Technology as a 'major driver' of health care costs: a cointegration analysis of the Newhouse conjecture.
Per capita real income on the demand-side and technological change, proxied by total R&D and health R&D spending, on the supply-side are hypothesized as major drivers of per capita real health care expenditure in the US during the 1960-1997 period. The findings are robust to a battery of unit root and cointegration tests. They support the Newhouse [Journal of Economic Perspectives 6 (1992) 3] conjecture that technological change is a major escalator of health care expenditure and confirm a significant and stable long-run relationship among per capita real health care expenditure, per capita real income and broad-based R&D expenditures. Policy implications are noted.
Okunad
Albert A
AA
Department of Economics, The University of Memphis, TN 38152, USA. aokunade@memphis.edu
Murthy
Vasudeva N R
VN
D020811:Biomedical Technology; D003627:Data Interpretation, Statistical; D004059:Diffusion of Innovation; D019981:Health Care Sector / Q000639:trends*; D005102:Health Expenditures / Q000706:statistics & numerical data* / Q000639:trends*; D006291:Health Policy; D006301:Health Services Needs and Demand; D006801:Humans; D007182:Income / Q000706:statistics & numerical data / Q000639:trends; D017059:Models, Econometric; D012109:Research Support as Topic / Q000191:economics*; D014481:United States