NCPA - National Center for Policy Analysis

Medical Technology Is Costly

April 9, 1999

New medical devices and procedures that perform wonders are also driving up health-care costs, analysts point out. Yet, at the same time, some of these breakthroughs can help patients avoid costly and risky operations.

For example, a new $3 million laser device provides an alternative to brain surgery and can pay for itself over time in savings on treatment and recovery time.

Still, no one disputes that new medical technologies are expensive.

  • Sales of new medical devices in the U.S. rose 30 percent over the past five years -- outpacing the 22 percent rise in overall health care spending.
  • Last year, spending on medical devices is estimated to have hit $62.2 billion -- compared to overall health-care spending of $1.16 trillion.
  • Sales of cardiovascular devices last year surged 24 percent over 1997 sales -- to $9.8 billion.
  • Sales of devices to treat opthamological problems increased 21 percent, to $4.1 billion -- while the market for orthopedic devices rose 12 percent, to $3.2 billion.

Experts report that health maintenance organizations have a tough time putting up barriers to care that is available. Most big plans rely on advice from panels of medical experts to recommend acceptance or rejection of new technology.

Such panels appraise the scientific value of products and procedures. Insurers typically weigh the recommendations along with cost-effectiveness considerations in deciding whether or not to approve the innovations.

Source: Milt Freudenheim, "A New Strain on the Cost of Health Care," New York Times, April 9, 1999.


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