Accounting for Health and Health Care: Approaches to Measuring the Sources and Costs of Their Improvement

Excerpt

In order for policy makers to pursue informed actions to enhance efficiency of the nation’s approach to medical and health care—whether through carefully targeted cost reductions or improved performance—a redesigned data system for tracking resource productivity is needed. This report lays out strategies for advancing this objective. Specifically, the panel recommends that work proceed on two projects that are distinct but complementary in nature: the first involves reformulating the economic accounting of inputs and outputs for the medical care sector; the second involves developing a data system that coordinates population health statistics with information on the determinants of health. Though the scope of activities required for each of these two projects is different, both economic problems involve identifying units of measurement for which meaningful prices and quantities can be attached so that returns to investments in health can be estimated, tracked over time as the quality of care and the composition of the population change, and compared under alternative planning scenarios.

Inputs to medical care include capital, labor, energy and materials, research and development, and the like. The report gives considerable attention to how expenditures on these inputs are to be allocated in an accounting structure, with the panel recommending that a substantial portion can be framed in terms of treatments for diseases and other well-defined conditions. In principle, this structure allows the value of the output of medical care to consumers (patients) to be adjusted to reflect changing quality of outcomes.

Inputs to health, the output of a broader accounting concept, include medical care but also many other factors. An essential component of this kind of account—and, more immediately, a data system that could be used in its development—involves selecting a summary measure of population health, and the report assesses the options. Though it involves very long-term commitments, efficient management of health care resources requires developing a more complete understanding than currently exists of the links between population health and the array of health inputs. Thus, the report discusses data needs and issues that are confronted in research seeking to attribute health effects to both medical and nonmedical (as well as market and nonmarket) inputs to health.