Cash for Clunkers, EMR Edition

From Jeffrey Miron of Cato. 

"Since 2009, the federal government has spent about $30 billion to encourage the adoption of Electronic Medical Records. So how is that working out? This story from NPR sheds some light:

Technology entrepreneur Jonathan Bush says he was recently watching a patient move from a hospital to a nursing home. The patient’s information was in an electronic medical record, or EMR. And getting the patient’s records from the hospital to the nursing home, Bush says, wasn’t exactly drag and drop.

“These two guys then type—I kid you not—the printout from the brand new EMR into their EMR, so that their fax server can fax it to the bloody nursing home,” Bush says.

In an era when most industries easily share big, complicated digital files, health care still leans hard on paper printouts and fax machines. The American taxpayer has funded the installation of electronic records systems in hospitals and doctors’ offices—to the tune of$30 billion since 2009. While those systems are supposed to make health care better and more efficient, most of them can’t talk to each other. 

Bush lays a lot of blame for that at the feet of this federal financing.

“I called it the ‘Cash for Clunkers’ bill,” he says. “It gave $30 billion to buy the very pre-internet systems that all of the doctors and hospitals had already looked at and rejected,” he says. “And the vendors of those systems were about to die. And then they got put on life support by this bill that pays you billions of dollars, and didn’t get you any coordination of information!”

The story illustrates a classic difference betwen interventionists and libertarians. Interventionists think, “EMRs are good, so we should subsidize or mandate them.” Libertarians think, “EMRs appear to be good; if so, the market will adopt them on its own.”

The federal government’s response is truly disheartening. According to Dr. Karen DeSalvo, acting assistant secretary for health at the U.S. Department of Health and Human Services,

“The time of letting a thousand flowers bloom, and having a set of standards that are quite variable, should come to an end… We should be working off the same set of standards.”

It is plausible that a common standard will facilitate communication between different medical providers, but the question is how we get there: via the “wisdom” of government or the wisdom of the market. The EMR saga suggests a clear answer."