Medical devices only a small slice of U.S. health care costs: report
by Brendon Nafziger
, DOTmed News Associate Editor | July 15, 2011
Medical device costs
rose an average
of 1 percent
over the past
Medical device prices increase at nearly half the rate of other consumer goods, and the slice of U.S. spending on health care that goes toward devices has remained stable at around 6 percent over the last decade, according to a report published Thursday by medical device manufacturers.
A report commissioned by Advanced Medical Technology Association, a trade lobby, found spending on medical devices in 2009, the most recent year for which data were available, totaled $147 billion, 5.9 percent of the $2.5 trillion spent on U.S. health care. That share has remained largely unchanged since the early 1990s.
"Medical devices haven't really appeared to be a significant driver of change," Guy King, the former chief actuary for Medicare, who helped prepare the report, told reporters in a call. "Price increases have been lower than inflationary indexes."
The report, the third for AdvaMed that King prepared with Gerald Donahoe, an economist, also found that medical device prices grew much slower than those for the rest of health care. From 1989 to 2009, medical device prices have risen at an average annual rate of 1 percent, according to the report. In the same period, the Consumer Price Index increased 2.8 percent. Meanwhile, the CPI for health care rose 4.7 percent, and the CPI for medical services 5 percent.
The big jump enjoyed by medical devices occurred in 1992, when the percent of total health care dollars spent on devices rose from 5.4 percent to 6 percent, to reach $38.8 billion that year. But the percentage hasn't really budged since then, the report said.
"In view of the conventional wisdom about the role of medical technology in driving up costs, it is surprising that the cost of medical devices during this period has risen little as a share of total national health expenditures and, since 1992, has remained essentially constant as a percent of national health expenditures," the authors write.
AdvaMed credited the sluggish price increase to the high competition in the industry.
"We have multiple manufacturers in many parts of our industry developing devices that are highly competitive with each other," Ann-Marie Lynch, executive vice president, payment and health care delivery policy, with AdvaMed, told reporters. "The highly competitive nature of the device industry as a whole is a key factor of what you're seeing here today."
The report was prepared using data gleaned from the Census Bureau on product shipments and the Bureau of Labor Statistics on pricing.
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