Are quality-adjusted medical prices declining for chronic disease?

At least for diabetes care, the answer seems to be yes, according to Karen Eggleson,

We analyze individual-level panel data on medical spending and health outcomes for 123,548 patients with type 2 diabetes in four health systems. Using a “cost-of-living” method that measures value based on improved survival, we find a positive net value of diabetes care: the value of improved survival outweighs the added costs of care in each of the four health systems. This finding is robust to accounting for selective survival, end-of-life spending, and a range of values for a life-year or, equivalently, to attributing only a fraction of survival improvements to medical care.

That is from a new NBER working paper.  One way to read this paper is to be especially optimistic about medical progress, and also the U.S. health care system and furthermore the net contribution of science and medicine to economic growth.  Another way to read this paper is to be especially pessimistic about human discipline and the ability to follow doctor’s orders.


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