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Medical Expenditure Growth and the Diffusion of Medical Technology

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  • Justin Polchlopek

Abstract

The general consensus among health economists is that the increasing capability of medical providers— often called medical “technology”—is responsible for the majority of growth in medical expenditure. And yet, the principle means of understanding medical technology is through the use of total factor productivity, which, despite giving reasonable estimates of the magnitude of the effects, is not a theory of technology, leaving policymakers without effective tools for prediction. This paper develops a descriptive model of technology that may have interesting implications for health economics. The model suggests that the manner of diffusion of technology is critical, and when technology diffuses haphazardly, the effects on expenditure can be unexpectedly large.

Suggested Citation

  • Justin Polchlopek, 2011. "Medical Expenditure Growth and the Diffusion of Medical Technology," Working Paper Series, Department of Economics, University of Utah 2011_10, University of Utah, Department of Economics.
  • Handle: RePEc:uta:papers:2011_10
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    File URL: http://economics.utah.edu/research/publications/2011_10.pdf
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    References listed on IDEAS

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    1. Harcourt,G. C., 1972. "Some Cambridge Controversies in the Theory of Capital," Cambridge Books, Cambridge University Press, number 9780521096720, May.
    2. David M. Cutler & Mark McClellan & Joseph P. Newhouse & Dahlia Remler, 1996. "Are Medical Prices Declining?," NBER Working Papers 5750, National Bureau of Economic Research, Inc.
    3. Jesus Felipe & J. S. L. McCombie, 2003. "Some methodological problems with the neoclassical analysis of the East Asian miracle," Cambridge Journal of Economics, Oxford University Press, vol. 27(5), pages 695-721, September.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Medical expenditure and technology growth
      by Economic Logician in Economic Logic on 2011-05-27 19:57:00

    More about this item

    Keywords

    Health Economics; Health Care Production; National Health Expenditures; Sraffian Economics; Total Factor Productivity; Input-Output Economics; Technological Diffusion Processes JEL Codes: B51; C67; D24; D57; I11; I12; O33;

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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