Medical technology and health expenditure: an economic review and a proposal.

This paper is an evaluative survey of the economic literature on the relationship between technology and/or innovation and health expenditures. Various types of analysis viz. econometric modelling; three residual approaches; the cost-of-illness approach; and the literature on supplier interests are contrasted, and the results presented. The paper concludes with a discussion of the policy and planning implications, and a simple, and conventional, proposal is made that could unambiguously determine this relationship in the case of process innovations.