Technology as a 'major driver' of health care costs: a cointegration analysis of the Newhouse conjecture

J Health Econ. 2002 Jan;21(1):147-59. doi: 10.1016/s0167-6296(01)00122-9.


Per capita real income on the demand-side and technological change, proxied by total R&D and health R&D spending, on the supply-side are hypothesized as major drivers of per capita real health care expenditure in the US during the 1960-1997 period. The findings are robust to a battery of unit root and cointegration tests. They support the Newhouse [Journal of Economic Perspectives 6 (1992) 3] conjecture that technological change is a major escalator of health care expenditure and confirm a significant and stable long-run relationship among per capita real health care expenditure, per capita real income and broad-based R&D expenditures. Policy implications are noted.

MeSH terms

  • Biomedical Technology*
  • Data Interpretation, Statistical
  • Diffusion of Innovation
  • Health Care Sector / trends*
  • Health Expenditures / statistics & numerical data*
  • Health Expenditures / trends*
  • Health Policy
  • Health Services Needs and Demand*
  • Humans
  • Income / statistics & numerical data
  • Income / trends
  • Models, Econometric
  • Research Support as Topic / economics*
  • United States