A national laboratory for reforming health care costs

Abstract

If health care costs are to be reduced, the labor productivity of the US health care system must be increased. Regulations, both government and professionally imposed, have removed the economic incentives that traditionally drive productivity growth. Labor productivity growth can only be reached by increased competition among service providers that leads to replacement of many of those working in the health care field with low-cost technology, principally electrical and computer technology. In highly competitive systems, technology innovation increases productivity, increases quality and reduces both costs and charges. In weakly competitive systems, such as health care and education, technology innovation often increases quality, decreases costs, and increases charges. The path to productivity growth is first competition, then technology innovation. We propose the development of a national program managed by a national laboratory that includes both competition enhancement and technology innovation as its primary elements.