Good News On Health Costs?
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  • Jacksonian Libertarian

    It’s the feedback of competition that makes the Free Enterprise system provide continuous improvements in Quality, Service, and Price. But when you separate buying decisions from the consumer, as the health insurance system does, you also interrupt the feedback and the improvements stop. What you are left with is unnecessary surgery, the prescription of dozens of unnecessary medications, simply all the waste, inefficiency, and bureaucracy, which characterizes the Government Monopoly.
    Look at how the Quality, Service, and Prices, have improved in those medical services that are not covered by insurance, like Lasik, or Cosmetic surgery.
    If the only health insurance available was the high deductable kind ($2,000) combined with the tax free health saving accounts, so that the consumer was spending his own money, Prices would drop, Quality would rise, and Service would improve.
    A slightly-less-unsustainable health cost trajectory is still unsustainable, and that which is unsustainable, will not be.

  • WigWag

    The pharmaceutical industry is in deep trouble and that should concern all of us. The fact that Pharma is no longer producing breakthrough medications is disturbing and signals that something is seriously amiss with the model that drug companies rely on.

    Disintermediation began to hit the pharmaceutical industry earlier than most industries; as far back as the early 1980s drug discovery was being driven by university based medical researchers who started their own biotech companies with venture dollars. Many of the most successful of these companies (Amgen and Genentech come to mind) were either bought out by large Pharma or have taken on the characteristics of large Pharma themselves.

    Perhaps the biggest problem these companies face is that the R&D it takes to produce an approved new medication is enormous and the costs are astronomical. For every new compound that ends up as a marketable product; hundreds fail.

    Pharma can no longer afford the significant R&D costs associated with new product development because the United States is the only country in the world where Pharma derives enough profit to plow back into drug discovery. The entire rest of the world pays only a slight premium over manufacturing costs (these costs are miniscule compared to R&D costs). But for the subsidy paid by American consumers and third party payers, there would be no pharma R&D at all. American drug costs are artificially high because the drug costs in the rest of the world are artificially low.

    This cannot last.

    Pharmaceutical products are actually the most important ingredient in lowering health care costs. How many hospitalizations and surgeries have been prevented by antihypertensive medicines and statins (e.g. Lipitor)? How much less expensive is the health care system as a whole because drugs that control blood sugar in diabetics prevents a tremendous number of hospitalizations?

    The fact that the Pharma model is now seriously broken will end up in the long run causing health care costs to rise and human suffering to rise right along with it.

    Something needs to be done.

  • jaed

    “Medical care is not getting better. New therapies are not being discovered, new devices are not being approved. Many of us will die sooner, and many of us will be sicker.

    “But costs aren’t going up as fast! So this is good news, right? Right???”

    This is, in other words, not good news.

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