reports

Development of a Medical Productivity Index for health insurance beneficiaries

Insurance Markets and Companies: Analyses and Actuarial Computations 2:7-15.

University of Minnesota, Minneapolis, MN, USA

In this paper, a Medical Productivity Index (MPI) is proposed as such a metric to capture the value of care received by patients from medical providers. For the health sector, such a metric could address the growing concern that medical care expenditures are sapping the economic vitality of a nation if these outlays show a productivity gain. The two primary components of the MPI are a measure of health outcomes and a measure of medical care effort. The MPI is applied to a national sample of Medicare 2007-2009 claims data. Application of the MPI shows both a cyclical and longterm trend in medical care productivity. There are substantial regional variations in MPI as well. Extensions of the MPI could provide disease and insurance contract specific sub-sector component comparisons in future applications. The use of MPI to retrospective claims and contemporary claims data provides a technology to track changes in medical productivity to gauge the impact of future health reform and medical technologies as well as an aging society to patients and the health care industry.