[Congressional Record Volume 140, Number 16 (Wednesday, February 23, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 23, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                  DEMOGRAPHY AND TECHNOLOGY TIME BOMB

                            HON. BILL BAKER

                             of california

                    in the house of representatives

                      Wednesday, February 23, 1994

  Mr. BAKER of California. Mr. Speaker, I rise today to share with my 
colleagues a poignant article by Mr. Thomas Loarie, from my hometown of 
Danville, CA. Mr. Loarie's article, entitled ``Demography and 
Technology Time Bomb,'' appeared in the Wall Street Journal of February 
16, 1994.
  In the article, Mr. Loarie warns against just one of the dangers of 
President Clinton's health care plan--that of the stifling of new 
medical technologies. Instead of causing health care costs to rise, 
medical research and development will actually bring costs down. More 
efficient and less intrusive surgical techniques will reduce the length 
of a hospital stay in some instances.
  We have the best health care system in the world. We must not prevent 
the crucial research and development that will allow it to continue to 
improve.

             [From the Wall Street Journal, Feb. 16, 1994]

                  Demography and Technology Time Bomb

                         (By Thomas M. Loarie)

       In its quest to squeeze savings from the health care 
     system, the Clinton health care plan threatens to put a 
     chokehold on the single greatest source of efficiency and 
     productivity: medical technology.
       This is shortsighted because in less than a decade, the 
     baby-boom generation will begin entering the peak years of 
     health care consumption. The need for efficient, labor-
     saving, resource-stretching tools to handle the boomers' 
     health care needs will be greater than ever.
       But perhaps the administration already knows this and 
     chooses to ignore it. As a developer of medical technology, I 
     know that the Clinton plan's impact on technology innovation 
     will not be widely felt for about 10 years. This is roughly 
     the time-line for a new medical device to go through 
     development, testing and evaluation by the Food and Drug 
     Administration.
       Health care is the one industry where, erroneously, 
     technological advances tend to be viewed as burdens, not 
     solutions. But medical technology prices increased at an 
     average annual rate of 2.9% between 1985 and 1992, vs. the 
     3.1% rate in the primary index of producer prices throughout 
     the U.S. economy, according to the Health Care Technology 
     Institute in Alexandria, Va. This is despite the rapid rate 
     of medical technology innovation during that period, a period 
     that saw seismic changes in the way health care is delivered.
       Development of less invasive surgical technologies, for 
     instance, helped drive the trend toward outpatient surgery, 
     which now constitutes nearly 60% of all hospital-based 
     procedures. One of the most important of these technologies, 
     laparoscopy, was considered an exotic idea when introduced in 
     the late 1970s for a small population of infertile couples 
     desiring pregnancy. Since then, spinoff technologies have 
     made its applications widespread.
       The savings that come from such innovation are often 
     ignored. Prior to 1989, for example, it cost about $21,000 
     plus six days in a hospital to have a gall bladder removed by 
     conventional surgery. Today, a laparoscopic procedure 
     performed in an ambulatory surgery center can accomplish the 
     same thing for about $6,400.
       Labor costs, which account for 80% of health care spending, 
     are the true wild card, yet they are not addressed in the 
     reform plan. Another wild card is over-utilization of 
     technology that occurs at the direction of physicians, 
     hospitals and consumers themselves. Here the Clinton plan 
     proposes to attack the problem by ensnaring medical 
     technology makers in the same bureaucratic net as technology 
     users. This is like cooling down the pace of 
     telecommunications innovation as a national strategy for 
     dealing with teenagers' overuse of their parents' telephones.
       If the health care system falls to fully exploit 
     technology's leveraging capacity, the needs and demands of an 
     aging population will either bust the nation's treasury or 
     require unnecessary, if not politically unacceptable, 
     rationing.
       Since coming under the regulatory purview of the FDA in 
     1976, our industry has undergone a series of ever-tightening 
     R&D controls and product requirements. A three- to five-year 
     FDA review process that was in force when my company started 
     in 1986 is now a five- to seven-year process, which extends 
     the full R&D cycle for many companies to 10 years or more. As 
     a result, costs associated with surviving the FDA new product 
     gantlet have grown substantially higher, while potential 
     returns have been further deferred.
       The chilling effect of the administration's plans for 
     health care spending caps can be seen by almost every leading 
     health care analyst on Wall Street. Their nearly unanimous 
     evaluation is that medical technology companies are among the 
     ``big losers'' in the Clinton plan. Uncertainties over how 
     new technologies will be assessed, how prices will be set, 
     and how global budgets will affect new technologies over the 
     long term have added measurably to the risk of investment.
       It is fantasy for Washington to think medical technology 
     investors have unlimited reserves of courage and patience. A 
     bureaucratic scheme that makes irrelevant such foundational 
     concepts as market research, pricing strategies and product-
     development timelines may be just the thing to steer 
     investors into less precarious pursuits, along such lines as 
     oil drilling or perhaps gold prospecting.
       The president's plan puts the brakes on new advances that 
     might otherwise be there to serve aging boomers like the 
     Clintons, at a moment when the health care system will be put 
     to its strongest test yet.

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