A long-time colleague recently asked me what effect the new health reform law would have on the use of the famous Star Trek Medical Tricorder.* I told him that provisions of the new health law will try to reduce the number of unnecessary imaging tests, and since the tricorder is a hand-held imaging scanner the new law might reduce its use – if it really existed.

Thinking about it later, I realized that if/when such hand-held scanners are developed they would replace much larger and more expensive devices.  The impact of innovations like this on healthcare spending depends upon how health insurance pays for these tests. For example, if these hand-held tests are paid the same amount as the big machine tests, then spending would likely increase because more of these tests would be done since they would be easier and faster to do.  However, if the amount paid for each scan were reduced, then the total effect on spending would depend on that old economics formula: Spending = Price x Volume.  But a third scenario is also possible.  If the tricorder were inexpensive enough that it was just another tool in the clinician’s hand – like a stethoscope is today – then there wouldn’t be any separate reimbursement and spending would dramatically decrease.

But back to the new health reform law: The new health reform law could directly alter incentives for discovering and developing new imaging and diagnostic tests, (as well and new therapies),  since R&D incentives are closely tied to future expectations for payment amounts and methodologies.  The new health reform law has several provisions that could either positively or negatively change these incentives.  For example, increasing the number of people with insurance creates a larger paying population, which would increase incentives for investing in R&D.

Conversely, the provisions for comparative effectiveness research, the Independent Payment Advisory Board, and movement towards bundling payments to larger groups of healthcare providers could put negative financial pressure on the incentives for some types of R&D……. depending upon how those provisions are implemented – particularly how robust the quality monitoring efforts are in conjunction with any initiatives to control spending.  That is, quality monitoring needs to make sure that spending cuts are not broad-sword like hacks at the biggest costs categories, but rather surgical in nature so that they truly reduce ineffective spending while appropriately valuing clinically and cost effective diagnostic and therapeutic interventions.

How the new health reform law’s implementation, (and other initiatives such as the President’s new National Commission on Fiscal Responsibility and Reform which could dramatically effect Medicare payments), will impact biomedical R&D remains to be seen.  But how it changes government and private sector payment amounts and methodologies, (as well as any changes to the policies and practices within regulatory agencies such as the FDA), will be closely watched by biomedical research companies, investors, and patient groups looking for better therapies, diagnostics, and disease monitoring devices.

Advancements in Diabetes
One clinical area where therapeutic and diagnostic advancement has occurred in recent decades is diabetes. Not only are first generation glucose monitoring watches now available, but insulin pumps – which were in clinical trials when I was in medical school – are now being used by such proto-celebrities as Crystal Bowersox, one of the four finalists on this season’s American Idol TV show.  (Note – Ms. Bowersox was shown on the TV show telling Harry Connick Jr. to hang on during their rehearsal session since her insulin pump was “talking at her.”)

While diabetes monitoring and treatment are certainly not inconsequential, it is now possible to avoid the devastating effects of poorly controlled blood sugar levels so that a 24 year old Mom can compete on a tremendously popular live TV show. And similarly, the disease wasn’t an issue in the nomination or confirmation of Sonia Sotomayor to sit on the US Supreme Court.

*According to Wikipedia, “The medical tricorder is used by doctors to help diagnose diseases and collect bodily information about a patient; the key difference between this and a standard tricorder is a detachable hand-held high-resolution scanner stored in a compartment of the tricorder when not in use.”