I'd Rather Fight Than Switch

New technology often is blamed for increased healthcare costs. Does the evidence support the claim?

A June 2009 study by Columbia University economist Frank Lichtenberg says "no." As Reason magazine's Ronald Bailey reports:

[A]dvanced medical technologies are not contributing all that much toward rising U.S. health care expenditures. Lichtenberg begins by looking at how the rate of increase in longevity has varied among U.S. states between 1991 and 2004. He investigates how such factors as the quality of medical care, behavioral risks (obesity, smoking, and AIDS incidence), and education, income, and health insurance coverage affect life expectancy. To measure differences in the quality of medical care, Lichtenberg examines how quickly each state took up advanced medical diagnostics and new drugs. He also calculates what fraction of physicians in a state were trained at top-ranked medical schools.

Lichtenberg's key finding is that life expectancy increased faster in states that more rapidly adopted advanced diagnostic imaging techniques, newer drugs, and attracted an increasing proportion of doctors from top medical schools. . .

Interestingly, Lichtenberg found that "growth in life expectancy was uncorrelated across states with health insurance coverage and education, and inversely correlated with per capita income growth." The last finding is a bit puzzling. Lichtenberg calculates that the average 20 percent increase in real per capita income resulted in lowering average life expectancy by 0.34-0.42 years and finds that states with high income growth had smaller longevity increases. . .

"The absence of a correlation across states between medical innovation and expenditure growth is inconsistent with the view that advances in medical technology have contributed to rising overall US health care spending," he concludes. Lichtenberg further speculates that states that have more quickly adopted high-tech procedures have not seen their health care expenses increase because "while newer diagnostic procedures and drugs are more expensive than their older counterparts, they may reduce the need for costly additional medical treatment." In other words, high-tech medicine may initially cost more, but it reduces spending in the long run, while increasing the life expectancies of patients.

Bailey concludes, "if Lichtenberg is right, slowing technological progress in medicine wouldn't save money, but it definitely would kill more people." See also Peter Suderman in the Wall Street Journal.

Given America's superior health care outcomes, remind me why we should mimic the European model?

(via TigerHawk)