The Lifetime Costs and Benefits of Medical Technology
Measuring the lifetime costs and benefits of medical technologies is essential in evaluating technological change and determining the productivity of medical care. Using data on Medicare beneficiaries with a heart attack in the late 1980s and 17 years of follow up data, I evaluate the long-term costs and benefits of revascularization after a heart attack. I account for non-random selection into treatment with instrumental variables; following McClellan, McNeil, and Newhouse, the instrument is the differential distance to a hospital capable of providing revascularization. The results show that revascularization is associated with over 1 year of additional life expectancy, at a cost of about $40,000. Revascularization, or other treatments correlated with it, appears to be highly cost-effective.
This paper was prepared for the conference in honor of Joe Newhouse's 25 years of editing the Journal of Health Economics. I am grateful to Doug Norton for superb research assistance, and to Henry Aaron, Jonathan Skinner, the editors, three anonymous referees, and conference participants for helpful comments, and to the National Institutes on Aging for research support. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
- Over the past fifty years, medical expenditures have increased very rapidly, from 5 percent of GDP in 1960 to 16 percent today. It is...
Cutler, David M., 2007. "The lifetime costs and benefits of medical technology," Journal of Health Economics, Elsevier, vol. 26(6), pages 1081-1100, December. citation courtesy of