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Economic Quarterly

Fall 1994

Medical Care Price Indexes

Robert F. Graboyes

Since 1950, medical care prices have risen twice as fast as nonmedical prices, as indicated by the CPI and other price indexes. Indexes, however, may overstate price increases in medicine compared to other sectors. Extracting prices from expenditure data is difficult in all service sectors because outputs are hard to define. The problem may be worse in medicine, where technological change is particularly rapid.

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