Medical Technology Usually Equals Better Outcomes, Higher Costs

Research on health care costs

    • October 31, 1998

The National Bureau of Economic Research, Cambridge, Mass., an independent, nonprofit economic research organization, undertook research into a variety of health care cost-containment issues between September 1995 and May 1997.

During the course of the three-year project researchers:

  • Assembled databases, including claims data from 20 million Medicare patients and 3 million employees and dependents covered by employer-sponsored health plans.
  • Conducted more than 40 studies on a wide array of issues.

Key Findings

  • Three general themes emerged from their work:

    • The structure of health care policies—whether through Medicare, traditional employer-provided fee-for-service health insurance, or managed care—has both a direct influence on treatment decisions and costs, and an indirect influence on the diffusion of new medical technologies.
    • Increasing use of intensive medical technologies is responsible for most of the growth in medical costs during the last decade.
    • The increasing use of medical technologies has had a substantial effect on improving health outcomes over time, but less frequent use of intensive treatment may have few adverse health consequences and yield significant cost savings.