Why Universal Healthcare Is The Worst Idea Ever
This article goes into excellent detail about health care and how future technology will make Universal health care obsolete.
Statins end up very cheap for much the same reason that cholesterol did: there are huge economies of scale in farming cows for milk and fungi for statins, or in brewing up synthetic versions of almost anything. But it takes a delicate choreography of patent-protected monopoly and cutthroat competition to get the innovation first and the rock-bottom prices later. At present, the front end is financed mainly by the United States. Drug companies introduce most new drugs here first, and affluent Americans pay premium prices while the patents last. Less affluent Americans, along with public and private insurers in the United States, Britain, Canada, and the rest of the developed world, get a sharply discounted ride on their economic coattails. Three-dollar statins in New York in 1996 get 30-cent statins to London in 2006 and three-cent statins to Kuala Lumpur a few years later.
Governments are impatient, however, especially when they have promised to supply what they can’t possibly afford but can readily seize. The promise of universal care implies state-of-the-art care, so governments’ principal response has been to skip straight to the three-cent pill. In the developing world, the authorities just fail to notice when pirates manufacture knockoffs. Most developed countries have gone halfway there, by instituting a monopoly buyer to bargain against the monopoly patent. Some members of Congress want to let U.S. patients order drugs from Canadian pharmacies, so that Ottawa will bargain with Pfizer on behalf of the poor in Oshkosh. Others want to set Washington up as the monopoly buying agent for all drugs that it pays for.
Drug companies, however, are quite smart enough not to develop three-dollar pills for three-cent buyers. Collectively, these price-depressing strategies already make it unprofitable to pursue many drugs that treat rare diseases, and drugs for all but the most common diseases earn most of their profit in the unregulated U.S. market. From Big Pharma’s perspective, we are now about half a country away—the rich-America half—from making most diseases too thrifty to bother with. Wherever it’s implemented, every new scheme to undercut the value of an existing patent lowers the incentive to discover new drugs. Every such scheme sacrifices long-term global health for short-term political gain. Every last one of them is ice cream today, and never mind about tomorrow.
January 2nd, 2008 at 8:44 pm
I don’t want drug companies to make less money off of their inventions. I want this country to spend the same amount on universal healthcare as it does on the current system. We can spend the same amount of money, give the corporations the same amont of profit for their innovations, and still provide better care to more people, for several reasons:
1. The classic line from the West Wing about AIDS medication is ‘the second pill costs 2 cents to make. The first pill costs a billion dollars.’ While this is true, and drug companies need to make money off their patents, there’s no reason that money should come through artificial scarcity keeping prices high. The drug companies could produce ten times the amount of pills they are making now for only a very small increase in their overhead costs, because most of the costs are in development, not production. The only reason for them to produce less is so they can cahrge more, followingthe classic supply and demand formula. If the government just pays them a lump sum (the same amoutn they’d make under the current system) to produce as many pills as are actually needed, they’d still have just as much incentive to invent new products, but everyone could benefit from them much more quickly.
2. A huge amount of the money currently going into the healtchare system pays for HMO’s, which are for-profit middlemen who are completely unneccesary to the actual healthcare process. If take them out of the picture, we can give that money to researchers and doctors, and provide even more incentive than we have now.
On a personal note, Ana is currently not going to a doctor to get her joint problems looked at, because if tehy find any type of condition, no matter how treatable it is, she can never get health insurance again. More generally, doctors routinely discourage people from getting tested for AIDS, because insurance companies will decline them or raise their rates just for getting tested (even if teh test is negative).
The current healthcare system in this country is FUCKED. If you have a free-markets alternative, I would love to hear it. Otherwise, I’m in favor of aan intelligently-design government solution; something has to change, fast.
January 9th, 2008 at 1:47 pm
[…] Darwin responded to a post of mine on health care. I don’t want drug companies to make less money off of their inventions. […]