Economics and the Rational Use of Medical Technology

Abstract

A new technology should replace an old one only if the prospective benefits outweigh the prospective costs. This deceptively simple rule proves difficult to develop into a conceptually sound decisionmaking framework capable of practical application. Even when this has been done we are confronted with data deficiencies which make the role of judgement critical. I will argue that it is important to use a framework that clearly identifies issues essentially empirical (i.e. matters of fact), which forecasts events or states of the world, involves valuation of potential costs and benefits, and estimates probabilities. I will argue that ’benefits’ must ultimately be measured in improved health of patients, and since ’costs’ are ultimately benefits foregone by other patients, all decisions about the rational use of medical technology must involve questions of distributive justice, which are made explicit.