Pricing Heart Attack Treatments

This chapter examines price indexes for medical care, focusing on heart attacks (acute myocardial infarction). It first describes several conceptual issues related to medical care price indexes and considers some basic descriptive information on changes in the treatment of heart attacks over time. It then treats formally two types of medical care price indexes, a service price index and a cost-of-living index. A key practical problem in estimating both types of indexes is measurement: list prices (“charges”) and harder-to-measure transaction prices have diverged increasingly, the development of new or modified medical treatments complicates the comparison of “like” goods over time, and determining the effects of medical treatment on important health outcomes is confounded by many intervening factors. The chapter summarizes the results for heart attack price indexes and extends them to include quality of life and more recent time periods. It also discusses inflation rates and benefit payments.