Will Health-Care Innovation Survive Obamacare?

I have the sense that many defenders of an even-more-fully-government-run health care system have a hard time taking this question seriously. But they should. It’s just a fact that much of the world’s medical innovation comes from the U.S. This goes a good way toward explaining with why survival rates for many potentially mortal health problems are highest in the U.S., and also partly explains why U.S. costs are so high. Indeed, that a certain strata of Americans spend so much, often on stuff that makes no difference, also partly explains the high U.S. level of innovation. Profligate U.S. spending on state-of-the-art treatments acts as a subsidy to the health care systems of other countries, who get to free-ride off American innovation and (often “wasteful”) market experimentation. As Megan McArdle put it:

At the highest macro level, life expectancy, Europe generally outperforms us.  But it’s not clear how much of that is health care, and how much things like our murder rate, and our famously sedentary lifestyles.  When you drill down into many diseases, we outperform them.  And many argue that we outperform them on hard-to-measure “lifestyle” issues:  how fast your torn ACL gets repaired, how quickly (or whether) you get a hip replacement, etc.  Such quality of life issues are nearly impossible to measure, though this hasn’t stopped many people from trying.  But I don’t really trust the figures they generate.

Europe gets a great deal out of all of this.  We figure out what works, then they adopt it.  But we get a great deal too–we get earlier access to controversial treatments, and our future generations get all the treatments we’ve discovered so far.

Megan mentions Virginia Postrel’s terrific Atlantic piece about her ordeal with breast cancer and the expensive but effective drug Herceptin, which may well have saved her life. And which New Zealand’s government health system wouldn’t pay for initially…

Looking at the crazy-quilt American system, you might imagine that someone somewhere has figured out how to deliver the best possible health care to everyone, at no charge to patients and minimal cost to the insurer or the public treasury. But nobody has. In a public system, trade-offs don’t go away; if anything, they get harder.

The good thing about a decentralized, largely private system like ours is that health care constantly gets weighed against everything else in the economy. No single authority has to decide whether 15 percent or 20 percent or 25 percent is the “right” amount of GDP to spend on health care, just as no single authority has to decide how much to spend on food or clothing or entertainment. Different individuals and organizations can make different trade-offs. Centralized systems, by contrast, have one health budget. This treatment gets funded, and that one doesn’t.

If I lived in New Zealand, I wouldn’t be dead, just a lot poorer. But if every place were like New Zealand, far fewer complex new drugs would get developed in the first place. And my odds of survival would be much, much lower.

The biggest challenge for advocates of less hindered market competition in health care is that it is so hard to see what is lost to excessive regulation and government rationing. Glenn Reynolds, writing in the Washington Examiner, does a terrific job illustrating what could be lost to a system of government rationing. For example, his family:

[M]y wife, a longtime vegetarian and marathon runner, had a freak heart attack at the age of 37.

It wasn’t from too many Big Macs. After some rough patches, she’s now doing well, thanks to an obscure and expensive anti-arrhythmic drug called Tikosyn, and an implantable cardioverter/defibrillator. Not too long ago, she’d have been largely bedridden. These medical innovations made the difference between the life of a near-invalid and a life that’s close to normal.

My mother had a hip replacement. Her hip didn’t break – she basically wore it out with exercise. When the pain got too bad, she got it replaced, and now she’s moving around like before, only painlessly. Not too long ago, she would have been chairbound.

My father had prostate cancer; his doctor suggested waiting but on biopsy it turned out to be pretty aggressive. It was treated with radioactive “seed” implants. He’s now been cancer-free for several years, without the side effects of earlier treatments — or, worse, of cancer.

My daughter had endoscopic sinus surgery this spring. She had been sickly and listless, complaining of constant migraine headaches, missing a lot of school, and generally looking more like a zombie than a teenager. Several doctors dismissed her problems, or prescribed antibiotics that didn’t help much, until we found one who took the extra step.

