Why Medical Technology is Driving Health Care Costs

From the introduction to Taming the Beloved Beast by Daniel Callahan

In a rare instance of consensus, health care economists attribute about 50% of the annual increase of health costs to new technologies or to the intensified use of old ones. That annual increase has fluctuated between 7% and 12% per year for many years now, and there is every expectation that it will persist at around 6-7% for the indefinite future. Medicare's cost increases are projected to be 7.4% a year between 2006 and 2017.
The frightening thought that the innovation that has saved so many lives and reduced so much suffering could itself be playing a leading role in our health care discomfort is hard to accept, difficult to talk about openly, and politically controversial. It connotes rationing of medical treatments, limits, and a direct threat to the cherished value of relentless progress against illness and death.

With health care reform in general, there are many novel ideas in the air, often accompanied by a strategy to implement them. But specifically for the manageI ment of technology, most general proposals do not encompass an implementation strategy...nothing less than a cultural revolution in our thinking about progress, technology, death and aging will suffice to do the job.

I strongly endorse the idea that our health care costs are driven by our technology and our values. My guess is that I disagree with Callahan on how to deal with these issues. But at least he and I could have a decent conversation about them. In my own book, I used the term "premium medicine" to describe the intensive use of technology.

Tyler Cowen provided the pointer to the book, and he has another key excerpt plus his own commentary.

Presented by

Arnold Kling

Arnold Kling earned his Ph.D in economics at MIT. He was an economist on the staff of the Federal Reserve Board. From 1986-1994 he worked at Freddie Mac. He started Homefair.com in 1994 and sold it in 1999. His fourth book, From Poverty to Prosperity, co-authored with Nick Schulz, is due out in April of 2009. He blogs regularly at Econlog.

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