Does More Health Insurance Lead to More Medical Innovation?

Following Medicare and Medicaid’s passage, I find that U.S.-based medical-equipment patenting rose by 40 to 50 percent relative to both other U.S. patenting and foreign medical-equipment patenting. Within the United States, increases in medical-equipment patenting were most dramatic in states where the Great Society insurance expansions were largest and in which there were large baseline numbers of physicians per resident. Consistent with historical case studies, Medical innovation’s determinants extend beyond the potential revenues associated with global market size; a physician driven process of innovation-while-doing appears to play a central role. An extrapolation of the evidence suggests that the last half century’s U.S. insurance expansions have driven 25 percent of recent global medical-equipment innovation. In a standard decomposition of health spending growth, this insurance-induced innovation accounts for 15 percent of the long run rise in U.S. health spending in hospitals, physicians’ offices, and other clinical settings.

Jeffrey Clemens, NBER Working Paper.

Comments (17)

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  1. Andrew says:

    This could likely be as more insurance patients have, the more likely they are to seek medical care. The more patients that physicians see, the more incentive to develop innovation to treat their influx of patients. Consistent with the process of “innovation-while-doing.”

  2. Matthew says:

    As more people are increasingly resistant to getting their insurance coverage through the Obamacare marketplace exchanges, I wonder how the resistance of particularly young people to get coverage will affect medical innovations.

    • Crawford says:

      I was at CES in Vegas not too long ago and the innovation in the health industry is getting quite impressive. Wearables are soon going to be more valuable than a primary care physician.

      • Chris says:

        It’s going to take a while for that technology to be adapted. The 60+ age group will be lost. “A bracelet that tracks my blood pressure and caloric intake? What does that mean?” – I can hear my parents now.

        • Crawford says:

          Exactly my point. The younger crowd will not need insurance. They will just have tech to monitor them/ keep them healthy

          • Carter says:

            Crawford, long time no see. You are absolutely wrong though. Preliminary care is what will keep obamacare working.

            • Crawford says:

              Young people will keep it working. Young people don’t like filling out forms out glitchy websites. Tech is their life. A watch that will tell you to take some Vitamin C and remind them to eat lunch? Seems more attractive to that generation.

            • Rutledge says:

              This guy.. Preliminary care is a waste of everyones time. Hour long waiting room experiences are for the birds.

              • James M. says:

                Who needs to wait at the doctor’s office when you can be your own doctor now.

                • Billy says:

                  This could be a bad thing as well. If people go to WebMD, they will diagnose themselves with all of the worst diseases imaginable.

      • Jay says:

        Between the star trek like scanner that can trace vital signs to the Google contact lens that tracks blood sugar, yearly checkups could be a thing of the past.

  3. Mike says:

    I think the innovation is due to the massive amount of funding that is being pumped into this industry. This market needs help and where there is a problem, investors see opportunity.

  4. Jane says:

    In support of the comments above, this is a great example of the private market stepping in to “fill the gap” created by all of this healthcare nonsense.

  5. Devon Herrick says:

    I’ve always assumed that the presence of money fund any medical service invented encourages development of new medical services. Some of these are good; some are ineffective. We definitely have benefited from more medical technology than we would have otherwise had. But, we also paid a high price for this new technology. There is no market discipline that requires proof of efficacy before insurers have to reimburse for new technology.

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