United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office General Government Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1996-08-26 monographic deposited born digital 92 p. GA 1.13:GGD-96-166 https://www.govinfo.gov/app/details/GAOREPORTS-GGD-96-166 P0b002ee180377f58 f:gg96166 DGPO 2010-08-12 2011-03-23 GAOREPORTS-GGD-96-166 machine generated eng fdlp REPORT GAOREPORTS-GGD-96-166 GGD-96-166 Price indexes Macroeconomic analysis Economic indicators Cost of living Health care costs Rental rates Health care cost control Consumer Price Index Medicaid Program Medicare Program BLS Consumer Expenditure Survey Chapter Report GGD

Pursuant to a congressional request, GAO determined: (1) whether changes made to the housing component of the consumer price index (CPI) made it more or less suitable as a cost-of-living measure; and (2) the advantages and disadvantages of changing the current measurement of medical care costs to a cost of living measurement.<p/>GAO found that: (1) the CPI is not a cost-of-living index, but a measure of the change in prices paid for a fixed market of goods and services; (2) a comprehensive cost-of-living index is broader in coverage than an index based on consumer expenditures and budgets; (3) the Bureau of Labor Statistics (BLS) uses the rental equivalence method to better measure housing costs within the CPI structure; (4) this method has made the CPI more suitable for measuring cost of living; (5) two-thirds of medical care expenses are excluded from the CPI, since they are paid by third parties payers; (6) including third-party payments in the CPI would move the CPI towards a cost-of-living index; (7) BLS excludes third-party payments from the CPI to better represent direct expenditures by consumers; (8) changing the medical care component of CPI would improve the formulation of health-care-specific policies and macroeconomic policies, but there is little technical feasibility in making such changes; (9) the Stigler committee believes that CPI should better reflect the cost-of-living index; (10) it is difficult to design a cost-of-living index for the federal government because of the additional uses of CPI; and (11) policymakers need to consider how the CPI will be affected by changing the medical care component and whether any single price index can account for such cost-of-living measurements. https://www.govinfo.gov/content/pkg/GAOREPORTS-GGD-96-166/html/GAOREPORTS-GGD-96-166.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GGD-96-166/pdf/GAOREPORTS-GGD-96-166.pdf GAO/GGD-96-166 https://www.govinfo.gov/app/details/GAOREPORTS-GGD-96-166 Chapter Report GAO/GGD-96-166; Consumer Price Index: Cost-of-Living Concepts and the Housing and Medical Care Components; Price indexes Macroeconomic analysis Economic indicators Cost of living Health care costs Rental rates Health care cost control Consumer Price Index Medicaid Program Medicare Program BLS Consumer Expenditure Survey Title 26 Section 1(f) 26 U.S.C. 1(f) Title 42 Section 415(i) 42 U.S.C. 415(i)