more than enough to justify the large increase in medical spending Quality is as important as quantity

Disease-based models will help evaluate what we have done and simulate future possibilities.