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Chapter 7: Problem 7

Improvements in technology usually result in lower costs of production or new and improved consumer goods and services. Assume that an improvement in medical technology results in an increase in life expectancy for people 65 years of age and older. How would this technological advance be likely to affect expenditures on health care?

Short Answer

Expert verified
The technological advancement in medical care, which extends the life expectancy for people over 65, could lead to a higher total health care expenditure. This occurs due to an increase in demand for extended years and potentially high costs of new medical devices or processes, despite the cost per health service possibly decreasing due to technological efficiency.

Step by step solution

01

Understanding the Impact of Lifespan Increase On Healthcare Demand

The technological advancement has resulted in a higher life expectancy for people aged 65 and above. This increase in lifespan means that these individuals will demand health services for a prolonged period, thereby increasing the total healthcare expenditure.
02

Factoring in the Cost of New Technology

These healthcare technological advancements, though efficient, may also be more expensive, adding to the overall cost. Even if these innovations result in more effective treatments, they may elevate healthcare costs due to the high price of new technology.
03

Balancing Lower Costs per Service with Increased Demand

While on one hand, advancement in medical technology could lower the cost per health service, on the other hand, the increased lifespan and potentially the high cost of new devices or procedures could lead to an overall increase in health care expenditure.

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Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Technological Advancements in Healthcare
Technological advancements in healthcare have revolutionized the way we approach medicine and patient care. Innovations such as minimally invasive surgeries, telemedicine, and health monitoring apps have made healthcare more efficient and accessible. These technologies often enhance the quality of care by allowing for early diagnosis and more precise treatments.
However, it's important to note that while these technologies can decrease the cost of individual procedures, their initial implementation can be costly. New machines and devices require substantial investment and training for medical staff. Despite the initial expense, the long-term benefits often outweigh the costs, as they lead to quicker recovery times and less hospital stay duration.
Overall, technology boosts the efficiency of healthcare services, although balancing cost implications remains crucial.
Life Expectancy and Healthcare Costs
Increased life expectancy due to advancements in healthcare technology can significantly impact healthcare costs. As people live longer, there is a sustained demand for healthcare services, particularly for those over the age of 65 who are more susceptible to chronic conditions.
With a longer lifespan, individuals require ongoing access to medical care, which can increase overall healthcare expenditures.
  • Regular checkups and preventive care become more frequent.
  • Chronic diseases like diabetes or heart conditions demand consistent management.
  • Long-term care services, including nursing homes and home health aides, become more prevalent.
Therefore, while living longer is a positive outcome, it necessitates a balance between managing increasing healthcare demands and controlling the associated costs.
Demand for Healthcare Services
The demand for healthcare services is intricately linked to technological advancements and changes in life expectancy. As technological breakthroughs enable longer and healthier lives, there is a natural rise in the need for healthcare services. This demand emerges for several reasons:
  • Individuals require ongoing treatments and medications to manage long-term health conditions.
  • Preventative services and routine health checks become more essential to maintain health over a longer lifespan.
  • More resources are needed for elderly care, including specialized facilities and personnel.
As a result, healthcare providers must adapt to meet these demands, which may involve expanding services and facilities. Economically, the increased demand poses challenges but also opens up opportunities for growth and innovation in the healthcare sector. Balancing availability, affordability, and service quality remains a key focus.

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Most popular questions from this chapter

Between 1830 and 1890 , the height of the average adult male in the United States declined by about 2 inches at the same time that average incomes more than tripled. Did the standard of living in the United States increase during this period? What insight into the health and well-being of the U.S. population might the decline in height provide? Briefly explain.

What are the main sources of health insurance in the United States?

A report from the American Council on Competitiveness noted that "there has been some recent progress in the digital health sector, which aims to better integrate information and software technologies into all aspects of healthcare." The report also concluded that "the U.S. has rather poor health outcomes relative to other developed countries and stands out as having exceptionally low healthcare productivity when measuring outcomes against spending." a. Briefly discuss the evidence for and against U.S. health care performing poorly relative to other countries when comparing outcomes to spending. b. If the U.S. health care sector makes increasing use of information technology, will it be likely to employ more workers or fewer workers than if it fails to widely adopt this technology? Briefly explain.

Some economists and policymakers have argued that one way to control federal government spending on Medicare is to have a board of experts decide whether new medical technologies are worth their higher costs. If the board decided that they are not worth the costs, Medicare would not pay for them. Other economists and policymakers argue that the costs to beneficiaries should more closely represent the costs of providing medical services. This result might be attained by raising premiums, deductibles, and copayments or by "means testing," which would limit the Medicare benefits that high-income individuals receive. Political columnist David Brooks summarized these two ways to restrain the growth of spending on Medicare: "From the top, a body of experts can be empowered to make rationing decisions.... Alternatively, at the bottom, costs can be shifted to beneficiaries with premium supports to help them handle the burden." a. What are "rationing decisions"? How would these decisions restrain the growth of Medicare spending? b. How would shifting the costs of Medicare to beneficiaries restrain the growth of Medicare spending? What does Brooks mean by "premium supports"? c. Should Congress and the president be concerned about the growth of Medicare spending? If so, which of these approaches should they adopt, or is there a third approach that might be better? (Note: This question is normative and has no definitive answer. It is intended to lead you to consider possible approaches to the Medicare program.

An article in the Economist noted that the National Health Service (NHS) in the United Kingdom "provides health care free at the point of use." a. What does "free at the point of use" mean? Is health care actually free to residents of the United Kingdom? Briefly explain. b. The same article suggested that funding problems at the NHS could be alleviated by "reducing demand for unnecessary treatments" and noted that while two-thirds of the 35 countries in the Organization for Economic Cooperation and Development (OECD) charge patients for an appointment with a general practitioner, the NHS does not. Is there a possible connection between the NHS's funding problem and its failure to charge patients for doctor appointments? Briefly explain.
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