Does technology drive up medical costs or lower them?
In the United States, the answer is unfortunately: it depends. Over the long run advances in medical technology improve medical care and lower costs. Basic economics teaches that a change in technology changes the entire marketplace, but the American medical marketplace is not the free market of economic models.
According to Dr. Stephen Schimpff the former Chief Executive Officer of the University of Maryland Medical Center and author of “The Future of Medicine” current incentives unnecessarily drive-up costs to consumer. One area where this regularly occurs is when new drugs arrive to the market. Drug companies negotiate to hold off on allowing generics of new drugs to come to the market, which would lower costs. The Federal Trade Commission says this practice violates antitrust laws. They estimate that consumers paid an additional $3.5 billion last year due to pay to delay deals.
The way that insurance provides reimbursement also prevents innovative technology from reaching the marketplace. Distance medical practices such as tele-consults or tele-diagnosis are often not covered by insurance. This means that a patient must schedule an appointment, which the doctor may bill to the insurance company.
This inefficient system creates an environment where the least efficient and most expensive care receives the most financial rewards. It also increases the potential for errors, which can lead to costly lawsuits.
If prescriptions went to an exclusively electronic system it would eliminate the potential human error from writing out an improper dose or even something as simple, yet prevalent, as poor handwriting leading to a mistake.
The only potential objection might be that technology eliminates jobs, which will be examined in the next post.