Medical Innovation Is Driving Down Health Care Spending

  • by: |
  • 05/07/2013

A new set of articles in Health Affairs about the declining rate of health care spending increases debate whether it's the recession or a slow down in the use of new technology.  The authors conclude "that a host of fundamental changes—including less rapid development of imaging technology and new pharmaceuticals, increased patient cost sharing, and greater provider efficiency—were responsible for the majority of the slowdown in spending growth."

It is just the opposite.  

The continuing decline since 2000 is the result of people living longer healthier lives due in large part to new devices and medicines for previously untreatable diseases.  In particular, the decline in the spending rates correlates strongly with steep declines in morbidity and mortality from cancer.   If you reduce the amount of people dying and being treated from a leading cause of death and illness you are going to slow the climb in health care spending.  

Consider the following:

  • Over the past 20 years, cancer deaths in the United States have dropped 30 percent, faster than in any time in history.
  • The percentage of cancer patients who have to be hospitalized has been cut in half.  The number of cancer survivors has more than doubled from about 6.8 million to 14 million today.  
  • That translates into 43 million additional life years worth $4.2 trillion in income. 

Finally, as Frank Lichtenberg's recently updated paper on the contribution of new cancer therapies to longer life and greater value notes that "the cost of new cancer drugs is less than 1% of the value of the mortality reduction they yielded."

We need to reboot the way we pay for health care to capitalize on and encourage even more innovation.  That, not a slowdown in the adoption of such technologies, will continue to make health care more affordable. 


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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