Robert Graboyes
October 13, 2017

Innovation, Not Insurance, Is Health Care’s Key

Innovation is key for technology in health to succeed

Digital Era technologies can offer better health for more people at lower cost.

But, innovation speed depends critically on public policy, and our health care debates focus monomaniacally on health insurance rather than on how we produce health. 

Like Jupiter’s Great Red Spot, America’s health care debate is a ferocious hurricane of noxious gas, swirling interminably but leaving everything around largely unchanged. International comparisons focus largely on political economy—governance, distribution, financing—rather than on the interrelationships between innovation, care, and health.

Pre-Obamacare America had certain quantities of doctors, nurses, hospitals, devices, drugs, and laboratories, combined into care via established recipes. Few slack resources lay about. Obamacare, enacted in 2010, covered tens of millions of new people and offered dozens of free services to all Americans, all while leaving resources and recipes little changed. The result was mainly redistributive, with winners and losers in terms of care, cost, and health.

READ MORE: Why We Need Health-Care Innovation More than Ever

In opposing Obamacare, America’s political Right offers a succession of equally feckless reforms. The Left waves single-payer about as a talisman. All these plans rest on the unwarranted assumption that changing payment structures will introduce great efficiencies. 

But Americans don’t spend more on care because we’re inefficient. We spend more because our saving rate is low and because we’re spending down accumulated wealth. (We consume more of almost everything.) America’s less-than-stellar health performance measures derive partly from causes outside of health care and partly from statistical quirks. For example, our somewhat-shorter lifespan results primarily from sudden violent deaths (murder and accidents)—not from health-care shortcomings. 

Technology, not doodling with insurance, is what will lower costs and improve outcomes.

A $99 attachment on my cellphone conducts 30-second, clinical-quality electrocardiograms, with artificial intelligence instantly assessing whether I’m encountering atrial fibrillation. If results are suspicious, a telemedicine option enables a heart specialist to review the data.

Passive telemetry and connectivity yield earlier signs of illness. Telemedicine makes early intervention easier, likelier, and cheaper. Genomic medicine personalizes care. Nanobots will soon deliver individually tailored treatments. 3D printers produce workable prosthetic hands for one percent of the cost of professional models. Soon, 3D printers may manufacture replacement organs. Computers like IBM’s Watson can perform complex diagnoses with breathtaking speed and thoroughness. In India, technology helped the cost of cardiac surgery to plummet while achieving world-class outcomes. 

Unfortunately, the pace of medical innovation may be heading the wrong way.Eroom’s Law” shows pharmaceutical development becoming slower and exponentially more expensive. (“Eroom” is “Moore” spelled backwards.)

Fully harnessing Digital Age medicine requires sound policies that encourage innovation. Unfortunately, such policies are often lacking, and the more we argue over insurance, the less we encourage innovation.


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About the Author

Dr. Robert Graboyes is Senior Research Fellow at the Mercatus Center at George Mason University in Arlington, VA. Author of “Fortress and Frontier in American Health Care,” his work asks, “How can we make health care as innovative in the next 25 years as information technology was in the past 25 years?”.

Previously, Bob was senior health care advisor for the National Federation of Independent Business; Sub-Saharan Africa economist for Chase Manhattan Bank; and regional economist/director of education at the Federal Reserve Bank of Richmond. He traveled extensively in Africa for Chase and twice was visiting health care scholar in Kazakhstan.

Bob has taught at five universities. He holds five degrees, including a Ph.D. from Columbia University. In 2014, he received the Reason Foundation’s Bastiat Prize for Journalism, an international competition “which honors the writing that best demonstrates the importance of individual liberty and free markets with originality, wit, and eloquence.” Bob is active on Twitter at @Robert_Graboyes.

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