PHP165 - THE LONG-TERM CHANGE OF MEDICAL SERVICE PRICE: AN INTERNATIONAL COMPARISON OF SELECTED COUNTRIES

Abstract

To investigate the long-term change of medical services price and explore the correlation between Consumer Price Index (CPI) and medical services price index in China and other countries including the United States, Germany, United Kingdom, Japan and Singapore, with the aim to inform China's medical services price regulation. Medical services price index is one component of CPI and is used to reflect the change in medical services price. Related data since 1997 were collected from the official websites of national statistical office of the abovementioned countries. In addition to descriptive statistics analysis, the standard time series correlation methods including cointegration test, Granger causality test, impulse response function and variance decomposition based on vector error-correction model were used to explore the correlation between CPI and medical services price index. During the past 20 years, China has the largest average increase in medical services price, while the average growth rate of medical services price in other countries, especially in Germany and Japan, were much lower. The study found that there is a long-term correlation between CPI and medical services price index in China. The results of Granger causality test indicate that CPI and medical services price index are mutually causal. And the variance decomposition results suggested that medical services price explain about 20 percent of CPI variance in China. There is no significant correlation between the CPI and medical services price index in Germany and Japan. When compared with the countries with classical healthcare systems, China had seen much higher growth rate of medical service price which was statistically time-series correlated with CPI. The historical data of China showed 3-year lag for CPI to significantly influence medical service price, while only one-year lag for the significant influence of medical service price to be accounted in CPI.