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Value Of Innovation

Is Technological Change In Medicine Worth It?

David M. Cutler and Mark McClellan

Medical technology is valuable if the benefits of medical advances exceed the costs. We analyze technological change in five conditions to determine if this is so. In four of the conditions—heart attacks, low-birthweight infants, depression, and cataracts—the estimated benefit of technological change is much greater than the cost. In the fifth condition, breast cancer, costs and benefits are about of equal magnitude. We conclude that medical spending as a whole is worth the increased cost of care. This has many implications for public policy.


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