fairly significant as a source of private innovation through the channel of funding universities.

Regarding the other part of the question, comparing cost-reducing innovation in health care with that of other industries, as a first approximation one looks at health care to say where are all of the cost savings inherent in desktop computers and so forth. In some sense one could argue that there is some cost savings going on. If increases in drug spending, for example, substitute for hospital stays, that is one source. But on balance it is becoming more expensive, even though people are getting more in return. Some people have identified the productivity slowdown in the pharmaceutical sector and in other areas of the medical care system as one contributor to that. But there are a lot of open research questions, and it is not well understood as to why that industry is so different.



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