The diffusion of advanced medical imaging scanners and health care expenditures: A cross-national OECD panel study (1990-2008)

apid growth in health care costs in developed countries has been a pressing policy issue for decades. Health economists agree that innovation and diffusion of technology in health care is among the most important factors contributing to growth in health expenditures in the developed countries. Technological innovation is difficult to observe directly so most researchers have relied on indirect measures of innovation such as time trends, patents, and research and development spending. This research evaluates a more direct measure of technological innovation and diffusion by examining the relationship between magnetic resonance imaging (MRI) and computed tomography (CT) units per capita and health expenditures per capita among member countries of the Organization for Economic Cooperation and Development (OECD), while controlling for other factors known to affect health care spending including GDP per capita, population health, health insurance system factors, and other health care resources. The analysis uses the OECD June 2010 health dataset and includes 21 of the 33 OECD countries between the years 1990 and 2008. A fixed effects model was employed to control for unobserved country and time effects. Results indicate that while per capita national income is by far the most significant and largest determinant of per capita health expenditures in the model, each additional MRI unit per million people is associated with increased health spending per capita of about...