Technological Advance and the Growth in Health Care Spending
AbstractThe second half of the twentieth century recorded a rapid growth in health care spending and a significant increase in life expectancy. This paper hypothesizes that the combination of techno-logical progress in medical treatment and rising incomes is the driving force behind these two trends. Using a stochastic, multi-period overlapping-generations model as the analytical vehicle, this paper argues that the rapid growth in medical spending is not driven by factors associated with market structures or insurance opportunities, but instead by factors underlying the production and accumulation of health. According to this model, improvements in medical treatment and rising incomes can explain all of the increase in medical spending and more than 60% of the increase in life expectancy at age 25 during the second half of the twentieth century.
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Bibliographic InfoPaper provided by Economie d'Avant Garde in its series Economie d'Avant Garde Research Reports with number 13.
Length: 49 pages
Date of creation: Nov 2005
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Web page: http://www.jeremygreenwood.net/EAG.htm
Technological progress; life expectancy; medical spending; health;
Find related papers by JEL classification:
- E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
- I12 - Health, Education, and Welfare - - Health - - - Health Production
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
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