2-year survivor. These estimates are similar to estimates obtained using other IV methods, and would probably be substantially higher if other medical costs (e.g., physician and ambulatory medical costs) were also included.

Thus, there is little evidence that the marginal cost-effectiveness of technological change is declining. On the other hand, the cost-effectiveness ratios are rather large, at least based on judgments by many investigators about “appropriate” ratios for guiding medical interventions (19). While the marginal effectiveness of the additional technologies available at the most intensive hospitals appears to be increasing, it may still be low.

The improvements in cost-effectiveness ratios suggests that Medicare policy for hospital reimbursement is having some desirable effects. In particular, the “high-powered” incentives provided by fixed payments per hospitalization may be discouraging the adoption of low-benefit, high-cost technologies. Moreover, the substantial improvements in AMI mortality since 1984 do not support the view that the payment reforms have adversely affected outcomes for elderly AMI patients. However, Medicare hospital reimbursement incentives are not high-powered in at least two important respects (1). First, the provision of intensive procedures—including cardiac procedures—leads to a different payment classification, and consequently substantially higher reimbursement. Thus, the higher costs of providing cardiac procedures during an admission may be largely offset. Second, treatment of a chronic disease using methods that require multiple hospital admissions result in higher payments, compared with treatments provided during a single admission. The changes in the effects of incremental technologies described here suggest that, in fact, these incentives may be affecting the nature of new technological change. In particular, technologies developed by cardiac-procedure hospitals appear to be associated with the provision of more intensive procedures, whereas technologies adopted by high-volume hospitals appear to be increasingly associated with multiple admissions for subsequent care. These differential patterns may be coincidental, but they are suggestive of a potentially important underlying relationship with reimbursement incentives.

I thank Jeffrey Geppert for outstanding research assistance and the National Institute on Aging for financial support, and participants in the National Academy of Sciences Colloquium for helpful comments.

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