Weak Idea at Bernie’s: Bureaucrats Should Not Negotiate Seniors’ Drug Prices

Capture14Senator Bernie Sanders and Representative Elijah Cummings — along with a few other liberal Members of Congress — want to change the way Medicare purchases drugs for seniors. It is a popular talking point mainly because many Americans naively assume Medicare does not bargain over the price of drugs. Even President Trump has perpetuated the bogus idea that having the government negotiate the price of drugs would lower Medicare’s drug costs. This may sound appealing to many because drug makers don’t elicit much sympathy these days. Yet, seniors, drugmakers and taxpayers alike have a stake in the outcome because drug therapy is the most convenient and efficient way to care for patients.

Medicare Drug Plans. The Medicare Part D drug program is run by private firms, who manage drug benefits for seniors. Medicare drug plans use a variety of techniques to control drug costs, including preferred-drug lists, tiered formularies, use of mail-order drug suppliers, negotiated prices with drug companies and drug distributors, and contracting with exclusive preferred pharmacy network providers. Private drug plan managers negotiate drug prices, often pitting each drug in a given class against competing drugs for a spot in a formulary. A formulary is the schedule of drugs covered by each plan. It varies slightly from one drug to the next, but on average, plan managers obtain discounts of about one-third off list prices. How do they do it? The pharmacy benefit managers (PBMs) who manage Part D drug plans have massive buying power. More importantly they have the ability to say “no” and refuse to cover a given drug if the price is not competitive with what competing drugmakers charge for similar drugs. It’s free market competition. Often times, the winning bidder is guaranteed 85 percent of plan members’ drug business when winning bidders’ drugs are approved for the formulary.

Could Government Get a Better Deal? It’s doubtful. Granted, buying power is important. However, the primary leverage a buyer has is the ability to walk away from a deal and deny a firm its business. The government lacks the willpower to say no in the face of angry seniors convinced they need a drug they heard about on TV. The Centers for Medicare and Medicaid Services (CMS) is run by political appointees. These agencies are overseen by Congress and Congressional committees. Members of Congress often get campaign contributions from the industries they oversee. As you can imagine, if CMS refused to cover a particular drug, Members of Congress from the district where the drug is made may intercede on the manufacture’s behalf. In a nutshell, Congress lacks the political will to effectively negotiate lower drug prices. When CMS inevitably failed to drive prices lower, there would then be calls for outright price controls, with prices dictated by fiat. Most economists agree price controls would result in fewer new drugs coming to market and fewer generic drugs to follow.

History of Success. More than 40 million seniors rely on Medicare Part D for prescription drug coverage. By virtually all measures, Medicare Part D has been a great success. Seniors’ satisfaction rates average about 90 percent. Seniors participating in Medicare Part D pay about one-fourth of the cost of their drug plan, while the government subsidizes about three-fourths of the cost. Though subsidized by Medicare, the premiums seniors pay are a function of the plan they choose — and ultimately of total program expenditures. On average, seniors choose plans with monthly premiums of about $42 for a stand-alone plan.

Premiums have remained affordable because drug spending per member has been far lower than projected. Back in 2006, the Social Security and Medicare Trustees projected the program would cost about $155 billion by 2015. Yet the cost in 2015 was only about $90 billion. [See the Figure] Medicare Part D has come in under budget and held seniors’ drug plan premiums in check for one primary reason: vigorous competition among numerous competing plans. Seniors select the plan that best meets their needs, so plan sponsors are constantly looking for ways to earn their patronage. Flexibility of plan design is another reason for Medicare Part D’s popularity. Medicare drugs plans are designed to appeal not just to seniors with high drug costs, but also those who spend little but want affordable protection against unanticipated drug bills.

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Bad Solution to a Problem that Doesn’t Exist. Since its inception, the Medicare Modernization Act that created Medicare Part D has included an anti-interference clause. The Medicare program cannot take sides in negotiations among marketplace participants. Contract negotiations between drug makers, pharmacy networks and drug plan sponsors are left strictly to the respective parties.

