Perhaps this explanation is correct; I have no data to contradict it. But my priors make me skeptical of this explanation. Technology creates great improvements in telecommunications and computing, yet the prices of wonders such as cell phones, telephone calls, and personal computers have fallen dramatically over the years.Yes, once one gets down the learning curve, and once one takes responsibility for paying for the new stuff rather than asking an insurer to pay for it, and once one is prepared to let rich people and hobbyists pay top dollar for the less productive early versions that make the learning curve possible. The Washington Post's Maya McGuineas (via Greg Mankiw) sees part of the argument, but not all of it.
Bending the curve enough to help balance the budget means walking away from some of the new technologies and devices that people want when they are sick. It also means improving consumer cost-consciousness through insurance reform and higher deductibles and co-payments. For most of us, that means paying more, not less. Even then, it is unlikely to be enough to get costs under control.I hope that passage is a consequence of hasty composition. The point in having new technologies is to help people get well, rather than to accept that their time is up, or to simply rest for two weeks and hope the condition goes away on its own. Yes, they are expensive. But to have them available at some price rather than unavailable at any price (go back in time far enough: no flying machines, no Stephenson valve gear, no fore-and-aft sail) means lower costs, if perhaps higher expenditures. Getting to an institutional structure in which the learning curve for medical technologies works for us is the real challenge.