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Why was the government subsidizing that?

Probably as part of the meaningful use policy in the US. Early adaptors were initially incentivized to move to EMRs off paper charts.

Today the incentive no longer exists. Instead theres a penalty in the form of reduced Medicare/medicaid reimbursement for practices that don’t comply.

Great answer. Thanks for not just downvoting me.

In what sense is that an answer to "why were they doing that?" The entirety of the answer does nothing but give a name to the policy. "Why" would usually be understood as a question about the reasons behind the policy.

"The government was subsidizing the abandonment of paper medical records because they had a program in place to do that" is something you knew before you asked the question.

They decided that medical records should be electronic rather than paper. Why do they do the other things they do?

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