How have health care prices changed over the past 20 years?This is a question raised by a paper Papanicolas(2024) To answer this question, prices in the United States were compared with prices in Australia, Canada, France and the Netherlands between 2000 and 2020.
Before arriving at the results, we first need to determine what types of price indices there are? The author lists three main types:
- Overall economic price index: For example, GDP price index
- A price index covering all goods and services consumed by households: For example, actual personal consumption (AIC) price index
- national health deflator. These are health-specific price indexes produced by various government entities such as the Centers for Medicare & Medicaid Services (CMS), the Bureau of Economic Analysis (BEA), and the Bureau of Labor Statistics (BLS) to produce the National Health Deflator)
The authors argue that the overall economy and the AIC deflator do a poor job of capturing changes in health care prices.
Although the GDP and AIC price indexes are widely used to deflate health spending for international comparisons, they reflect changes in overall prices rather than changes in health care-specific prices.Given that health care is often provided by non-market producers such as governments (where prices may not be imperfect signals of market value), health care prices can differ significantly from the economy as a whole or AIC prices
The sources used by the author are as follows:
| nation | Index name | Producer |
| Australia | Total Health Price Index (THPI) | Australian Institute of Health and Welfare (AIHW) |
| Canada | Overall Healthcare Implicit Price Index | statistics canada |
| France | health price index | Directorate of Research, Evaluation and Statistics (DRESS) |
| Dutch | health price index | Statistics Netherlands (Central Bureau of Statistics, CBS) |
| us | Personal Healthcare Price Index | Centers for Medicare and Medicaid Services (CMS) |
result:
The highest growth rates of health care expenditures were in Australia (5.7%) and the United States (4.9%), and the lowest growth rates were in France (2.7%). However, while a larger portion of the increase in spending was due to higher prices in the United States (accounting for 55% of spending growth), the figures for other countries were much lower (48%). farther:
By looking at the ratio of the specific consumption-based health index to the general consumption-based price index (AIC) during the study period, we find that health prices in the United States have shown the highest relative cumulative “excess” growth over the past few years. study period (14%), followed by Canada (12%). Compared with overall price growth, Australia and the Netherlands also showed higher cumulative medical price growth over the study period, although slightly lower than the first group of countries (7%–6%). Finally, France has the lowest cumulative price increase, with health care prices only slightly higher than general prices (2%).
In the chart below, spending growth is broken down into price and volume, with Panel A looking at the consumption deflator for public payers and Panel B looking at the consumption deflator for private payers. One can clearly see that the price of health care purchased by public payers increases faster than that of health care purchased by households (i.e., out-of-pocket or private insurance).
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