In this case the status quo is the best possible solution. When politicians talk about the government negotiating Medicare drug prices, keep in mind unelected bureaucrats and political appointees will be the ones negotiating. They will have little reason to drive hard bargains when their Congressional overlords want to protect valuable constituents, who fill their campaign coffers. Without the knowledge that a “losing bid” risks losing out on virtually all business from seniors enrolled in a given Medicare drug plan, drugmakers would have little reason to offer their lowest prices during contract negotiations.

Comments (32)

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  1. Z Woof says:

    Rx in Medicare is the price we paid for the tax-free HSA for all Americans under the age of 65-years-old. Now we have poor young people paying sky-high payroll taxes so multi-millionaires, like my brother, can set on their boats here in Tampa Bay and scarf down FREE drugs in Medicare.

    No wonder young people quit having children, the future taxpayers.

    PLUS, Medicare discriminates against Black males, it’s racist.

  2. Allan says:

    Bureaucrats Should Not Negotiate Seniors’ Drug Prices and neither should Part D

    Devon, I take issue with your positive comments about Part D. Think liquidity constraint and then think how Part is partially responsible for inflationary drug pricing.

    “Medicare Part D drug program is run by private firms” … That doesn’t make Part D a free market device. In fact if one wants to give part D a political label they could just as easily label it as fascist.

    “plan managers obtain discounts of about one-third off list prices. How do they do it?”

    Ever hear of the chargemaster for hospitals? Take a lesson from the chargemaster. I wonder why my Part D insurer pays more for certain drugs than I would have had to pay. I still use my insurer because I only have to pay a fraction of the higher cost price. Recognize that we are paying more than necessary because the taxpayer is blindly subsidizing 75% of the bill. This program is grossly flawed even though “Seniors’ satisfaction rates average about 90 percent.” You could double the price for my car and I would still be satisfied if the I only had to pay for 1/4 of the cost.

    “Premiums have remained affordable because drug spending per member has been far lower than projected.”

    Of course that happens when 75% of the bill is picked up by the taxpayer and when the insurer doesn’t cover the most expensive drugs. Then the insured either takes a less expensive drug that might not meet patient needs or the patient pays for the drug himself relieving the insurer of that cost!

    Let me give you an example, Lunesta, whose list price is somewhere in the range of $300. Check out the Medicare plans and see if any carry Lunesta. How much the insurers have to pay, I don’t know, but it is surely higher than $22 from membership warehouse or healthWarehouse at $54 or $39 from Walgreens in my area based upon some sort of discount. The insurance alternative might be Ambien and they might pay quite a high price for it. But if the patient chooses the alternate drug and pays cash the insurer saves money or if the patient chooses the less expensive medication through the insurer even though it might not work as well the insurer still saves money. They win no matter which choice is made and you will have your opportunity to compare the present costs with the projections and applaud. Multiply this by a whole bunch of similar episodes and there will be lots of savings from prior projections, but quite a loss based upon reality.

    We have all been hoodwinked.

  3. Barry Carol says:

    I agree with Devon that the current Part D program is working reasonably well, at least for the most part. I also think there is plenty of room to speed up the FDA approval process especially for manufacturers of generic drugs who want to enter the market as new competitors. Hopefully, new FDA Commissioner, Scott Gottlieb, will lead the way to do just that.

    One issue that does need attention is to find a way to pass the rebate that payers receive to the insured member who has a high deductible drug or health insurance plan and is exposed to paying the full cost of the drug even when the payer receives a rebate that can easily equal half of its cost. This was most clearly illustrated by the recent furor over the pricing of the Epi-Pen manufactured by Mylan Pharmaceuticals.

    I think when liberals talk about Medicare negotiating drug prices, what they really mean is to have Medicare DICTATE drug prices just like they do with services, tests and procedures paid for by Medicare Parts A and B. That way, Medicare won’t have to make coverage or formulary placement decisions. It’s a bad idea pure and simple.

    In the pure free market world favored by Allan, most people would not be able to afford to buy the more expensive drugs, especially the specialty drugs which would probably mean that most of them would never have been developed in the first place because drug companies wouldn’t be able to make enough money to cover their costs. This is especially true for specialty drugs aimed at relatively small populations covered under the Orphan Drug Act of 1984 which defines a small population as fewer than 200,000 patients in the U.S.

    Finally, most people don’t realize that many of the expensive drugs that need to be infused in a doctor’s office, infusion center or hospital are not included in the cost of the Part D program because they are covered under Medicare Part B.

