Technology progress and rising healthcare expenditure in the U.S.

ABSTRACT

Technology is widely recognized as a core driver of healthcare expenditure (HCE) in the literature. Since technology is not an easily measurable variable, past studies have incorporated measures to proxy technological changes. However, there is no comprehensive study that has compared the technological effects on U.S. HCE, using alternative input and output technology proxies. Our estimates suggest that, depending on the technology proxy, the effect of technology on HCE, ranging from 0.25 to 0.87, is smaller when output proxies are used relative to input proxies.

KEYWORDS:

• Healthcare expenditure
• income elasticity of healthcare
• technology effect on healthcare

JEL CLASSIFICATION:

• H51
• I10

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The focus of this paper is on the long-run effects. However, the short-run estimates for models S1-S6 are available via request.