What will finally break the back of health care costs? Telemedicine

Nobel Laureate Vernon Smith paints a simplistic and overly pessimistic view of the health care cost crisis, focusing on the need to align incentives and the difficulty in doing so.Doctor, Can You See Me Now? in today's Wall Street Journal explores telemedicine applications, which are increasingly allowing specialists in academic institutions provide advanced diagnostic services to rural hospitals. Thanks to technology --especially high definition video and high quality audio-- telemedicine has become feasible even for critical situations, such as deciding whether a stroke patient can safely receive tPA or whether a newborn needs to go to the ICU.The technology costs tens of thousands of dollars or more per installation, and of course doctors and hospitals are looking at it as a potential new revenue stream. Payers --with few exceptions-- are  resisting because the application is unproven and they fear rising costs.It's possible telemedicine will raise costs in the near term, but I foresee a day in the not too distant future --maybe 10 years-- when widespread telemedicine will enable a highly competitive marketplace for health care delivery, so that doctors and hospitals from around the country or around the world will compete on price and quality to serve patients wherever they may be. As telemedicine is coupled with robotic surgery and similar technologies, it will be possible to reengineer the delivery system and overcome local provider monopolies that exist today.We can already see this start to play out in teleradiology. But there's no reason for progress to stop there.If you think the insurance companies are putting up fierce resistance to a public option, just way to see how providers react in 5 years or so when serious consideration is given to allowing Medicare to reimburse telemedicine services provided by overseas physicians and hospitals.