    • Allan says:

      “Part D program is working reasonably well”

      Of course you would feel that way, Barry, since it is a government program and the senior only pays 25% of the actual cost that is grossly inflated. I am going to buy a car tomorrow. I’ve had my eye on a Porsche for $100,000. I’m hoping you and Devon can get the taxpayer to pay for part of it so it only costs me $25,000. I’d give that exchange high marks and a 5 star satisfaction rating.

      “In the pure free market world favored by Allan, most people would not be able to afford to buy the more expensive drugs”

      You are right. Prevent liquidity constraint from doing its job and thereby let pharmaceutical prices double and triple. Fantastic idea until the prices get so high that even the 10 cent medication increases to unaffordable levels. We have seen that before with the ACA that you have embraced over and over again. You should write a book. “My love affair with socialism”.

      Of course one could provide insurance for certain needs instead of insurance to pay for all medications that have been priced based upon the assumption of insurance.

      You probably believed Hillary Clinton when Bill was President and Hillary pointed to a poor woman (I think it was all made up) who spent $10,000 on her medications. Hillary gave the diseases and I calculated that using very successful medications I could probably treat the woman for about $300. (The Orphan Drug Act you mention defines an alternative way of producing and paying for certain drugs having high costs. It’s an alternative to the stupidity of Part D.)

      Anyway, Barry, Merck tells me your check is in the mail and thanks you for your support in helping them create a higher floor for their drugs while leaving the ceiling wide open.

  4. Lee Benham says:

    Ya what Allan said 👍👍

  5. Bob Hertz says:

    Both Allan and Barry have some good points.

    Barry, I have been interested in this proposition of yours

    “….the specialty drugs which would probably mean that most of them would never have been developed in the first place because drug companies wouldn’t be able to cover their costs…”

    When a drug has a large market like Sovaldi for hepatitis, is this really true?

    Even if Sovaldi cost $1 billion to develop, there are at least 2 million potential customers just in the US. At a price of $84,000 a year, and assuming a low cost of production, the maker of Sovaldi would cover their development costs after 20,000 or so patients!!
    (I know my numbers are rough)

    • Allan says:

      Bob, you are looking in the wrong direction. Don’t look at the costs and profits of success, that is unwise. How do you compensate those that spent a billion dollars and end up losing money?

      I have said this a million times, we pay for capital risk along with costs and time. Creating a new drug or drug class has a high capital risk with many failures along with taking a long time before seeing profits. Those that invest their capital do so to earn a profit and they don’t necessarily care what that investment goes into. Most importantly they invest based upon profit and risk whether it be pharmaceuticals or toys. They might expect a higher return in pharmaceuticals because there might be more losses and a greater time period involved.

      In any event these marketplaces for capital act to stablize the markets. If the costs of products are too expensive few if any will invest in those products and the investors will choose to invest in products that are more affordable. If the government artificially lowers profits the investors will flee from that sector.

      Bob, have you ever invested in the stock market, real estate etc. yourself where you had to evaluate risks and returns not relying upon a balanced portfolio and other people? If you did, which I doubt, you would be thinking differently.

  6. Bob Hertz says:

    Allen, I like your point about liquidity constraints.

    It reminds me of the debates about college tuition and how it has grown, the more we subsidize it.

    In a world without drug insurance, would pharma companies not even develop specialty drugs, some of which are really quite wonderful? (I speak from personal experience.)

    Or, would they develop something close to the current drugs but just charge what people could afford without insurance?

    In other words, if every country paid for drugs what India or Egypt paid, would advanced drugs disappear?

    Personally I doubt it but my knowledge is limited.

    • Allan says:

      “It reminds me of the debates about college tuition and how it has grown, the more we subsidize it.”

      You got it.

      If liquidity constraint more strongly existed in the pharmaceutical industry likely we would see a few less similar super expensive drugs appearing at the same time. We also might see the scientists looking for ways to make care less expensive which would be a big benefit. Additionally we might see the FDA radically change their rules to promote more innovation and lower the costs of production.

