The Relationship Between Per Capita Income and Diffusion of Medical Technologies

It is commonly known that per capita income is correlated with the level of health care spending and that technology is a major factor in explaining the increase in health care spending. This study examines differences in the rate of diffusion of medical technologies in Organization for Economic Cooperation and Development countries between 1975 and 1995. We find that the importance of income in explaining the long-term availability of a technology generally declines over time and becomes insignificant for some technologies. In other words, more affluent countries are earlier adopters of new technologies, but access to technology becomes less dependent on income over time. The evidence also suggests that the effects of reimbursement incentives are greater for purchases of diagnostic technologies than for lifesaving technologies and that reimbursement incentive effects are less significant for older technologies.