Innovation and Universal Healthcare

INNOVATION AND UNIVERSAL HEALTHCARE….Jonathan Cohn’s cover story in the current issue of the New Republic takes on the conservative claim that a federally-funded universal healthcare plan would stifle medical innovation. It’s a good piece that runs down the the usual arguments against this claim (most basic research is government funded, other countries with UHC systems do fine, the free market wastes an awful lot of its research dollars on me-too drugs, etc.), but of course it doesn’t provide a smoking gun. How could it? When all the arguments are finished, we’re still trying to predict the future and we just can’t do it.

But let’s add two things anyway. The basic conservative argument is that the vast amount of money spent in America drives the lion’s share of medical innovation in the world. Without the prospect of huge returns from the American market, the medical industry wouldn’t have the motivation to spend huge amounts of money on applied research and market development, so innovation would be reduced. But Matt Yglesias points out that this is hardly the whole story. After all, it’s not as if a UHC bans private citizens (or insurance companies) from paying for therapies that the feds won’t:

Insofar as there might be some projects that aren’t worth doing at the price the UHC system is prepared to pay, you could just try to get people to pay out of pocket for it. If the innovation’s so great, why won’t those with money be willing to pay for it? Obviously, the poor won’t be able to afford it, but they’re no worse off than they are today as un- or under-insured patients.

That seems true, but again we’re faced with the empirical question of whether it really is true. Would there be enough rich people willing to go outside the system to provide the same returns for innovation that our current system provides? There’s no way to know except by adopting UHC in America, waiting a few decades, and finding out.

Or maybe not. It seems to me that there’s some scope here for a natural experiment. There’s one specific demographic that has been covered by UHC both in Europe and the United States for the past four decades: elderly people. So here’s the experiment: identify various areas of medicine, identify the extent to which they serve patients over the age of 65, and then create some metric to identify the rate of innovation in these areas. If UHC stifles innovation, then you’d expect that the more a particular medical specialty targets the elderly (and is therefore funded solely by UHC), the less innovative it’s been over the past 40 years. And if a particular specialty exclusively targets those over 65, you’d expect progress to be almost nil.

This wouldn’t be an easy study. Figuring out which specialties target older patients probably isn’t too hard, but creating an innovation metric would be tricky. Alternatively, perhaps you could simply look at medical industry R&D spending, since that’s what drives the innovation in the first place. Even if you can do all that, though, there’s still a big cross-pollination problem, since advances in one area might be driven largely by related advances in another area.

Still, there’s considerable scope for some very useful research here, no? I’d venture to guess that most Alzheimer’s therapies worldwide, for example, are paid for by UHC. Ditto for hip replacements and cataract surgeries. So how much innovation has there been in those areas, and how does it compare to innovation in, say, antibiotics or statins that are used by patients of all ages?

Seems like something that would be worth a few million dollars in federal grants. A little data never hurt anyone, did it?