Income, insurance, and technology: why does health spending outpace economic growth?
A broad consensus holds that increased medical capability-technology-is the primary driver of health spending growth. However, technology does not expand independently of historical context; it is fueled by rising incomes and more generous insurance coverage. We estimate that medical technology explains 27-48 percent of health spending growth since 1960-a smaller percentage than earlier estimates. Income (gross domestic product, or GDP) growth plays a critical role, primarily through the actions of governments and employers on behalf of pools of consumers. The contribution of insurance is likely to differ, with less of a push from increasing generosity of coverage and more of a push from changes in provider payment.
Smith
Sheila
S
Office of the Actuary, Centers for Medicare and Medicaid Services, Baltimore, Maryland, USA. ssmith2@cms.hhs.gov
Newhouse
Joseph P
JP
Freeland
Mark S
MS
D057217:Economic Development; D005102:Health Expenditures / Q000706:statistics & numerical data / Q000639:trends*; D006801:Humans; D007182:Income; D019458:Insurance Coverage / Q000191:economics / Q000639:trends*; D015271:Insurance Pools; D013677:Medical Laboratory Science / Q000191:economics* / Q000639:trends