A head CT scan done on a fancy new in-office machine showed a nasty festering infection, the surgeon cleaned it out, and now she’s like a normal kid again. Before laparoscopy, her condition would probably have remained untreated, and she would have been another “sickly” kid. Better to be well.

The normal critique of socialized medicine is to point out that people have to wait a long time for these kinds of treatments in places like Britain. And that’s certainly a valid critique. I’m sure my mom and daughter would still be waiting for their treatments, while my father and wife would probably be dead.

The key point, though, is that these treatments didn’t just come out out of the blue. They were developed by drug companies and device makers who thought they had a good market for things that would make people feel better.

But under a national healthcare plan, the “market” will consist of whatever the bureaucrats are willing to buy.

I plan to write something longer about why this is such a tough issue to crystallize and communicate. My hunch is that our thinking about any issue like this, where enormous humanitarian benefits are side-effects of systems driven largely by self-interest, is badly distorted by the Knobe Effect.

Author: Will Wilkinson

Vice President for Research at the Niskanen Center

62 thoughts

  1. I'm sure this has its own effect named after it, but it seems like except in personal situations like Reynolds or Postrel (or me, my sister was more born just late enough to take advantage of newly reliable heart surgery) above, no one really notices where medical innovation comes from, or what impact it has. No one thinks about the people who would be alive today if medical innovation had gone faster, and no one will think about the people who won't be alive tomorrow if medical innovation goes slower, because they won't exist any more.It's similar with estimating economic growth. People simply can't appreciate the difference in a piddling few percents of growth over a number of years. They think that factor is somehow external to everything else, and will keep on going at some “proper” pace no matter what.I guess people are just extremely bad at gauging how things “might be” in sufficiently complex systems.

  2. Adam Shields – I read a lot. I blog all (or most) of my reading at http://bookwi.se My spiritual direction website is at http://aspiritualdirector.com
    arshield says:

    I think you have very real concerns. But there also are the concerns about people without insurance dying because of a lack of routine medical care, not the expensive stuff the basic stuff.I have a friend that had her pregnancy defined by her insurance as a pre-existing condition, not because she was pregnant when she got the insurance (she wasn't) but because she had a c-section with one of her previous deliveries. So the medical insurance paid for the up front pre-natal and the follow up but would not pay for the delivery. This was supposed to be good insurance from a fortune 100 company. I think that we should be able to do both, but there will be some trade offs. Changing laws around liability will do part. But changing culture to try to get people to understand that sometime a pill or a treatment isn't the best thing, is probably more important. Parents forcing doctors to give antibiotics for a cold is a very common example.

  3. “I’m sure my mom and daughter would still be waiting for their treatments, while my father and wife would probably be dead.”Sure Glenn. Endoscopic Sinus Surgery happens everywhere and has for at least a decade with its historical precursor being available since the 50s. CT Scanners were invented in Britain. Prostrate seed implants were given up on in the U.S. in the late 70s, but revived thanks to European experiments in the 80s. Hip replacements happen everywhere. Tikosyn is available everywhere. This is why Glenn Reynolds is completely unreliable. Meanwhile, had members of his family been unlucky enough to be uninsured, they'd had to have chosen between bankruptcy and their treatment.And really, any argument about health care that fails to mention the hundred million or so uninsured or underinsured is really bordering on mendacious. What is rationing if not simply having 1 in 4 people have to choose bankruptcy along with treatment?

  4. I see this as one of the few side benefits of Obama and the Democrats crapping on the American health care system: it will screw over a lot of foreigners.French, Chinese, Canadian, Bangladeshis will all suffer. The US health care system heavily subsidizes the rest of the world.

  5. “Prostrate seed implants were given up on in the U.S. in the late 70s, but revived thanks to European experiments in the 80s. Hip replacements happen everywhere. Tikosyn is available everywhere. This is why Glenn Reynolds is completely unreliable.”You appear to have missed the point – no one questions that Europe and Asia are able to get something of a free ride by making cheap, generic copies of American drugs. Tikosyn is available everywhere because Pfizer, an American drug company, payed for the research that created it as well as the testing that proved it's efficacy and safety. Pfizer did so in hopes of making a profit. Remove that profit incentive by making government responsible for deciding what is needed and what isn't, and Tikosyn most likely wouldn't exist.

