The impact of technological change on the increase in health expenditure

The increase in health expenditure and its components (hospital expenditure, pharmaceutical expenditure) at a rate above that of the Gross Domestic Product (GDP) has attracted the attention of researchers in the field of health economy and has led to the introduction of cost-containing policies internationally. Population ageing, changes in income, relative prices in the health sector and technological change have all been proposed as determinants of the increase in health expenditure. Of these, technological change is considered among the most important, explaining up to 50% of the total increase in health expenditure over the last 50 years, although the mechanism of this interaction remains understudied. Various theories have been proposed that focus on the interaction between insurance coverage and technological progress, and on the impact of the introduction and diffusion of new health technology on the demand for healthcare services. The understanding of this mechanism is crucial for the development and institution of sound health policy, especially since the documented increase in health expenditure has taken place in parallel with significant improvements in health of the population and quality of care, to which technological progress has also contributed, and these trends are expected to continue.