This bit from Phil Longman's review of Jon Cohn's book seems germane to the question of whether low-cost, socialized systems can innovate:
[This] system's innovations have included the development of the first artificial kidney, the cardiac pacemaker, the first successful liver transplant, and the nicotine patch, plus many advanced prosthetic devices, including hydraulic knees and robotic arms.
The system in question? Why, the government-run, fully socialized, Veteran's Health Administration! The VHA has also proven remarkably innovative and effective at developing protocols to manage chronic conditions like diabetes. In fact, The Annals of Internal Medicine pitted the VA against an array of managed care systems to see who offered better treatment for diabetics. The VA triumphed in all seven of tested metrics. That hasn't required a lot of medical device innovation so much as rethinking how to deliver and encourage routine care, but it's important nonetheless, and more effective at improving health (not to mention controlling cost) than most technological innovations we could point to.
Anyway, are we done on this innovation question? I think the burden has now shifted to the right to prove that a national system would staunch innovation.
