Pricing Heart Attack Treatments

David M. Cutler, Mark McClellan, Joseph P. Newhouse, Dahlia Remler

NBER Working Paper No. 7089
Issued in April 1999
NBER Program(s):Aging, Health Care, Productivity, Innovation, and Entrepreneurship

In this paper, we estimate price indices for heart attack treatments, demonstrating the techniques that are currently used in official price indices and presenting some alternatives. We consider two types of price indices, a Service Price Index, which prices specific treatments provided, and a Cost of Living Index, which prices the health outcomes of patients. Both indices are complicated by price measurement issues: list prices and transactions prices are fundamentally different in the medical care field. The development of new or modified medical treatments further complicates the comparison of like' goods over time. And the Cost of Living Index is hampered by the need to determine how much of health improvement results from medical treatments in comparison to other factors. We describe methods to address each of these obstacles. We conclude that whereas traditional price indices when applied to heart attack treatments are rising at roughly 3 percent per year above general inflation, a corrected service price index is rising at perhaps 1 to 2 percent per year above general inflation, and the cost of living index is falling by 1 to 2 percent per year relative to general inflation. We discuss the implications of these results for official price index calculations.

download in pdf format
   (487 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w7089


Users who downloaded this paper also downloaded* these:
Cutler, McClellan, Newhouse, and Remler Pricing Heart Attack Treatments
Cutler, McClellan, and Newhouse w6514 The Costs and Benefits of Intensive Treatment for Cardiovascular Disease
Cutler and McClellan w5751 The Determinants of Technological Change in Heart Attack Treatment
Shapiro, Shapiro, and Wilcox Measuring the value of Cataract Surgery
Glaeser, Kominers, Luca, and Naik w21778 Big Data and Big Cities: The Promises and Limitations of Improved Measures of Urban Life
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us