A comprehensive central repository of medical data could be an answer to the cost and quality problems plaguing US health care. Besides the medical histories of individual patients, the database would aggregate information spotlighting medical best practices and their impact on patient care as well as help researchers to identify health-related trends. It would be accessible to doctors, patients, insurers, and researchers via secure and confidential networks.

Without question, such a scheme would greatly improve the quality and consistency of health care practices. Improved data from health care providers would help patients to make better choices—a vital step toward self-directed care. In time, too, patients would benefit from access to standard, portable medical records containing all aspects of their medical history, from physicians' notes and prescriptions to X-rays and laboratory results.

For all of these undoubted advantages, the creation of a nationwide system of electronic health records (EHR) is far from a foregone conclusion. A sizable investment—as much as $200 billion initially—would be required to transform the industry's IT and telecommunications infrastructure to enable data capture and reporting by all participants. Furthermore, such a system would be extremely complicated, requiring the cooperation of a multitude of physicians, specialists, nurses, and...