INNOVATION UNDER FEDERAL HEALTH-CARE REFORM

Health care reform, which seeks to expand coverage and control spending, contains mixed messages for innovators. Policies that advance reform goals are likely to shift resources away from hospitals, specialists, and expensive procedures and toward areas such as prevention and primary care where innovation may yield greater health improvements per dollar spent. The size of these effects depends critically on the extent of cost containment achieved. Constraining spending will be politically difficult because it requires that consumers forgo some possible health benefits in return for lower costs. In a climate of cost containment, systematic evaluation of new technology is vital to identify and expand coverage to worthwhile innovations and to assure a fair hearing for innovators.