Technology and Longer Lives Leading to HIGHER HEALTH BILLS.

If you have clogged arteries and the cost of treating them goes down, will you and your insurance provider pay more or less for health care? The answer, according to Stanford (Calif.) University health economist Victor Fuchs, is probably more. "You will pay less for the particular treatment in this case, but chances are the procedure will be performed on more patients, and they and you will live longer, healthier lives, racking up more health care bills."

Health care for the elderly could consume 10% of the nation's gross domestic product by 2020 if present trends continue, he predicts. That is more than double the share the elderly consumed on health care in 1995, which means that Americans will have less money to spend on other goods and services.

Many stories have been written about the aging of the postwar baby-boom generation and the looming costs associated with their retirement. What is less well understood, Fuchs points out, is that another factor is driving up health care costs much faster. Age-specific expenditures have been rising, so that health care costs of the average 73-year-old, for example, are considerably higher than they were for the average 73-year-old 20 years ago. Even though some new treatments for ailments cost less than older ones, the total costs of sustaining health for a year are increasing for the elderly.

A number of studies are under way to try to pinpoint the many factors driving health care costs and quality, but economists already generally agree that new medical technology is the primary reason Americans over 65 are spending more on health care. Modern methods of diagnosis and treatments with new drugs or surgical procedures have improved the general health of older people--especially men--and lengthened their lives. People...