      Right now government fashions the removal of money from your pocket in the least recognizeable way possible. That means under many or most circumstances a lot of money is wasted in the process of disguising the theft. Think of the ACA. Why charge the young more? It was a way to obtain revenue without obvious taxation. Why was the penalty not a tax? Because they wanted to hide the tax. AS soon as you recognize that good government is less government, the sooner you will see your aims achieved.

  7. Bob Hertz says:

    The question about whether to insure the most expensive drugs is a tough one.

    If you do insure the drugs, some extra lives are saved. (even if they are only saved for a period of months, as seems to happen with some cancer drugs)

    But by insuring the drugs, you in a sense reward high prices, and incentivize others to invent expensive drugs also rather than look for ways to do things cheaper.

    In a way it reminds me of the debate that Charles Murray used bring out on welfare for mothers with dependent children.

    If you give generous welfare, you make some lives better.

    But at some point you reward mothers for being single, as the government check does not come with a less reliable entity called a husband.

    And then you get family breakup, all caused by what has been called misplaced compassion.

    With drugs, you could break the price fever by withdrawing insurance.

    However, some persons would die sooner, and that as they say would ‘go viral.’

    • Barry Carol says:

      Bob – We could also ask what most people think is a reasonable price to pay for comprehensive health insurance with a deductible between $500 and $1,000 per year if there were no Medicare, Medicaid or ESI. My guess is between $75 and $100 per month which is similar to auto insurance. At that price, they might even be pleased if they never had to use the insurance because it would mean they remained healthy. I suspect, however, that there wouldn’t be nearly as much innovation especially in the specialty drug space. If the entire population of 320 million paid $100 per month for insurance, premium revenue would be $384 billion per year. That’s about 11% of current healthcare spending in the U.S. How the heck do we square that circle?

      For most countries, the percentage of GDP a society is willing to spend for healthcare is a political decision in the end and is not necessarily related to how much healthcare its citizens want or even need. There are many worthwhile priorities both public and private and healthcare is just one of those priorities. It has to compete for resources with other priorities.

      In America, drug companies want patients to pay little or nothing for their drugs but they want payers to pay through the nose. While they need to earn enough profit to provide their investors with an adequate risk-adjusted return on their capital after accounting for research and development failures as well as successes, a balancing act needs to be struck somehow between satisfying investors without bankrupting society.

      At some point, we have to say enough is enough. I would prefer to see that happen by payers just saying no to covering drugs they deem too expensive relative to the benefit provided as opposed to government stepping in and dictating prices like it does with Medicare and Medicaid. For the relatively few individuals with lots of money, they will remain free to spend it any way they choose to including on expensive drugs and other medical treatments.

    • Allan says:

      “But by insuring the drugs, you in a sense reward high prices”

      You got it again. Those high prices remove resources from those unknowns (far greater in number than the known sick) so that in reality we are treating less disease not more.

      Let me provide a follow-up on the cost of Lunesta. Originally the person we were helping had to pay up to $333 for the drug. Then we found discounted medications from GoodRx and Blink. Today we composed the appropriate letter to the insurance company to make them accept the fact that Lunesta was required. The price is now $7.35.

      This works for me, Barry and probably everyone on this list. Unfortunately many of the most needy don’t have the resources or the knowledge to actually go through this rigmarole so very frequently they are the one’s that pay full price. What we are seeing in this area is welfare for the rich that want more security than the poor who don’t get the security. That is why when I talk about Barry’s protecting his country club buddies that is what I actualy believe is happening.

  8. Allan says:

    I should have added to the above that all these quirks demonstrate why Part D should never have been passed. I am shocked that a somewhat libertarian organization gave any support to Part D.

    • Z Woof says:

      Allan, it wasn’t going to pass so they kept the vote open and beat a bunch of conservatives over the head with tax-free HSAs for everybody under 65-years-old and they got the votes to pass Rx in Medicare. That is how the MSA was turned into tax-free HSAs.

      The MSA was going to be sunset so thank goodness for old peoples drugs.

      Like I said, Rx in Medicare was the price we paid for tax-free HSAs.

      • Allan says:

        I know the history real well, but many libertarian leaning conservatives believe that Medicare Part D is a good program. It is neither libertarian nor a good program. It is another entitlement program that attracts votes.

  9. Bob Hertz says:

    If you want a hard assignment, try running a public or a private insurance operation with this goal………..

