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The Future of Healthcare Reform In the United States$
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Anup Malani and Michael H. Schill

Print publication date: 2015

Print ISBN-13: 9780226254951

Published to Chicago Scholarship Online: May 2016

DOI: 10.7208/chicago/9780226255002.001.0001

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The Role of Technology in Expenditure Growth in Healthcare

The Role of Technology in Expenditure Growth in Healthcare

(p.249) Chapter Ten The Role of Technology in Expenditure Growth in Healthcare
The Future of Healthcare Reform In the United States

Amitabh Chandra

Jonathan Holmes

University of Chicago Press

This chapter presents a summary of the 2012 article “Technology Growth and Expenditure Growth in Health Care” by Amitabh Chandra and Jonathan Skinner. It addresses the fact that most of the growth in US health expenditures remains unaccounted for. The authors present a typology of medical technologies based on their average cost effectiveness: category 1 “home run” technologies are highly productive and cost-effective for all patients, category 2 technologies are cost effective for some patients but not for others, and category 3 technologies have small or unknown benefits. In the United States, category 1 technologies explain a substantial portion of gains in longevity attributable to better medical care, whereas category 2 and 3 procedures make up the majority of health spending increases. Spending policy that acknowledges the heterogeneity of patients and technologies could achieve better lower cost health outcomes. To lower costs, the authors suggest allowing insurance companies to treat spending differently for each category, rewarding health outcomes and not quantity of procedures, and increased use of comparative effectiveness analysis.

Keywords:   health care costs, medical technology, expenditure

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