The Effect of U.S. Health Insurance Expansions on Medical Innovation

Jeffrey Clemens

No 19761, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: I study the channels through which health insurance influences 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.

JEL-codes: H51 H57 I1 I13 O3 O31 (search for similar items in EconPapers)
Date: 2013-12
New Economics Papers: this item is included in nep-hea, nep-his and nep-ino
Note: EH PE PR
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Citations: View citations in EconPapers (25)

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Working Paper: The Effect of U.S. Health Insurance Expansions on Medical Innovation (2012)
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