    “just saying no to covering drugs they deem too expensive relative to the benefit provided”

    (in Allan’s words)

    I am not saying this is a bad goal, in fact I think it is a good goal.

    A lot of Americans take an absolutist position that preserving life is all that matters, no matter how short a time it is preserved for. Few of us will say in public that the attitude that death is just inevitable so why spend billions to prevent it. Nor are we allowed to say in public that some lives are so wretched that almost any extra spending is excessive.

    One of my fantasies is that medical providers would be totally welcome to spend billions saving lives, but only so long as they do with their own money. Not the public’s money, and not the family’s money.

    The Mayo Clinic and similar places have very large financial endowments. Let them do anything they wish with their own funds. Let them figure out how to pay for super expensive specialty drugs. If you prescribe it, you pay for it.

    • Barry Carol says:

      Bob — The good news is that a far higher percentage of the population, especially among the elderly, has executed a living will or advance directive or a POLST as compared to 15-20 years ago. Most of those people opt for no heroic measures beyond comfort or palliative care.

      There have been cases, however, where doctors ignored the documentation and provided heroic or even futile care when the patient didn’t want it. They called it erring on the side of life. In those cases, providers should absolutely pay for the care or at the very least write off the cost and not expect any payment from the patient, the family or the insurer.

      • Allan says:

        The bad news is that even those that are signing living wills are getting treatments today that keep them alive even longer at much greater cost. Living wills generally deal with true end of life scenarios that I don’t believe make that much of an economic difference.

        1)Very few people are willing to cut their lives significantly shorter.
        2)Many having living wills die before the will is even considered.
        3)If the living will is considered I don’t know how much is actually saved. We are talking about the end of life where there isn’t much more to be offered.
        4)When there is no living will we still let lives end.
        5)In my own practice I didn’t see much difference between those being treated with and without a living will except when the ambulance arrived at the door.
        6)Hospice IMHO has had a more important effect, but I don’t know if it has cost money or saved money.

        We cannot assume that the physician or family know what usefull life there is for a patient when one considers ending a life that has not reached its endpoint. In a study some years back both the physicians and family were wrong as many times as they were right.

        “There have been cases, however, where doctors ignored the documentation and provided heroic or even futile care when the patient didn’t want it. … providers should absolutely pay for the care”

        That is a pretty definitive statement with a directive as to payment of costs that I find abominable. We are not always sure what the patient wanted and when the patient cannot answer for himself we have to use his agents. Sometimes the agents aren’t honest and have personal motives in mind. You think things are clear cut, but they aren’t. Once again you are blaming doctors with a broad brush.

        • Barry Carol says:

          So how common do you think it is for patients whose prognosis is dire and the prospect of recovery is zero are being given PEG tubes and vents so they can languish for weeks or even months in an expensive ICU bed? Isn’t that costly futile care that’s probably much more common in the U.S. than elsewhere? How common is it for patients with advanced Alzheimer’s or dementia to get an expensive surgical intervention or to be given drugs for everything from BP to cholesterol management to diabetes management when their quality of life is gone? If such patients have documentation that says they don’t want these interventions, that’s a good thing both for them and for society in my opinion.

          • Allan says:

            THE BLAME THE DOCTOR GAME A LA BARRY BY CONFLATING DIFFERENT IDEAS:

            “prospect of recovery is zero are being given PEG tubes and vents”

            I get it Barry. You believe that physicians are conspiring together to keep patients on ventilators and PEG tubes. There may be a few crazies out there and thus you go on a witch hunt to blame the entire medical profession. The families, nurses and aids must be so scared they keep their mouths shut or your paranoia leads you to believe they are all in cahoots with the medical profession to establish vegetable gardens and reap the profits.

            Families are an integral part of the decision making and they are generally the one’s frequently promoting that type of care. Of course, sometimes a demented patient breaks a hip. Would prefer them to writhe in pain? I guess should that demented patient (we won’t go into the different grades of dementia) develop appendicitis you would push for a rule to give him a lethal injection.

