CPI revisions

Jay Hecht JayHecht at aol.com
Wed May 20 10:06:16 PDT 1998


In a message dated 98-05-19 12:22:17 EDT, you write:

<<

The most egregious revision, however, had to do with health care. So

far, hospital costs were measured in terms of cost per day. From now on,

the BLS will keep track of cost _per patient_. So, the sooner insurers

can kick patients out of hospitals, the 'cheaper' health care becomes,

and there will be no need to give people raises. I think this revision

is crucial, given that the cost of health care is projected to skyrocket

again after a brief lull.

>> The CPI for healthcare is about 12% of the total CPI-U. The real question is "who pays retail?" For large urban hospitals, most of the business is either medicare and medicaid, whose costs are largely determined by HCFA. Most hospitals run on a DRG system whereby they are paid by disease (e.g. 4-6 days to get a person stabilized for Type I diabetes).

The net effect has been to reduce hospital utilization rates. But I think the CPI doesn't measure the MASSIVE DECLINE IN QUALITY in medical care, especially hospital stays. Why can't we place increases in DISUTILITY (as measured by price declines?) in the CPI.

Jason



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