Technological Innovation as a Driver of Healthcare Expenditure: Measuring Technology Directly
Technological Innovation as a Driver of Healthcare Expenditure: Measuring Technology Directly

Summary/Abstract: Spending on healthcare in industrialized countries has grown substantially over the last few decades (OECD 2016). Over the years, many researchers have analyzed the main determinants of aggregate healthcare expenditure. In this paper we determine the main factors that have contributed to the increase in healthcare spending over time, focusing especially on the impact of technological innovation on the healthcare sector. This paper differentiates itself by using multiple imputation to construct a large, complete panel dataset and through the construction of a technological composite index able to directly measure the role of new technologies on healthcare costs. The results suggest that the introduction of new technologies contribute to the increase in healthcare expenditures verified in the last years, where technology has a differential impact on costs depending on a country’s stage of the development of technology. Moreover, by analyzing the non-linear effects of technology, we can also conclude that this increase in healthcare expenditure per capita driven by technological innovation illustrates diminishing returns, fading away with volume. Many of our conclusions, such as those regarding GDP per capita, percentage of private expenditure on health, and health expenditure financed by General Government reinforced findings from other studies.

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