Astronomical Costs Of New Medical Technology

August 14, 1998

ANN ARBOR---In a new article published in Medical Care Research and Review (September 1998 issue), researchers from the University of Michigan's School of Public Health outline three obstacles policy-makers may encounter as they consider new laws and other measures designed to curb the cost of health care.

The article examines the role of medical technology as the root of spiraling health care costs. "The reason why health care costs are higher now than they have been in the past is because of new medical technology. It's not increased waste, it's not fraud, it's not increased law suits, it's not the fact that people on average are older---all of that may contribute, but the predominant factor relates to the development and utilization of new medical techniques, of which there are an enormous number," said U-M public health economist Michael E. Chernew, who is first author of the article.

Chernew and colleagues examine existing evidence that assesses the relationship between health care costs and medical technology. The article, "Managed Care, Medical Technology, and Health Care Cost Growth: A Review of the Evidence," also examines the role managed care may play in constraining health care costs by controlling medical technology.

Although some existing studies show that managed care has reduced the rate of health care costs growth in some markets, in general, the rate of growth of health care costs have exceeded sustainable levels. If managed care does not control health care cost growth, then some other force will, Chernew said.

He and the co-authors of the article discuss three paths policy makers may consider:

1. Managed care plans will increasingly ration care. "If technological progress continues to push costs upward, constraining health care cost growth will require placing greater restrictions on this care,'' Chernew said.

2. The decentralized, competitive health care system that exists now will be abandoned in favor of a nationalized system to control costs. "Health care cost growth can be controlled centrally by government action Š Other more interventionist forms of government action might move the issue of medical technology use from the economic sphere to the political," Chernew said.

3. The nature of medical progress will change in such a way as to reverse the historic relationship between technological progress and health care cost growth. "The theory is that no one would have to ration care and that we'll get out of this problem by use of better technology and that's obviously the best solution, but it's very hard to figure out how to make that happen,'' Chernew said.

The study co-authors include Richard A. Hirth, U-M assistant professor of health management and policy and internal medicine; Seema A. Sonnad, U-M assistant professor of surgery; A. Mark Fendrick, U-M assistant professor of health management and policy and internal medicine; and Rachel Ermann of the Alpha Center in Washington, D.C.

University of Michigan

Related Health Care Articles from Brightsurf:

Study evaluates new World Health Organization Labor Care Guide for maternity care providers
The World Health Organization developed the new Labor Care Guide to support clinicians in providing good quality, women-centered care during labor and childbirth.

Six ways primary care "medical homes" are lowering health care spending
New analysis of 394 U.S. primary care practices identifies the aspects of care delivery that are associated with lower health care spending and lower utilization of emergency care and hospital admissions.

Modifiable health risks linked to more than $730 billion in US health care costs
Modifiable health risks, such as obesity, high blood pressure, and smoking, were linked to over $730 billion in health care spending in the US in 2016, according to a study published in The Lancet Public Health.

Spending on primary care vs. other US health care expenditures
National health care survey data were used to assess the amount of money spent on primary care relative to other areas of health care spending in the US from 2002 to 2016.

MU Health Care neurologist publishes guidance related to COVID-19 and stroke care
A University of Missouri Health Care neurologist has published more than 40 new recommendations for evaluating and treating stroke patients based on international research examining the link between stroke and novel coronavirus (COVID-19).

Large federal program aimed at providing better health care underfunds primary care
Despite a mandate to help patients make better-informed health care decisions, a ten-year research program established under the Affordable Care Act has funded a relatively small number of studies that examine primary care, the setting where the majority of patients in the US receive treatment.

International medical graduates care for Medicare patients with greater health care needs
A study by a Massachusetts General Hospital research team indicates that internal medicine physicians who are graduates of medical schools outside the US care for Medicare patients with more complex medical needs than those cared for by graduates of American medical schools.

The Lancet Global Health: Improved access to care not sufficient to improve health, as epidemic of poor quality care revealed
Of the 8.6 million deaths from conditions treatable by health care, poor-quality care is responsible for an estimated 5 million deaths per year -- more than deaths due to insufficient access to care (3.6 million) .

Under Affordable Care Act, Americans have had more preventive care for heart health
By reducing out-of-pocket costs for preventive treatment, the Affordable Care Act appears to have encouraged more people to have health screenings related to their cardiovascular health.

High-deductible health care plans curb both cost and usage, including preventive care
A team of researchers based at IUPUI has conducted the first systematic review of studies examining the relationship between high-deductible health care plans and the use of health care services.

Read More: Health Care News and Health Care Current Events is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to