Universal coverage and medical innovation


The New Republic's Jonathan Cohn has written a new piece on health reform, recognising and then questioning what he calls the best argument against universal coverage--the risk that it would suppress medical innovation. Cohn writes:

More than a decade ago, Michael Kinsley, the journalist and former editor of this magazine, developed Parkinson's disease--a degenerative condition that impairs motor and speech  control, producing tremors, rigidity, and eventually severe disability. While the standard regimen of medications helped, he knew that his symptoms were bound to get steadily worse with time. He needed something better--something innovative--before the disease really progressed. In 2006, he got it at the famed Cleveland Clinic in Ohio

The treatment Mike received is called Deep Brain Stimulation, or DBS for short. It began with a physician--one of the world's top Parkinson's specialists--drilling two holes in his head, into which were implanted two thin electrodes made of titanium. The electrodes were attached to wires, which the physician threaded behind the internal portions of Mike's ear, down his neck, and eventually into his chest cavity, where they were connected to a pair of tiny battery-powered controllers. After the surgery, the doctor activated the controllers using a remote device, unleashing a steady pulse of small electrical shocks that ran across the wires, through the electrodes, and--finally--to the part of the brain that regulates movement. DBS doesn't cure Parkinson's, but it has been shown to control the symptoms for extended periods of time. And that's what happened for Mike (who is also, full disclosure, a friend).

DBS represents the cutting edge of Parkinson's treatment; the Food and Drug Administration approved it only ten years ago. It is also very costly. Medtronic, a company that makes the electrodes, says the whole procedure costs between $50,000 and $60,000. And, because the treatment's main effect is to suppress and delay the onset of symptoms, rather than cure the disease, Mike started wondering whether a system of universal health insurance would pay for it--and, if so, in which cases.

I thought it was an excellent article, but needlessly confusing about the distinction between universal coverage and single-payer. The idea that universal coverage might threaten innovation arises out of that confusion.

Universal coverage, in its own right, poses no threat to innovation  or to the availability of expensive and exotic treatments for people who can afford to pay. America can achieve universal coverage by filling gaps in  its existing system--in much the way that the Democratic presidential candidates are now suggesting, and as Mitt Romney did as governor of Massachusetts. Reforms like this pose no threat to the incentives that drive medical innovation in the US. The trade-off between universal coverage in its own right and innovation is a straw man.

What might pose a threat to innovation, depending on the details, is new attempts at cost-control. A highly centralised single-payer system like Britain's or Canada's presses down on costs partly by denying expensive or otherwise cost-ineffective treatments (in the judgement of the system's administrators) to patients, and by other forms of rationing. Trade-offs between economy on one side and innovation and access on the other inevitably start to bite. The results may be better or worse  for citizens as a whole--but once you start to curb costs from the top down, the trade-offs are inescapable.

Centralised single-payer systems are apt to be uniform-access systems as well, since they are politically directed. (Canada's private health-care system has been regulated out of existence; Britain's is quite small.) So curbing access to expensive new treatments for the majority becomes curbing access for (almost) everybody. But the key thing is, you don't need single-payer to achieve universal coverage. Cohn frequently uses those terms as if they are interchangeable--which is hard to understand, now that all the Democratic candidates are in fact proposing universal coverage not based on single-payer.

All of the reform plans now on the table for the US are multi-payer systems--hence unequal-access systems. The rich will be able to buy better insurance and treatments that are not covered even by the best insurance. The Mike Kinsleys of this world (Mike is a friend of mine, too, by the way) will still be able to buy the best, newest, most sophisticated and most speculative treatments. There is the spur for innovation. And universal coverage does nothing to put it in jeopardy. Single-payer--together with the principle of equal access to medical technology--might indeed put it in jeopardy, in its effort to curb costs. But no Democratic candidate is suggesting such a thing.

This is not to say that controlling costs doesn't matter, of course. It matters very much. But it is cost-control that may jeopardise innovation, not universal coverage.

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Clive Crook is a senior editor of The Atlantic and a columnist for Bloomberg View. He was the Washington columnist for the Financial Times, and before that worked at The Economist for more than 20 years, including 11 years as deputy editor. Crook writes about the intersection of politics and economics. More

Crook writes about the intersection of politics and economics.

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