The long-sought goal of widespread use of health information technology (IT) and electronic health records to improve the performance of U.S. health care has faced stubborn barriers to implementation over the past decade. Last year, the Obama administration and Congress chose to pursue another climb up the steep hill of health IT development. The American Recovery and Reinvestment Act of 2009 injected unprecedented amounts of funding, along with new financial incentives and disincentives, to achieve broader adoption of interoperable health IT systems.

As part of the AEI project Beyond "Repeal and Replace": Ideas for Real Health Reform, health industry analyst Stephen T. Parente questions whether this strategy is likely to overcome longstanding economic disincentives to the use of electronic health records, particularly in physicians' private practices. He suggests that policymakers instead should draw upon the lessons of the financial services industry's experience in implementing IT several decades ago. Parente recommends an approach that uses integrated-health-card technology to build on the current transaction-based system for health insurance. He proposes that expedited payment incentives could enrich it with additional data of high clinical value.

Parente offers a clear, market-oriented alternative to the current centralized health-IT procurement approach, which is supplemented with insufficient bribes and penalties to achieve private-sector compliance with interoperability standards. He concludes that this more practical "back to the future" path to harnessing health information in real time can deliver

long-overdue dividends in medical-fraud control, insurance-coverage administration and underwriting, and improved health care quality.

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