Adjusting Health Expenditures for Inflation: A Review of Measures for Health Services Research in the United States.

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Abstract

OBJECTIVE:

To provide guidance on selecting the most appropriate price index for adjusting health expenditures or costs for inflation.

DATA SOURCES:

Major price index series produced by federal statistical agencies.

STUDY DESIGN:

We compare the key characteristics of each index and develop suggestions on specific indexes to use in many common situations and general guidance in others.

DATA COLLECTION/EXTRACTION METHODS:

Price series and methodological documentation were downloaded from federal websites and supplemented with literature scans.

PRINCIPAL FINDINGS:

The gross domestic product implicit price deflator or the overall Personal Consumption Expenditures (PCE) index is preferable to the Consumer Price Index (CPI-U) to adjust for general inflation, in most cases. The Personal Health Care (PHC) index or the PCE health-by-function index is generally preferred to adjust total medical expenditures for inflation. The CPI medical care index is preferred for the adjustment of consumer out-of-pocket expenditures for inflation. A new, experimental disease-specific Medical Care Expenditure Index is now available to adjust payments for disease treatment episodes.

CONCLUSIONS:

There is no single gold standard for adjusting health expenditures for inflation. Our discussion of best practices can help researchers select the index best suited to their study.