Technological change has also been a key driver of spending increases for some time. From pharmaceuticals to imaging to cardiac procedures, markets have been saturated with new and expensive services and products in recent decades. But the adoption of new technology seems to have slowed. Major parts of imaging growth are down, some cardiac procedures are being performed less frequently as studies show they are overused, and the number of new molecular entities approved by the Food and Drug Administration has not kept up with research and development spending.
To be sure, there are many new drugs and imaging devices on the market, especially in fields like oncology. But sales of these new technologies have been more disappointing than robust. The therapeutic prostate cancer vaccine Provenge was not the hit it was expected to be; Zaltrap, a therapy for some cancers and macular degeneration, had to halve its price because it was losing out to Avastin.
Efficiency efforts are finally taking hold in the health care community. Recent news reports about delivery system changes in large health care organizations, declining rates of hospital-acquired infections, and new emphasis on reducing readmissions are indicative of changes going on across the country. These efforts have been facilitated by the ACA and state efforts to limit Medicaid, total health care spending, or both (as in Arkansas, Massachusetts, and Oregon).
The first part is “the great stagnation to the rescue,” the second part is good news, and in the third part the reference to Massachusetts is some kind of Straussian satire. The article itself is here, and contains further analysis.
The initial pointer is from @JustinWolfers.