Will Medical Innovation Slow With Reform?

TW: One (of the many) nebulous but superficially legitimate objections to health care reform (or alternatively rationales for America's highly inefficient approach to health care) is that we fund tremendous medical innovation. Klein questions the premise of that objection/rationale. The best point he brings up is why folks are not clamoring for even more highly expensive cutting edge research spending if the returns from the existing spending are so attractive.

America is a bastion of medical research but the cost of that research like all other costs can not be infinite and it must be weighed against alternative uses of those funds.

From Ezra Klein at WaPo:
"...there's one objection to a national health-care system that I find kind of interesting. As the argument goes, the United States overspends on health-care insurance. But that overspending has a point. It supercharges innovation. The rest of the world, in fact, free rides off of the high prices we pay for new drugs and ingenious technologies. That's not a great deal for us, but it's better than the grim future that awaits us in a world where the United States is not massively overpaying, and innovation thus grinds to a global halt.

The problem with that objection is that it's all theory. I've never seen empirical evidence quantifying the benefits of domestic overpayment, nor the cost to innovation of, say, a government health-care system that cut spending by 15 percent. Similarly, you'd also want to consider whether further drug innovation was the most productive use of those dollars. Out of every $100 we spend paying more for drugs and devices than other countries, would those last $8 do more good contributing to "innovation" (along with profits, advertising, me-too drugs, etc) or funding early childhood education? Or cutting taxes?

Nor do proponents of this theory seem to take it particularly seriously. They'll use it as a cudgel against single-payer, but never as an argument to increase domestic spending. But why not? If the benefits to innovation are really so grand, why shouldn't we double our spending? Or increase it by 20 percent? It seems unlikely that fortune has delivered us to the optimal point on the curve. If the need to better fund global medical innovation were truly so persuasive, you'd imagine that it would cease being a convenient objection to universal health care and be built into an affirmative policy proposal in its own right..."
http://voices.washingtonpost.com/ezra-klein/2009/07/the_question_of_innovation.html