  6. I savor the irony of someone regurgitating the “hundred million uninsured or underinsured” talking point complaining, in the same breath, about mendacity.

  7. Health care keeps getting more costly in relative terms because we keep coming up with new and better ways to treat people. People like to buy things that help them live longer, healthier lives. It's not irrational to want these things, and it's not immoral to make money selling them. But even in countries with socialized medicine, demand for more and better treatments is transforming those systems. It is a natural human desire to want to get better when sick, and no matter what impediments we put in the way, nature finds a way around them.

  8. Even the most inflated estimates put the uninsured at 45 million, and many of those people are illegals or healthy ones who choose satellite TV instead of health insurance. So I find your “100 million or so” number to be… quite mendacious.

  9. Innovation has never thrived in health/medicine, not by comparison to most sectors. This goes all the way back to the Carnegie Commission prior to WWI and Flexner's report to congress which resulted in all non-allopathic medical schools (read: non-MD) being shut down, with osteopathy and chiropractic just skating by. Having been in venture capital and now being associated with a med school/research complex, I could tell you all kinds of stories about the anti-innovation bias in medicine today.It is to the point I have come to believe that the medical establishment embraces nationalized health care largely as a bulwark against innovation. Talk with surgeons my age, and it's hard to mistake that they view the watershed events of their career that have greatly reduced the need for certain surgeries as disruptive rather than a boon for patients.Disintermediation alone (if you have to go thru B to get from A to C and you eliminate B, that's disintermediation) could make today's health care system, with its “shortages” of doctors and nurses and insurance, cover our total need and do it at reduced cost. But you will notice that a radical rethinking of medical practice is not on the table here. It's a major way that businesses in every other sector compete, but medicine has been and wants to remain free of its embrace.

  10. “It’s just a fact that much of the world’s medical innovation comes from the U.S.” Beyond that, how much of *worldwide* medical innovation is done with the US market in mind? Surely European medical companies take the potential to make a profit in the US into account when they are deciding on research investments. That potential is unlikely to be there after a government takeover of US health care.

  11. A libertarianThere is a libertarian/conservative movement to increase pressure on politicians in Washington to be very careful about how they vote on this bill.We are calling for Chris Dodd's resignation because we feel he represents much of what is wrong in our capital right now. If you feel as we do, we ask that you simply encourage others to call for his resignation by posting it on sites, telling your libertarian/conservative friends or making posters at Tea Parties that support this call for Chris Dodd's resignation.

  12. Guess you missed that part about “But we get a great deal too–we get earlier access to controversial treatments, and our future generations get all the treatments we’ve discovered so far.”

  13. “This goes all the way back to the Carnegie Commission prior to WWI and Flexner's report to congress which resulted in all non-allopathic medical schools (read: non-MD) being shut down, with osteopathy and chiropractic just skating by.”This is an ignorant comment and makes me doubt your other statements. Flexner visited every “allopathic” medical school and recommended that 3/4 be closed. He had nothing to do with chiropractic and osteopathy because both are modern anti-science developments. In 1960, when a friend considered applying to LA chiropractic college (He was a lawyer and wanted to learn more anatomy), I suggested he call the school and ask about admission criteria. They told him they did require a high school diploma but would make exceptions. That's why they didn't make many inroads into respectability until the past 25 years.”Having been in venture capital and now being associated with a med school/research complex, I could tell you all kinds of stories about the anti-innovation bias in medicine today.”I don't believe anything you say since you got the first item so wrong.I disagree a bit about innovation as laparoscopy came from France. However, that is understandable because France has a very free and open medical care system. There is a national fee schedule but it is voluntary ( you can pay extra to see any doctor you want to) and all care is fee-for-service although some prepaid clinics exist. It is nothing like Canada or the NHS. Innovation comes from freedom, not necessarily from lots of money. It is freedom that we are in danger of losing in the US.

