When selling ObamaCare, President Obama cited significant cost savings through the digitizing of patients' medical records as one of the many incentives for passing the Affordable Care Act.

Now we find out that the savings first projected to be over $80 billion a year will be lower and take more time to achieve. All of this hinges on the broad application of digital medical records by healthcare providers who aren’t moving with haste.

So why isn’t your local doctor racing to convert your records from the old paper and pen? Well, we’re dealing with technology which changes rapidly and often has significant costs including human costs from adoption that continue over time.

The prohibitive costs of installing new software, staff training, and technology maintenance among others have discouraged doctors despite the fact that they face potential financial penalties. Thus there’s talk of the government paying some of these costs.

Here’s what going on:

The government’s incentive programme was greeted with high expectations in light of a 2005 Rand Corporation report, which estimated potential healthcare savings at $81bn a year. But a new Rand report from January strikes a more restrained tone, suggesting these widespread savings cannot take place yet because the electronic health records themselves are too expensive, unable to communicate with other systems, and not used widely enough.

Wow, who would’ve thought? Establishing a broad national policy has consequences that the program designers had not intended.

A system this widespread only works if everyone participates. Because many are not inclined, the government must mandate participation and assess penalties on non-compliers. It’s cheaper for some healthcare providers to take a penalty from the government than to invest in something too costly to sustain.

Sound familiar? Individuals aren’t the only ones who don’t want to be bullied into action they’ve made a calculated decision is not in their interests.

Some are harping on the financial boon that the health IT industry is experiencing. I’m not mad at the free market creating supply to meet demand. If I could get in the game I probably would.

Here’s another point to consider: the government may be creating perverse incentives among healthcare technology companies which fuels the communication breakdown between health records systems and failure of this experiment. Do tech companies have any incentive to build software that works in concert with each other? As competitors, it’s unlikely they are swapping details on how their products work at the risk of losing their competitive edge. And to secure upsell opportunities of system upgrades, add-ons and maintenance down the line to their clients, companies have an incentive to not to be too efficient or friendly.

Surely, the social engineers behind this IT mandate thought through all of these issues and myriad others like privacy concerns. Realistically, they were blinded by the prospect of “promising” large-scale economic impact.