Guidelines for Measuring Disease Episodes: An Analysis of the Effects on the Components of Expenditure Growth

Objective

To provide guidelines to researchers measuring health expenditures by disease and compare these methodologies' implied inflation estimates.

Data Source

A convenience sample of commercially insured individuals over the 2003 to 2007 period from Truven Health. Population weights are applied, based on age, sex, and region, to make the sample of over 4 million enrollees representative of the entire commercially insured population.

Study Design

Different methods are used to allocate medical‐care expenditures to distinct condition categories. We compare the estimates of disease‐price inflation by method.

Principal Findings

Across a variety of methods, the compound annual growth rate stays within the range 3.1 to 3.9 percentage points. Disease‐specific inflation measures are more sensitive to the selected methodology.

Conclusion

The selected allocation method impacts aggregate inflation rates, but considering the variety of methods applied, the differences appear small. Future research is necessary to better understand these differences in other population samples and to connect disease expenditures to measures of quality.