NCPA - National Center for Policy Analysis

Technology Will Increase Health Care Spending

March 7, 2001

The cost of medical technology may account for up to a third of projected increases in U.S. health care spending over the next five years, according to a new study by Project HOPE's Center for Health Affairs funded by the Health Insurance Association of America (HIAA) and the Blue Cross Blue Shield Association (BCBSA).

The report concludes that technologies that may save costs in some cases often increase overall spending.

  • For example, positron emission tomography (PET) scans -- an imaging technology used to better diagnose cancer -- can save money by preventing surgery for nonresectable or benign tumors, precluding the use of prolonged chemotherapy for treatment failures.
  • However, high acquisition and low operating costs for PET scanners create strong incentives for hospitals to expand the use of PET technology to areas where it has less benefit for the patient.

Price is not the only determining factor behind overall technology costs. Volume also determines overall technology costs.

  • For example, monoclonal antibodies -- which can cost between $8,000 and $30,000 to treat selected types of cancer -- are used by fewer than 30,000 new patients a year.
  • Meanwhile, the use of ThinPrep for cervical cancer screening adds only $8 to the cost of conventional Pap smears, but may be used by as many as 12 million new users next year.

The key question, says the study, is not whether technologies increase costs, but what benefits are achieved for the resources consumed.

Source: Penny E. Mohr et al., "The Impact of Medical Technology on Future Health Care Costs, Final Report," February 28, 2001, Project HOPE, Center for Health Affairs, 7500 Old Georgetown Road, Suite 600, Bethesda, Md. 20814.


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