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Health Care Spending Growth

Michael E. Chernew and Joseph Newhouse ()

Chapter Chapter One in Handbook of Health Economics, 2011, vol. 2, pp 1-43 from Elsevier

Abstract: This chapter provides a conceptual and empirical examination of health care spending growth (as opposed to the level of health care spending). Given that an equilibrium spending level exists, spending growth requires some variable to change. A one-time change in such a variable (or a one-time policy intervention) will generate a new equilibrium spending level, though the length of the transition period will depend on switching costs and information lags. After the new equilibrium is established, spending growth will cease. Yet we observe persistent spending growth. This implies at least one continually changing variable and the variable most commonly identified as continually changing is medical technology, broadly defined. We review theoretical models related to spending growth, including some that treat technology as exogenous and others that treat technology as endogenous. We then review the empirical literature related to spending growth and medical technology.

Keywords: spending growth; inflation (search for similar items in EconPapers)
JEL-codes: I19 (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1016/B978-0-444-53592-4.00001-3

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