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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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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 26 October 2021

The Complex Relationship between Healthcare Reform and Innovation

The Complex Relationship between Healthcare Reform and Innovation

(p.289) Chapter Twelve The Complex Relationship between Healthcare Reform and Innovation
The Future of Healthcare Reform In the United States

Darius Lakdawalla

Anup Malani

Julian Reif

University of Chicago Press

Health care expenditure in the United States has grown rapidly, exceeding the annual growth in GDP by 2.5% since 1960. This rise has strained budgets and is the focus of the current national debate over health reform. Conventional wisdom holds that the primary driver of cost growth is medical innovation. This chapter examines how the expansion of health insurance affects innovation. First, it examines how expansion of health insurance directly and indirectly affects the demand and supply of medical innovation. Second, it examines how health insurance can cure an unfortunate side effect of using patents to encourage medical innovation: high prices that make medical care unaffordable for many. Third, it examines how innovation both promotes health insurance and reduces demand for such insurance. The complexity and uncertainty of the relationship between insurance and innovation puts a premium on the ability to experiment with alternative forms of health care reform.

Keywords:   health care reform, medical innovation, insurance, health care expenditures, supply and demand, patents

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