HEALTH COSTS: New Medical Technologies Drive Increases
Today's New York Times looks at how new technologies are contributing to higher health costs. Paradoxically, though new technologies are often touted as cheaper than conventional treatments, they are often applied to larger groups of patients, raising overall costs. "Looking far out, there are some possibilities that new kinds of technologies might be so powerful as to reduce the cost of health care. But for the next five to 10 years, if not longer, the general consensus is that technology will continue to increase health care spending," said Stuart Altman of Brandeis University. With a 50% jump in sales over the last five years, spending for prescription drugs is the largest factor behind rising health costs, but sales of new medical devices are close behind, rising 30% over the same period. Mark Freeland, deputy director of HCFA's National Health Statistics Group, said, "About half the growth in real per-capita health costs is associated with medical technology." Paul Ginsburg of the Center for Studying Health System Change, said, "Some of the biggest impacts are not clear until years after a procedure is introduced, as it gets better and physicians find more uses for it." The Times profiles the growing popularity of gamma knife brain surgery, which uses radiation to shrink tumors instead of traditional surgery. Though it costs just $18,000, compared to $30,000 for traditional surgery, its better safety record has increased demand. And, Michael Chernew of the University of Michigan noted, "It is extraordinarily difficult for HMOs to put up barriers to care that is valuable." Other hot new products include lasers for eye surgery, stents, implantable defibrillators, spinal implants and blood oxygenators. Still another cost driver is the remarkable success in saving very premature infants. Minnesota's Health Partners spent $50,000 or more on each of 345 premature births in 1998 -- double the number in 1996. Health Partners CEO George Halvorson said, "It's the right thing to do, but it's very expensive. As a result, our premiums are going to go up, and people are going to have to pay more for care" (Freudenheim, 4/9).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.