  14. I should add that the “anti-science” remark pertains to the theory, not to the present practice of osteopathy which usually ignores the origins of the concept.

  15. Read more carefully. “uninsured and underinsured”. I say or so because one could debate the meaning of underinsured but 100 million is in the ballpark.

  16. You don't know much if you think Drug companies are developing drugs and making profits only in America. 5 of the top 7 revenue generating drug companies are in Europe. Now it may be the case that the U.S. is helping customers in Europe pay less for drugs but why anyone things that's a positive is beyond me. So spare me simplistic thinking about removing the profit incentive. Pfizer will find plenty of ways to make oodles of money making great drugs even if the U.S. adopted single-payer tomorrow. The U.S. would just pay for less of it then it does now. Or we can continue to be the world's fool when it comes to financing high drug prices.

  17. Will has probably addressed this elsewhere, but how does his concern over a more centrally-controlled government medical system fit with his adoration of places like Canada, Denmark etc. I don't mean this as a “gotcha” type thing, I rather like Scandinavia. Just curious.

  18. “Indeed, that a certain strata of Americans spend so much, often on stuff that makes no difference, also partly explains the high U.S. level of innovation.”Yes, and this strata of Americans with the means to continue spending huge amounts will continue to do so, even with a public option.Also, I don't see how Megan's point about how we get earlier access to controversial treatments can be true unless 1) you have the cash to pay for it out of pocket or 2) you have an insurance policy that covers experimental treatments (and who has that?).

  19. I'm not sure it matters where the company is based, Europe or the US. The biggest market, and the point of this article, is still the US because we “Pay Up” for specialized treatments. This does lead to more drug development. However, the benefit of the “free ride” seen in places that don't do the kind of expensive drug development, i.e. Canada, Mexico, developing countries have many of these medications available for a fraction of the price of drugs in the U.S. This is why there was such a big fight over mailorder meds coming from Canada. Consumers in the U.S. HAVE subsidized drug development for other countries.

  20. This comment raises a really interesting question. I've heard Will's argument — that the U.S. government's expanding the public sector's role in the health care industry might decrease returns to medical research, and so slow the advancement of medical science — before. The idea, I gather, is that pharmaceutical companies, medical device manufacturers, and doctors won't work on cutting edge stuff unless they can take in U.S.-style revenues. Huge prices — which is a kind of rationing — raise the return on investment. They're the price we pay for progress. But two potential problems come to mind.First, doesn't this story cut against our usual understanding of capitalist competition? Developing new products is risky, but as long as the expected return on investment is positive, then we'd expect companies to conduct research and offer new developments at competitive prices. We'd also expect companies to compete away one another's profits until the price of health services reaches an equilibrium. If the expected return on investment is positive, you'd expect the research to be done no matter what the public sector is doing — unless the government makes market-priced sales in the private sector illegal, which nobody is proposing to do in the U.S. One thing that's missing from stories like Will's is what's happening in Europe. Is it actually the case that all the cutting edge medical research is done on the backs of U.S. consumers? Conservatives seem to assume that's the case, but no one ever cites empirical evidence showing that it's true. Merck and Bayer aren't exactly lightweights, and I guess it's possible that almost all their R&D money comes from U.S. sales, but given the size of the pharmaceutical market, that doesn't seem very likely — or, at least, it seems likely that the story's a lot more complicated than that. Second, let's assume that it really is true that it's really true that without U.S. consumers paying higher prices there would be much less new R&D. It's possible that the expected return on investment just isn't positive, in which case we have a serious market failure and there ought to be a subsidy. That, in effect, is what I understand Will's argument to be proposing. But why does the subsidy have to come in the form of exemptions that shelter HMOs from competition so they can reap huge profits and enable pharmaceutical companies, device companies, and physicians to charge more?And, third, a set of related issues: Regardless of the best form of subsidy, why is it at all just to ask U.S. consumers to subsidize medical science for the rest of the developed world? And, again, assuming Will's story is basically right, and U.S. consumption subsidizes R&D across the board, is there any reason to believe that, if U.S. consumers just said they'd had enough, and are going to control costs by having the public sector pay a lot of mine-run care, Europeans wouldn't pay more? I mean, Europe is a really rich place, and I'm pretty sure people there are as interested in fancy drugs and life-extending treatments as Americans are.There are obvious left-leaning answers to some of these questions. The odd thing is that, unless I'm wrong, Will seems to accept something like those answers when it comes to the massive subsidy the U.S. government's defense expenditures provide to European states. Should this area be different? Why?

