Electronic Records…more please!
By SamTuesday, April 15th, 2008 at 9:41 pm
In our discussions of e-government, we have focused primarily on the ways in which information technology can help inform government decision-making through private citizen input. I would like to discuss the reverse: how policy makers can support the use of information technology to benefit private citizens. Across a wide variety of government services and government supported industries, electronic record keeping can improve our lives directly and indirectly by reducing long term costs and thus decreasing our tax burden.
We can start with the tax system itself. Although I won’t try to dream that our tax system will receive a desperately needed overhaul, a little injection of IT could at least help reduce costs and make filing taxes easier for average citizens. This afternoon, along with no doubt millions of other procrastinators, I mailed in my tax returns to the US Federal Government and the State of Illinois. Although 80 million people (not bad out of a total 300 million people) chose to file their taxes online, the cost of processing the remaining mailed in forms is probably not trivial. Since key paperwork like W-2 forms usually arrive as a piece of paper mailed by employers, filing online is not necessarily more convenient; you apparently have to retype your W-2 form to make it electronic. Additionally, my summer employer had to waste resources processing my request for a duplicate W-2 form because I had never received the first one. This problem would have never occurred if the government maintained a national database of W-2 forms and other relevant records. Besides making relevant records conveniently available in electronic form, (entering pipe dream territory) the IRS should estimate the cost difference of processing an individual record on paper vs. online and offer a tax rebate of that value to online filers.
The tax system was just a minor example of a way in which electronic records can improve the efficiency of our bureaucracy and economy. If we strive to adopt many such policies, it could result in great savings for the government. One particular important area where government support of electronic record keeping could lead to drastic improvements is health care. In the current system, hospitals and private practices implement their own record keeping systems, and the vast majority do so with paper rather than electronic records. This results in an enormous amount of resources wasted processing and maintaining these records as well as costly and easily avoidable medical errors (e.g. your pharmacist gives you the wrong medication because he/she can’t read your doctor’s handwriting). If you move from one health care system to another, even if they both use electronic health records, your new physician will have to waste valuable time getting a detailed medical history that already exists on someone else’s computer. Although theoretically the market should lead health care providers to adopt such a cost saving system on their own, a significant amount of the savings come from network effects. If two private companies develop competing systems of health care record keeping, most hospitals don’t want to spend millions of dollars upgrading to what could turn out to be the HD DVD of health care records. The US government should set up an independent agency to develop a national health record database, subsidize the adoption of this technology by all health care providers, and eventually condition Medicare and Medicaid payments on use of the technology (essentially mandating its universal use). As long as the database is maintained nationally, private companies could compete to develop the appropriate software and hardware for interacting with the database, fostering innovation.