The inevitability of a national healthcare system has shaped the way Congress has attempted to regulate hospitals and doctors ever since the passage of Medicare and Medicaid in 1965. Two interrelated themes characterize all federal policy related to controlling costs ever since; namely, central planning and resisting technological innovation.
In 1974, the government set up a planning apparatus, advanced as a means to curtail health care cost inflation. One of its central aims was to constrain the development and application of new technology. Early on the government had determined that technology was the single most important factor in rising health care costs. This view was confirmed by European nationalized systems that worked hard to resist the proliferation of new technologies. The government’s first outing in planning under the 1974 statute was to retard the proliferation of the newly developed magnetic resonance imaging technology that subsequently proved to be the most powerful diagnostic tool since the introduction of x-rays, and the coming of today’s use of sophisticated genetic testing.
While medical technology has survived, largely on its ability to demonstrably improve clinical outcomes, its dispersion has been limited both in scope and scale by the federal government. Federal regulation of new drugs and devices has expanded hugely over the last thirty years. Indeed, many innovators and entrepreneurs never start new companies based on a promising new technology because they presume that ultimately the government will deny their ability to enter the market, or the process will be so long that their new company will never survive the wait. Through device regulation government has undeniably “chilled” innovation in health care.