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Insurance effects on US medical spending (1960–1993)

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  • Edgar A. Peden
  • Mark S. Freeland

Abstract

Regression results show that nearly half of 1960–1993 growth in real per capita medical spending and almost two‐thirds of its 1983–1993 growth were due to ever‐increasing levels of insurance coverage (the spending portion paid by third parties). Growth in coverage may have played a minor part as well; we would not rule out the standard finding that it has had a positive but relatively small effect. Viewed from a different perspective, the results imply that about two‐thirds of 1960–1993 spending growth came via cost‐increasing advances in medical technology resulting from: (1) commercial research and development induced by coverage levels and (2) noncommercial medical research. The remaining one‐third, was due to standard factors: age–sex mix changes, income growth and coverage growth (the latter playing a small but indeterminate part).Copyright © 1998 John Wiley & Sons, Ltd.

Suggested Citation

  • Edgar A. Peden & Mark S. Freeland, 1998. "Insurance effects on US medical spending (1960–1993)," Health Economics, John Wiley & Sons, Ltd., vol. 7(8), pages 671-687, December.
    • Handle: RePEc:wly:hlthec:v:7:y:1998:i:8:p:671-687
    DOI: 10.1002/(SICI)1099-1050(199812)7:8<671::AID-HEC379>3.0.CO;2-9
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    Cited by:

    1. Karine Lamiraud & Stephane Lhuillery, 2016. "Endogenous Technology Adoption and Medical Costs," Health Economics, John Wiley & Sons, Ltd., vol. 25(9), pages 1123-1147, September.
    2. Karine Lamiraud & Stéphane Lhuillery, 2015. "Endogenous Technology Adoption and Medical Costs," Working Papers hal-01218064, HAL.
    3. Rodrigo R. Soares & Rudi Rocha & Michel Szklo, 2021. "American Delusion: Life Expectancy and Welfare in the US from an International Perspective," Working Papers 13, Instituto de Estudos para Políticas de Saúde.
    4. Weiwei Chen & Albert Okunade & Gregory G. Lubiani, 2014. "Quality–Quantity Decomposition Of Income Elasticity Of U.S. Hospital Care Expenditure Using State‐Level Panel Data," Health Economics, John Wiley & Sons, Ltd., vol. 23(11), pages 1340-1352, November.
    5. Mauro Laudicella & Paolo Li Donni & Kim Rose Olsen & Dorte Gyrd‐Hansen, 2022. "Age, morbidity, or something else? A residual approach using microdata to measure the impact of technological progress on health care expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 31(6), pages 1184-1201, June.
    6. Wong, Albert & Wouterse, Bram & Slobbe, Laurentius C.J. & Boshuizen, Hendriek C. & Polder, Johan J., 2012. "Medical innovation and age-specific trends in health care utilization: Findings and implications," Social Science & Medicine, Elsevier, vol. 74(2), pages 263-272.
    7. Adam, Taghreed & Evans, David B., 2006. "Determinants of variation in the cost of inpatient stays versus outpatient visits in hospitals: A multi-country analysis," Social Science & Medicine, Elsevier, vol. 63(7), pages 1700-1710, October.
    8. Svetlana N. Beilfuss & James A. Thornton, 2016. "Pathways and Hidden Benefits of Healthcare Spending Growth in the U.S," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 44(3), pages 363-375, September.
    9. Molly Frean & Mark Pauly, 2018. "Does High Cost-Sharing Slow the Long-term Growth Rate of Health Spending? Evidence from the States," NBER Working Papers 25156, National Bureau of Economic Research, Inc.

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