Healthcare Cost Control and GOP Hysteria

RationingPaul Waldman at The American Prospect wrote a short article one of the reasons we have, The Most Expensive Health Care in the World. In it, he discusses charges to Medicare. He contrasts two drugs that are almost identical in the treatment of macular degeneration. One is Lucentis and the other is Avastin. But while Lucentis costs $2,000 per dose, Avastin only costs $50. So doctors prescribe the more expensive drug.

And why do they do this? Because it is to their advantage. Medicare pays doctors 6% of the cost of the drug for prescribing it. So they get $3 for prescribing Avastin and $120 for prescribing Lucentis. That’s not a hard decision for the doctor even though it is terrible for public policy. Waldman noted that the obvious fix to this situation is to give doctors a flat fee for writing prescriptions. If they got $10 whether they prescribed Lucentis or Avastin, there would be far less Lucentis prescribed.

But there is a problem. Waldman put it correctly, “Of course, the pharmaceutical lobby would pull out all the stops trying to keep that six percent fee in place.” This is a big part of the problem with allowing such an unequal society. I don’t think anyone really thinks that Congress is going to allow any policy changes that might hurt the pharmaceutical industry. Avik RoyAs it is, Medicare Part D wasn’t about providing drugs to the elderly. It was about providing profits to the pharmaceutical industry.

The whole thing comes down to price control. I’m reminded of a remarkable conversation that Ezra Klein had with Avik Roy last year. Roy goes on and on about the Switzerland system and the Singapore system. This is strange since he hates Obamacare, which is quite similar to them. But Klein hit back on this and got to the core of what matters in healthcare reform:

But in these systems, right, because when you talk about the one-seventh, Singapore is very cheap. Great Britain is very cheap compared to us. Canada is cheap. Sweden’s cheap. France is cheap. Everybody’s cheap. And what all of them do, the thing that they all do, is not health savings accounts, right? That is not the common denominator. The thing every single one of those systems do is the government is a primary negotiator. The government says how much can a drug company charge. The government says how much will a doctor’s visit cost. The government says how much a hip replacement will cost. And the per-unit price of health care in those countries is way, way, way down.

Roy agrees with this, but he shouts “Rationing!” whenever the issue comes up. So even though Roy is willing to admit in theory that we must do something to contain costs, he is never willing to support such measures in practice. And this is true of the conservative movement itself—most especially the GOP. Ideologically, they are committed to the idea that the free market is perfect and if only we ignore it all will be well. Of course, the actual evidence shows anything but.

The problem with the conservative approach is that it leads to the usual libertarian “utopia” where everyone is completely free to do anything they want if they can afford it. But in this world, the group that can afford it includes almost no one. Of course, even for the extremely rich, this situation is bad. A robust middle class is the engine of innovation. And if the rich want to have the next decade’s great innovations, they would want more equality. But I guess the idea of relative wealth is just too compelling for the rich and their apologists.

The healthcare situation all comes down to us finding a way to contain costs. We already ration healthcare in this country, we just do it by wealth. We are looking for a way to do it more fairly. No one is suggesting that the rich shouldn’t be able to buy the best care available. But we are saying that a base level of care should be available to all. The current system doesn’t work for the rich or the poor. It is just a system designed to unfairly enrich a certain part of the economy: doctors and pharmaceutical companies. And they would be doing fine regardless.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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