Friday, August 07, 2009

The Price of Innovation

Megan McArdle:
Dean Kamen has some lengthy thoughts on innovation that are well worth reading. As the article notes, besides the Segway and the world's first stair-climbing wheelchair, "His innovations include the first wearable infusion pump, a portable kidney dialysis machine, a more flexible stent, one of the world's most advanced prosthetic arms, and many other devices used in the treatment of diabetes, heart disease, cancer and other conditions". Kamen's core point is that innovation is expensive. You can't stop rewarding innovators and expect to have as much of it.

There's often a sort of implicit dichotomy in discussing health care innovation: you have academics, and then you have greedy people. Academics do a lot of important work. Greedy people steal that work, and make a fortune that they don't deserve.

But there's no question that Dean Kamen knows how to produce real and important innovation--his inventions are, if not saving lives, dramatically improving their quality. If he demands to get rich in return for doing this--very rich, filthy rich, obscenely, rolling around in piles of $100 bills rich--then this strikes me as a good bargain. But I think for a lot of people it isn't. The injustice of his demands for profit rankles more deeply than the miracle of his inventions can soothe. If they have to risk some innovation in order to wring this profit out of the system, and distribute the goods he's already produced for us more widely, they're fine with that tradeoff.

I'm not. And I don't think this is a gap we can bridge by discussing the thing. We're doomed to keep getting angry at each other.

Ezra Klein might reply, with justice, that Dean Kamen is an interested party: he would like to get paid as much as possible for his inventions. But this does not, of course, mean that he is wrong. More on why I think ignoring the businessmen in favor of the "experts" is such a bad idea later.


thinking said...

This is a straw man argument.

I don't think many people have a problem with inventors like Dean Kamen getting rich. Few liberals, for instance, have a problem with someone like Steve Jobs being insanely rich.

And no one is proposing to "stop rewarding innovators."

The problems people have with the current system are far different.

First, many people are exasperated at themselves and/or their family members not having affordable access to even basic healthcare.

What good are all of these magnificent inventions if very few can benefit from them?

Plus, most medical experts will tell you that the greatest improvements in public health occur through making the more basic practices and technologies available to a wider population.

It's possible to find all sorts of very heart rending stories of families undergoing tremendous suffering because the current system does not provide them affordable healthcare. These people have no axe to grind against people like Dean Kamen, but only want to make sure their children or their spouses or their grandparents get treatment.

Second, to the extent that people do begrudge anyone making money off of the current system, their anger is usually directed at parties like insurance company execs, etc, who are paid, in part, according to how efficiently they reject claims.

Third, in countries with universal coverage, it's not like medical innovation has stopped.

thinking said...

Here's a more realistic example of someone the public would be angry at making a lot of money (from Paul Krugman's column):

Rick Scott is the former head of Columbia/HCA, a for-profit hospital chain. Mr. Scott was forced out of that job amid a fraud investigation; the company eventually pleaded guilty to charges of overbilling state and federal health plans, paying $1.7 billion -- yes, that's BILLION -- in fines. Now ironically he heads up an organization calling itself a new organization called "Conservatives for Patients’ Rights."

thinking said...

One more thought on innovation: many have noted that a system of universal coverage would encourage entrepreneurialism, as well as a mobility among the workforce.

Right now many people are tied to their employers simply out of fear of losing health insurance, especially those with pre-existing conditions.

If many people knew they could get an affordable public option, how many more would be encourage to start their own companies, follow their dreams and ideas, etc.?

Add in the greater efficiency associated with greater mobility in the workplace, and you have an environment that may be more conducive to innovation and productivity.

As a bonus, there's the fact that health care reform would benefit small businesses.

One thing is for sure: the current system is unsustainable morally or fiscally.