Dot-Gov: Market Failure And The Creation Of A National Health Information Technology System

Abstract

The U.S. health care marketplace’s continuing failure to adopt information technology (IT) is the result of economic problems unique to health care, business strategy problems typical of fragmented industries, and technology standardization problems common to infrastructure development in free-market economies. Given the information intensity of medicine, the quality problems associated with inadequate IT, the magnitude of U.S. health spending, and the large federal share of that spending, this market failure requires aggressive governmental intervention. Federal policies to compel the creation of a national health IT system would reduce aggregate health care costs and improve quality, goals that cannot be attained in the health care marketplace.