Sunday, April 11, 2010

The Deadly Tax on Medical Innovation

By Paul Hsieh

[Note: This post is part of Modern Paleo's weekend schedule of blogging on Objectivism on Saturdays and free market politics on Sundays.]

As Tax Day approaches, PajamasMedia has just published my latest OpEd on health care, death, and taxes:

"The Deadly Tax on Medical Innovation"

My theme is that one of the greatly under-appreciated effects of ObamaCare will be how it will stifle medical innovation, thus leading to millions of preventable deaths. I make the analogy with Moore's Law and the growth of personal computing power as a model for how medical progress can and should happen in a free society -- and as a warning as to future progress jeopardized by ObamaCare.

Here is the opening:

The Deadly Tax on Medical Innovation

Most technology aficionados are familiar with Moore's Law, which states that computing power tends to double roughly every two years. The average American experiences this most clearly when purchasing personal computers. In 1998, Apple introduced its iMac computer with a 233 MHz processor, 32 MB RAM, and 4 GB hard drive, for a price of $1300. In 2010, Apple's low-end iMac includes a 3.06 GHz processor, 4 GB RAM, and a 500 GB hard drive for $1200. This represents a greater than 10-fold increase in processor speed and over 100-fold increases in RAM and hard drive sizes for roughly the same nominal dollar amount (30% fewer real dollars after adjusting for inflation).

Similar but more quiet progress has also occurred with medical technology. During my medical career, MRI scanners have advanced from creating crude but workable images of brain tumors to generating high-resolution scans displaying not just their anatomic extent, but also their internal chemical composition and the extent of functional disruption caused to the rest of the brain architecture. These advances allow doctors to plan surgery and radiation treatments in an extremely precise fashion to remove the tumor while preserving as much normal brain function as possible. As Clayton Cramer has observed, modern American medicine is much closer to the Star Trek "Sickbay" than doctors could have imagined a mere 20 years ago.

Raymond Kurzweil has generalized Moore's Law as "The Law of Accelerating Returns," arguing that technological progress overall follows a roughly exponential curve. This exponential curve is a natural reflection of the fact that today's progress forms the base of tomorrow's innovation. This create a virtuous cycle in which innovators continually build on each other's work, adding to an ever-increasing fund of knowledge, which in turn allows for future innovations. When people are left free to innovate, the exponential gains they create are therefore akin to the exponential growth we see in our bank balances when we allow compound interest to operate over time.

However, such exponential gains are not automatic. Moore's Law (and Kurzweil's generalization) are not laws of nature. Instead, they presuppose a system of government that leaves innovators free to create. Conversely, a government that penalizes innovation could dramatically slow the pace of medical progress, leading to millions of preventable deaths. And this may be one of the worst long-range consequences of the recently passed ObamaCare health legislation...
(Read the full text of "The Deadly Tax on Medical Innovation".)

[Dr. Paul Hsieh's other op-ed on free market medicine can be found on the FIRM web site. -- DMH]

Comment Rules

Rule #1: You are welcome to state your own views in these comments, as well as to criticize opposing views and arguments. Vulgar, nasty, and otherwise uncivilized comments will be deleted.

Rule #2: These comments are not a forum for discussion of any and all topics. Please stay loosely on-topic, and post random questions and comments in the designated "open threads."

Rule #3: You are welcome to discuss the merits (or lack thereof) of products. Spam comments will be deleted.

You can use some HTML tags in your comments -- such as <b>, <i>, and <a>.

Back to TOP