  21. I'm afraid it is you who is ill-informed. Osteopathic medicine was developed by A. T. Still in the 1870s, and manipulative therapy, its unique core, remains a major component. Likewise, D. D. Palmer founded chiropractic medicine in the 1890s. Your anecdote about admission criteria is dubious.Your last two sentences though are right on the money.

  22. I know it screws over Americans too. But I have to look for some silver linings as Obama brings America to ruin.My main one is that liberals don't have guns.

  23. Not.'Nature' will not find a way. Humans have to. It's magical thinking of the worst kind to think that taking the profits out of health care will produce better and cheaper health care. The opposite will happen.

  24. Osteopathic medicine, in theory, attributes all illness to displacement of the spine, a theory similar to that of Palmer, founder of chiropractic. Modern Osteopathic physicians, with a few exceptions, dismiss the theory and practice standard medicine. Chiropractic functions as a form of “alternative medicine” and mostly chiropractors act as physical therapists not primary care physicians, except among poorly educated immigrants.My comment about ignorance pertained to your erroneous assertion that Flexner was concerned with the minor issue of alternative practices like Osteopathy and chiropractic. You could read my book on medical history for more information, if you have a desire to be educated.This little squabble adds nothing to the issue of health care reform.

  25. This little squabble that you started and continue to get wrong.First, osteopathic manipulative medicine does not closely resemble chiropractic; it is concerned with lymphatic, muscular and other systems.Osteopathic physicians, far from dismissing the theory and practice of modern medicine, practice evidence-based medicine with a more patient-centered approach and the addition of training in manipulative medicine.Chiropractic functions as “alternative medicine” when looked at thru the prism of allopaths.Flexner openly criticized not only osteopathy and chiropractic but naturopathy, homeopathy, physio-medicine, eclectic medicine and other schools of medical thought with the result that, largely on his say-so alone, those fields no longer exist. Yes, he was hard on many allopathic schools too. However, he is worshipped to this day by hospital finance people for making the allopathic paradigm dominant and for creating the lucrative gatekeeper model of medical care.Sounds like it might be time for a second edition of your book or at least an errata page.

  26. Will, how about making a reasonable alternative proposal? I mean, you'd have to agree that whatever the current US system is, it's certainly not free market, what with the government subsidies to shape it into its current form. I personally don't have much choice of health care at all: I get to pick between Kaiser and a Cigna plan, or else quit my job, and buying insurance on my own would be prohibitively expensive. Clearly not a good situation. And I'd be interested in hearing your opinion of systems like the Netherlands, where insurance is mandatory, price is fairly tightly regulated, but insurers are otherwise free to do whatever. Is that the direction we should be moving in?

  27. good god, manyou just said; it does not matter wheter the incentives [for medical innovation] are bigger or larger because they will BE anyway. What vacuous BS

  28. Hardly, “dusty.” I am pointing to the folly of trying to constrain human initiative and the human desire for life and health. Systems that try to do this fail for this very reason- nature finds a way around them.

  29. Medical innovation in the United States is driven by our enormous public funding of medical research by the NIH, the professors at non-profit universities who utilize the funds, and the army of technicians, post-docs, and graduate students who provide highly skilled, low cost, labor. The breakthroughs are printed and available in academic libraries across the world. Will's piece buys the great fiction that profit oriented companies are responsible for innovation. Innovation comes from your tax dollars and this will not change. Products implementing the intellectual work product of research scientists come from corporations, but it's not like a corporation is going to develop a surgical technique. Basic investigation of medicine is not going to change with publicly funded health care. In my experience the publicly funded research scientists of our university system are incredibly dedicated to curing disease and helping patients without working for a corporation.

