Universal health care at the expense of innovation?

Jonathan Cohn has an article at TNR that considers the question, "Can we really be sure that universal health care won't come at the expense of innovative medicine?" Here's the argument against it:

In a universal coverage system, the government would seek to limit spending by forcing down payments to doctors and pharmaceutical companies, while scrutinizing treatments for cost-effectiveness. This, in turn, would lead to both less innovation and less access to the innovation that already exists. And the public would end up losing out, because, as Tyler Cowen wrote last year in The New York Times, "the American health care system, high expenditures and all, is driving innovation for the entire world."

That assumption requires several leaps of logic in Cohn's opinion, leaps born out of the assumption that the private health care system drives innovation. Consider the story of one treatment for Parkinson's disease and how it came to be developed:

The story of Deep Brain Stimulation actually holds some important lessons about how innovation frequently takes place--and why it's not all that dependent on a non-universal, private health care system like the one we have in the United States. For one thing, it turns out that DBS isn't exactly an American innovation. If anybody deserves credit for developing it, it's the French--and one French doctor in particular. [...]

The development of DBS was one part basic knowledge--an understanding of how Parkinson's works and how the brain responds to electrical stimulation--and one part sheer luck. Profits, on the other hand, had relatively little to do with it. According to Robert Gross, an Emory University neurosurgeon and expert in the field, Benabid had actually approached the companies that already made electrodes for use in treating chronic pain, suggesting they develop a device specifically for Parkinson's. But they declined initially, so Benabid had to use the existing devices and adapt them on his own. "The companies did not lead those advances," Gross says. "They followed them."

In this sense, DBS offers an important window into the way medical innovation actually happens. The great breakthroughs in the history of medicine, from the development of the polio vaccine to the identification of cancer-killing agents, did not take place because a for-profit company saw an opportunity and invested heavily in research. They happened because of scientists toiling in academic settings. "The nice thing about people like me in universities is that the great majority are not motivated by profit," says Cynthia Kenyon, a renowned cancer researcher at the University of California at San Francisco. "If we were, we wouldn't be here." And, while the United States may be the world leader in this sort of research, that's probably not--as critics of universal coverage frequently claim--because of our private insurance system. If anything, it's because of the federal government. [emphasis mine]

Yep, that's right. The federal government. It turns out the National Institutes of Health (comprised of 27 separate institutes) is the single biggest source of medical research funding in the entire world. Last year it spent more than $28 billion on research, accounting for one-third of the total money spent on medical research and development in this country and half the money spent at universities.

Cohn made one other more point worth noting: Since 2003, Bush and his congressional allies have let NIH funding stagnant because they needed room in the budget for other priorities, like tax cuts for the rich. Well, of course. Alzheimer's, aids and cancer can wait.

I'm not worried about universal health care hurting innovation, I'm worried we'll never recover from the damage the Republicans have done to our government.