The Technology Factor

Since 1970, health care spending has grown at an average annual rate of 9.8%, or about 2.5 percentage points faster than the economy as measured by the nominal gross domestic product (GDP). Annual spending on health care increased from $75 billion in 1970 to $2.0 trillion in 2005, and is estimated to reach $4 trillion in 2015.

And health care spending increases health insurance premiums, and taxpayer funded health plans, proportionately.

new medical technology may account for about one-half or more of real long-term spending growth.

Half is a substantial number.

“medical technology” can be used to refer to the procedures, equipment, and processes by which medical care is delivered. Examples of changes in technology would include new medical and surgical procedures (e.g., angioplasty, joint replacements), drugs (e.g., biologic agents), medical devices (e.g., CT scanners, implantable defibrillator's), and new support systems (e.g., electronic medical records and transmission of information, telemedicine).2 There is very little in the field of medicine that does not use some type of medical technology and that has not been affected by new technology.

Joint replacement, implantable defibrillator's. Bionic people.

From 1980-2000, the overall mortality rate from heart attack fell by almost half, from 345.2 to 186.0 per 100,000 persons

With heart disease the #1 killer, I doubt anyone would want to go back to the way it was 20 years ago.

Another example of how advances in technology have changed health outcomes over time is in the treatment of pre-term babies, for which very little could be done in 1950. But by 1990, changes in technology, including special ventilators, artificial pulmonary surfactant to help infant lungs develop, neonatal intensive care, and steroids for mother and/or baby, helped decrease mortality to one-third its 1950 level, with an overall increase in life expectancy of about 12 years per low-birthweight baby.4

The cost of treating a premie can easily top $1M. In some cases, the long term effects of treating these children, some of which have serious health issues that they never outgrow, can hit $5M or more over a lifetime.

Many factors influence innovation in medical care. Consumer demand for better health is a prime factor. Research shows that the use of medical care rises with income: as people and the nation become wealthier, they provide a fertile market for new medical innovations. Consumers want medical care that will help them achieve and maintain good health, and advances in medical technology are perceived as ways to promote those goals. Consumer demand is affected by the increased public awareness of medical technology through the media, the Internet, and direct-to-consumer advertising.

These are points that have been addressed in this forum before. We have a demand driven system fueled by seemingly unlimited fund . . . usually from the carriers. A small card in your wallet is like a credit card with a $3M+ line of credit. Doc copays at $20 and the same for Rx, no one pays for their health care any more.

This leads to xs demand and over-utilization.