Competition And New Technology

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Abstract
Most real medical spending growth is accounted for by beneficial but costly new technology. This paper argues that a missing dimension of our concepts of competition among health plans is a focus on their policy toward new technology. In principle, plans could choose to move rapidly or slowly, inclusively or selectively, toward adopting new technologies, broadly defined. These policies would affect the rates of growth of their premiums, and consumers could choose among plans depending on both the technology policy and premium growth. Legal impediments, physician resistance, and membership turnover are all possible obstacles. Further thought should be given to making technology policy an explicit dimension of plan competition.