Notable and Quotable: Obamacare’s Anti-Innovation Mindset

Preface: The Obama administration mindset is evident: restrict medical innovation through federal regulations, and you can lower costs, expand access, and make affordable a single-payer system.. In this article in Forbes, Carl Schramm, a University Professor at Syracuse who founded the Johns Hopkins Center for Hospital Finance and Management, articulates the point of view of single-payer advocates who see medical innovators as enemies of government-run systems. What follows are excerpts from Schramm’s December 19 article in Forbes Magazine.

“Obamacare, And The Government's Cruel War On Innovation”

"As a young professor at Johns Hopkins I was around at the beginning of the academic study of health care costs. Over time it became clear that research support in the field was going to be circumscribed by a powerful and largely unspoken common objective. Foundations and federal research agencies were committed to the view that central control of payment would lead to lower costs and make the expansion of coverage possible."

"Simply, national health insurance was the obvious objective, a view commonly but simplistically justified by reference to other“industrialized,” or “advanced,” or, “civilized,” countries. “Single payer” coverage evolved as the strategy to take the U.S. in this direction. "

"The inevitability of a national healthcare system has shaped the way Congress has attempted to regulate hospitals and doctors ever since the passage of Medicare and Medicaid in 1965. Two interrelated themes characterize all federal policy related to controlling costs ever since; namely, central planning and resisting technological innovation."

"In 1974, the government set up a planning apparatus, advanced as a means to curtail health care cost inflation. One of its central aims was to constrain the development and application of new technology. Early on the government had determined that technology was the single most important factor in rising health care costs. This view was confirmed by European nationalized systems that worked hard to resist the proliferation of new technologies. The government’s first outing in planning under the 1974 statute was to retard the proliferation of the newly developed magnetic resonance imaging technology that subsequently proved to be the most powerful diagnostic tool since the introduction of x-rays, and the coming of today’s use of sophisticated genetic testing."

"Not surprisingly Obamacare continues government’s dyspeptic attitude toward technological innovation. Next year the federal government is set to impose a 2.3 percent surtax on the sales of all medical technology. This move alone is a clear signal of the hostility that the government can send to a specific industry. But, the legislation proposes another aspect even less congenial to new drugs and technologies: Various government agencies are now empowered to establish a new threshold for judging products beyond the safety standards now in place. Clinical efficacy, judged using economic cost data, will have to be proved before new drugs and medical devices are approved. As I noted in my Fogarty Lecture at Stanford, this standard alone will greatly depress new innovation. A government that seeks to encourage innovation does not create multiple means to frustrate its champions..

"But, Obamacare does encourage one innovation, if a concept well over three decades old can be called new. As part of a general strategy to control costs (and, it is argued, improve care) the government is mandating a new federal platform for “electronic” medical records. (The very language makes apparent just how old the technology is.). The idea is that an orthopedist in Aspen fixing a skier’s broken leg would benefit from knowing of her patient’s tonsillectomy in Buffalo twenty years before. Research suggests that electronic records are unlikely to save money or improve care in all but exceptional settings, such as the Mayo Clinic where all of one’s doctors practice in the same location. In the end, government would have access to and supervise the retrieval of everybody’s medical information. Maybe we can be trained that if we must break a leg, it would be best to do so on a weekday between 9 and 4 Washington time."

Tweet: The Obama administration , and other advocates of single-payer, view regulating medical innovation as necessary means of controlling costs