Reconciling Medical Expenditure Estimates from the MEPS and the NHEA, 2012

In this study, we compare and align health care expenditure estimates from the Medical Expenditure Panel Survey and the National Health Expenditure Accounts. Reconciling MEPS and NHEA estimates serves two important purposes. First, it is an important quality assurance exercise for improving and ensuring the integrity of estimates from both sources. Second, the reconciliation provides a consistent baseline of health expenditure data for policy simulations. MEPS is often used in developing microsimulation models because it contains person-level expenditures. Reliable estimates of national health spending need to be used as a baseline for analyzing the impact of potential policy changes on health care costs. Based on results from our study, analysts can adjust MEPS to be consistent with the NHEA so that the projected costs as well as budgetary and tax implications of any policy change are consistent with national health spending estimates. Previous reconciliations have been used as the baseline by the Department of Health and Human Services, the Congressional Budget Office, RAND and other researchers in simulating the impact of potential policy changes.

The NHEA and MEPS both provide comprehensive estimates of health care spending in the U.S. The NHEA is primarily based on aggregate provider revenue data and administrative records of publically administered programs and covers the entire U.S. population and a full range of health care expenditures, including personal health care spending, public health services, research, and investment in structures and equipment. NHEA estimates are produced annually in the U.S. by the Office of the Actuary at the Centers of Medicare and Medicaid Services (CMS). MEPS, on the other hand, provides person-level information on health expenditures from a nationally representative sample of households in the civilian, non-institutionalized population. MEPS is produced by the Agency for Health Care Research and Quality (AHRQ) and the National Center for Health Statistics. The reconciliation is conducted every five years when the quinquennial Economic Census is available as it is the only data source that contains expenditures at the required level of detail so that specific expenditures reported in different service categories in NHEA and MEPS can be aligned. . The previous reconciliations were conducted for 1996, 2002 and 2007 (Selden, Levit and Cohen et al. 2001, Sing, Banthin and Selden et al. 2006 and Bernard, Cowan and Selden et al. 2013).

Although each source provides a measure of total national spending on personal health care (PHC), at first glance the estimates appear to diverge significantly. We make adjustments to account for the differences in underlying populations, covered services and other measurement concepts to reconcile the expenditure estimates. Once we adjust the NHEA to make it consistent with MEPS, we compare and discuss potential reasons for the differences for each service category and source of payment. We also discuss how the expenditure estimates have changed since the previous reconciliation in 2007. Identifying service types and sources of payment with larger gaps helps AHRQ and CMS focus future research efforts aimed at improving expenditure estimates from the MEPS and the NHEA.