MANAGED CARE, MEDICAL TECHNOLOGY, AND HEALTH-CARE COST GROWTH - A REVIEW OF THE EVIDENCE

Although managed care plans reduce health care expenditures at any poi nt in time, less is known about whether such plans control health care cost growth. Because use of new medical technology is an important de terminant of cost growth, the impact of managed care on utilization of medical technology will largely determine whether managed care can re duce expenditure growth to sustainable levels. This article reviews th e literature relating medical technology to cost growth and the litera ture examining the impact of managed care on either cost growth or on the diffusion of medical technology. Studies that examine plan-level d ata often reach different conclusions than studies that examine market -level data. The evidence suggests that managed care, as currently pra cticed, may reduce the rate of cost growth. However, managed care is u nlikely to prevent the share of gross domestic product spent on health care from rising unless the cost-increasing nature of new technology changes.