  30. Medicine is cheaper from Canada and Europe. Some people travel to Mexico and other countries to save on medical treatments. Companies such as Walmart and Publix are offering some basic medications at low prices. TV and radio news features commentary and debate on health care systems daily. Something is wrong with our health care system. It may be the best for innovation and delivering cutting edge treatment. But, if that system is denied to you because of your ability to pay, then it needs to reworked to be universally available. Politicians who stand in the way need to be exposed for what they are and voted out of office.

  31. Zealot?Why do you feel the need to be insulting?I simply have facts at hand that you should but don't. Most are so basic, you can Google them.Did you chronicle in your book, for instance, that DOs, using manipulative techniques, had dramatically lower patient death rates during the Spanish influenza outbreak than did MDs? You can't Google that one; it's in peer-reviewed journals of the time.

  32. Wish I had bookmarked the finding posted on the internet in the last 2-4 days that found rather the opposite–that the results of the huge US investment into medical research has been enormously underwhelming. They speculated that researchers were rather adept at grantsmanship and didn't want to ruin a good gig by actual discovery.That's been my experience too. I interviewed the head of a much-heralded “bench to bedside” program with the useful mission of getting research findings swiftly installed in medical practice. When I finally inquired how many projects were in the pipeline after three years… zero. But he was proud of the fact that many PhDs had been filled in on the intricacies of patent and trade-secret protection.I helped an ENT publicize his NIH grant. He'd come up with a simple, clever device that promised to turn a $2000 procedure performed by a specialist into an $80 procedure performed by a nurse–precisely the kind of innovation medicine needs. He was insistent it be portrayed as pure research; the product aspect was not to be mentioned lest he suffer the scorn of his colleagues.These are some of the experiences that lead me to be pessimistic for the prospects for medical innovation today as things stand. Forget it if the new health care plan goes through.

  33. Thanks for truly articulating my point and for bringing up our Defense budget which works much in the same way. Both examples go a long way to explaining why I don't take conservatives seriously when it comes to constraining spending. We subsidize the rest of the world in terms of Defense and aspects of Health Care yet conservatives have no real desire for reform as it will cut too deeply into the profits of their important corporate constituencies.And I read Glenn Reynolds article again. That truly was atrocious propaganda. To use Defense again, how does Glenn explain our vast military superiority, all publicly funded. He's an absurd person.

  34. I also wish you could cite a source. Feel free to link your interview.PhDs in the sciences are granted for an original intellectual contribution to science (as slight as this contribution admittedly may be). They are, by definition, innovative – why a lab that produces successful PhDs instead of products is proof that innovation is in peril eludes me. Given that a typical PhD takes 4-6 years, that nothing was in the pipeline after thre years is hardly surprising. My argument is pretty straight forward. The heavy lifting of scientific discovery is done by publicly funded university researchers. Corporations take these insights and monetize them. COX-2 inhibitors are a good example of corporations gravy training on actual research. Researcher discovers an important receptor site, corporation cyclesrapidly through hundreds of chemical analog candidates to fit in the site. Combinatorial chemistry and drug screening is hardly innovative in a corporate setting.As for the ENT, his innovation was funded by an NIH grant, thus proving my point. Scientists are currently in an extremely competitive market seeking funds for medical research. If anything, the constant spinning of their research as medically important encourages scientists to overpromise, deceive, and play it safe. Will is absolutely right that self interest drives innovation – but it's publicly funded.Charlie, can you provide a single counter factual where a corporation created a medically important (i.e. – reduces mortality) drug or device without using the intellectual work product of a university scientist? I'm talking a soup to nuts innovation from the private sector. Other commentors are welcome to chime in.

