WHY LIMIT AN INNOVATIVE INDUSTRY?

September 21, 2009

Despite all the well-documented problems with our health care system, the United States is still the world's leading source of medical innovation, says Newt Gingrich, former speaker of the House of Representatives and the founder of the Center for Health Transformation.

For example:

  • Since 1960, the U.S. age-adjusted death rate for heart disease has declined by 54 percent due to advancing technology and new drugs.
  • Pacemakers have been transformed: they once required a user to wear a backpack to monitor the device's short battery life; today, pacemaker batteries last more than seven years and are small enough to install in the rib-cage muscle wall.
  • Premature babies survive in America to live full lives more often than anywhere else in the world.
  • New drugs now arriving on the market cure once-lethal leukemia; on the horizon there are vaccines to prevent other types of cancer.
  • Modern science and technology offer even more exciting treatments in the future for diseases like AIDS, Parkinson's and Alzheimer's.

Standing in opposition to this world of hope is the vision of reform advanced by President Barack Obama and congressional Democrats, says Gingrich.  That vision would destroy the economic incentives that drive health care innovation because it starts with a fundamental conceit: that government planners can spend health care dollars better than patients and doctors in the marketplace.  This planning is the foundation for the arbitrary insistence that spending 17 percent of our gross domestic product (GDP) on health care is "too much."

The new bureaucracies that would be set up to reduce health care spending by slashing payments to doctors, hospitals, surgeons, specialists, drug companies, high-tech equipment makers and others will kill the innovation that has served us so well, explains Gingrich.  The essential incentives for the huge capital investment necessary to develop breakthrough treatments will be gone.  And so too will high-paying jobs that these investments create.

Indeed, the plan released by Sen. Max Baucus (D., Mont.) last week would impose new taxes on medical device manufacturers of $40 billion over 10 years, notes Gingrich.  That's more than industry venture capital investment.

Source: Newt Gingrich, "A Growth Vision for Health Reform; Why limit an innovative industry to a certain percent of GDP?" Wall Street Journal, September 21, 2009.

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