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Social and Behavioral Sciences Commons

Open Access. Powered by Scholars. Published by Universities.®

2012

Dartmouth College

Health Economics

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Full-Text Articles in Social and Behavioral Sciences

Technology Growth And Expenditure Growth In Health Care, Amitabh Chandra, Jonathan Skinner Sep 2012

Technology Growth And Expenditure Growth In Health Care, Amitabh Chandra, Jonathan Skinner

Open Dartmouth: Faculty Open Access Scholarship

In the United States, health care technology has contributed to rising survival rates, yet health care spending relative to GDP has also grown more rapidly than in any other country. We develop a model of patient demand and supplier behavior to explain these parallel trends in technology growth and cost growth. We show that health care productivity depends on the heterogeneity of treatment effects across patients, the shape of the health production function, and the cost structure of procedures such as MRIs with high fixed costs and low marginal costs. The model implies a typology of medical technology productivity: (I ...