A Health Report Card for the Nation

1. A Health Report Card for the Nation David Cutler Harvard University ASHE Presentation, June 6, 2006

2. 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.

3. 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)

5. 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

6. 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

7. 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.

8. 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.

9. 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.

10. Outline • National Health Accounts: A Conceptual Basis • The process of constructing accounts • Health Accounts: A First Pass • Population health assessment

11. National Health Accounts: A Conceptual Basis

12. Inputs Medical care Time investment Other consumption (cigarettes) R&D Environment Outputs Health (QALE) External (income) effects from being healthier The Health Economy

13. Inputs Labor Capital Raw materials Outputs Total sales An Analogy: National Income and Product Accounts

16. Inputs Medical spending by: Payer Recipient of funds Outputs Current National Health Accounts

17. Issues • Want outcomes too • Need to relate inputs to outputs • The ‘disease’ is the natural way to do this.

18. Inputs Medical spending by: Disease Time investment Other consumption (cigarettes) R&D Environment Outputs Health by: Disease Ideal National Health Accounts

19. What Do We Need To Do • Measure the population’s health • Attribute that to particular conditions • Measure spending by condition • Build models that link conditions and their treatments to costs and outcomes.

20. 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

21. A More Complex Version: Including Non-Fatal Health

22. 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.

23. Conception of non-fatal health Health Domain 1: Symptoms / Impairments Domain 2: Symptoms / Impairments Domain 3: Symptoms / Impairments Disease 1 Disease 2 Disease 3

25. 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.

26. 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.

27. Data Sources • NMES (1987) and MEPS (2000) • MCBS (includes institutionalized) • NHANES (disease measurement) • Disease-specific data: • SEER • Framingham Heart Study • …

28. 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.

29. Symptoms/impairments with largest decrements

30. Change in Health, 1987-2000

31. QALE increase by impairment

32. Impairment Question Wording

33. If health care explains 50% of health improvement

34. 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.

35. 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.