Health economics and statistics

Assignment Questions

PART 1. (5 points): Healthcare Spending

Graph (i) health expenditures as a proportion of GDP and (ii) GDP growth on one, clearly-labeled graph. Make sure your axes are labeled and there’s a title on your graph and a source/citation at the bottom. All data should be in nominal (rather than real) terms and should be annual, spanning sixty years from 1960-2020)

What happened to health care spending in absolute terms and as a % of GDP during the downturns of 2001-02, 2007-09, and 2020? Why (use your intuition in 1-3 sentences)

Detailed instructions in case you need them:

Download FRED data on US GDP growth (nominal, not real) and create a graph with a data series labeled “Nominal GDP growth” (in case you cannot find it it’s called Leading Indicators OECD: Reference Series: Gross Domestic Product: Original Series for the United States). This data goes through 2021

Download US GDP (nominal). This data goes through 2021.

Download National Healthcare Expenditure data. This data spans 1960-2020.

Calculate and graph your own formula = “US Health Expenditures as a proportion of GDP”, 1960-2020.

Graph the data in (1) and (4) above on one chart.

Download and submit your excel or R file through Canvas. Make sure your axes are labeled and there’s a title on your graph and a source/citation at the bottom

PART 2. (15 points): Growth Accounting on National Health Expenditures (NHE):

1.Calculate per capita NHE in 1960 and in 2020 (use the FRED population data)

2.Calculate the compound annual growth rate (CAGR) of NHE from 1960-2020

3.Calculate the CAGR for GDP from 1960-2020 and compare to the CAGR for NHE above

4.Calculate the portion (%) of NHE accounted for by the following categories in 1960 and 2020:

A.Hospital expenditures

B.Physician and Clinical Expenditures

C.Prescription Drug Expenditures

D.Nursing Care

E.Home Health Care

  1. Briefly comment (1 sentence) on how those expenditures have changed over time and why

5.Look at the 2 major sub-categories of spend under National Health Expenditures (i.e., health consumption expenditures (HCE) and investment). (Reflection question) Pharmaceutical investment in R&D is on the order of $200 billion and appears to be much larger than government investment in healthcare as shown here. Where or how do you think such investments get captured in accounting for healthcare sector magnitude and growth?

All graphs and calculations for this assignment should be submitted in Sheets, Excel or R.

Use the following data sources and methodology to answer the assignment questions: FRED (GDP; Population; Leading Indicators OECD: Reference Series: Gross Domestic Product: Original Series for the United States)

National Health Accounts Historical

National Health Expenditures CY 1960-2020 – official data from Centers for Medicaid and Medicare Services (CMS)

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical

National Health Expenditure Accounts (CMS Methodology)

https://www.cms.gov/files/document/definitions-sources-and-methods.pdf?courseID=158887&assignmentID=878071&skipModuleItemSequence=true

If you aren’t familiar with GDP and how we measure it, there are plenty of good sources, you might google parts of khan academy’s macro course

https://www.khanacademy.org/economics-finance-domain/macroeconomics/macro-economic-indicators-and-the-business-cycle/macro-the-circular-flow-and-gdp/v/examples-of-accounting-for-gdp