  35. Well, I don't think these sorts of international subsidies are always unjustified. And I'm not sure where I come out on the specific questions at issue here. But I've always thought that the “the current U.S. system funds medical R&D” claim was one of the most compelling arguments against major health care reform. But people who make this claim — at least the people that I read — are always really vague about the details of how the subsidy is supposed to work, why R&D would go away if the U.S. shifted to a (more?) public system (at least in the absence of major reform in Europe, &c.), and, if the subsidy really exists, why it's okay to ask U.S. consumers to pay it.

  36. I appreciate your consternation, bookscout. The interview was personal. The news article on the shortcomings of medical research was online just in the last few days and was from a decent source (nytimes?) I certainly would've bookmarked it if I'd expected this discussion to ensue.I'm late to the medical side of things. Earlier I worked with PhDs in a wide variety of fields, from metallurgy to electrical engineering to polymer chemistry to applied physics and so on. They all had a mentality of productizing discoveries. I found that spirit some in the medical world at places like Stanford Hospital, but for the most part I instead find antagonism to commercialization.The “bench to bedside” program was not to mint PhDs. Instead, it was senior researchers in Alzheimer's, in genetics, in cancer, in eye research, a variety of medical fields. Nothing in the pipeline there after 3 years is telling.

  37. Let me spell this out. Productizing is the *least* innovative part of a medical discovery. The last lab I worked in does Alheimer's research and their first paper is on it is about to come out – three and a half years after beginning the work. This has nothing to do with products, but goes to the structure of Alzheimer's amyloid plaques. Getting a medically utilizable product from this is not likely at all, but down the line someone will benefit from knowing the structure of these plaques. The innovation is in using an old structural determination technique in a novel way and developing all the lab methods from scratch.

  38. I'm talking 12 research groups of senior people each with multi-million dollar budgets with a “bench to beside” commercialization program added, not at inception, but to mature programs and three years later, nothing in the pipeline.

  39. Basic care improves because of the “expensive stuff”. Innovation by definition means cheaper and better. The point of this article is that in a monolithic government system, where everything must be distributed equally, new surgical techniques that enable safe c-sections would have been “expensive stuff”, and would never have made it. Technology is by its nature deflationary. New stuff is expensive, but becomes cheaper over time. Even in this case, your friend may have had to pay a lot of money for her C-Section, but it was much cheaper as a percentage of her wage than it would have been 50 years earlier for the same level of care, though in reality, the level of care she received now was probably not even available to the richest 50 years ago.Think air conditioners in cars. They were once a luxury, but are now commonplace. If in the 50's we had demanded that everyone be provided a vehicle from a single payer system, it would have been impossible for air-conditioners to make the cut. We simply could not have afforded them for everyone at the time. The production costs of air conditioners would have stayed the same as manufacturing processes could not have been refined with experience.This story plays out over and over again in market economies. Here is a comparison of the Sears catalog that shows an 80 percent reduction in cost (per hours worked) for common household items. http://mjperry.blogspot.com/2009/03/miracle-of-…That being said, I agree that liability problems stifle innovation, and that we should agree on a level of basic care that is made available to those least able to pay.

  40. Adam Shields – I read a lot. I blog all (or most) of my reading at http://bookwi.se My spiritual direction website is at http://aspiritualdirector.com
    arshield says:

    The problem isn't the innovation it is the unpredictability. If you never know what your insurance will and will not pay for then there is not a free market system. A free market system says that you can go into the market and figure out what is the best insurance for you. If your insurer randomly (based on your understanding) agrees to pay for one thing, but won't pay for another that is not a free market system. Market economies must have open and understandable pricing in order to work. Heath care is not open or understandable and therefore it is not a real market system.

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  42. I hope that the “Obamacare” will not have a negative effect on the health care innovations. On the contrary, maybe he is going to invest even more in research. I suffer from a sinus infection for which there is no cure yet but I sure do hope medicine will come up with a permanent cure for it.

  43. I hope that the “Obamacare” will not have a negative effect on the health care innovations. On the contrary, maybe he is going to invest even more in research. I suffer from a sinus infection for which there is no cure yet but I sure do hope medicine will come up with a permanent cure for it.

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