            • Barry Carol says:

              I blame the families who can’t let go especially when there is no documentation outlining what care the patient wants and doesn’t want if he can no longer communicate. Our litigation system also pushes providers in the direction of providing more care rather than less to reduce the risk of being sued. That’s unfortunate. It’s not about doctors or hospitals trying to maximize revenue. It’s about systemic impediments that prevent them from applying common sense depending on the circumstances. That’s what needs to change. At the very least, the more people we can convince to execute documents and make sure providers have them when they need them would be helpful to everyone including from a cost standpoint.

              • Allan says:

                “I blame the families”

                I don’t try and blame people for the policies that have been created by others. One should have a bit more compassion for those that are losing a loved one. That is a time people are not always logical.

                But, before you blame the families you blame the doctors. Everyone is to blame except those that create social policy which complicates everyone’s life. You are even blaming the lawyers that are doing their jobs. When do you stop blaming people?

                “It’s about systemic impediments that prevent them from applying common sense depending on the circumstances.”

                Those systemic impediments are things that you support and promote on a daily basis. In the 70’s I had the luxury of still dealing with real people directly. By the time I retired I was dealing with your type of medicine which meant the patient was secondary to the government. …And now you complain about what you see?

                “the more people we can convince to execute documents and make sure providers have them when they need them would be helpful to everyone including from a cost standpoint.

                Where is your proof of the savings? You don’t have any real proof other than an abstract proof that deals with very limited variables making your proof useless. I’m pretty knowledgeable in this field and I don’t have a living will. I guess that is because I am an old-timer and don’t have to rely upon government to know when to live and when to die.

    • Allan says:

      “One of my fantasies is that medical providers would be totally welcome to spend billions saving lives, but only so long as they do with their own money.”

      In a strange way I agree. If that were the law physicians would not be treating patients and no physician costs would be created. I guess at that point the patient and doctor could sign a contract outside of the law where the patient paid the doctor for the doctor’s services. Thus cash payment has been invented. :-)

  10. Bob Hertz says:

    Barry, your comments are focused on potentially futile care.
    Although I am not an MD and have no first hand knowledge, my suspicion is that this type of care is not our greatest challenge in health care cost control.

    What troubles me is the care which is NOT futile, but actually works in most cases and yet is just too darned expensive.

    A 75 year old may well survive a heart transplant at a cost of $600,000.

    Now step one before any difficult rationing is to see if the real cost is $600,000. What portion of that cost is a drug company getting very rich, or a hospital covering some extra overhead?

    Then, if the cost is really is $600,000, is it time to ask whether we can spend that much public money on anyone, whether they are a symphony musician written up in the New York Times or a prisoner in the sex crimes unit in Moose Lake MN.

    • Barry Carol says:

      Bob — I don’t have as big a problem with the heart transplants as I do with the expensive cancer drugs that may only give a patient an extra few months of low quality life.

      John Bogle, the founder of Vanguard, got a heart transplant at age 67 and is still going strong at 84. Former Vice President, Dick Cheney, was near death until he got a heart transplant at 71. He’s still with us as well after 20 months on the waiting list and using a LVAD to keep him alive.

      At least organ transplants have elaborate protocols that determine who gets them and who doesn’t because there aren’t enough to go around. Anyone and everyone can get an expensive cancer treatment as long as there is a payer to pay for it.

      Some people suggest that we use age-based rationing so that if you’re, say, over 90, you’re an automatic no code unless you can pay for your care yourself. I don’t support that either. I do think it’s unfair, though, that drug companies go along with price controls in other countries because they know they can make it up by charging what the market will bear in the U.S. market. Other first world countries are free riding by not covering their share of R&D costs. That needs to change in my opinion.

      • Allan says:

        “with the expensive cancer drugs that may only give a patient an extra few months of low quality life.”

        Barry, why should you be upset at persons living a few extra months? You support systems of involuntary pooling and then complain when patients aren’t willing to die or physicians aren’t willing to deny them future life. You blame both of these groups for high costs, but the fault lies in the policy that you support.

        I remember my residency days when we were trying to treat all sorts of leukemias. The survival rates were atrocious, but we built upon the survivals learning how to extend the time interval of life until some of those cancers were cured. I guess in your world this should never have happened.

        “organ transplants have elaborate protocols … Anyone and everyone can get an expensive cancer treatment”

        In other words it’s OK to live for 6 months with an organ transplant, but not 6 months with cancer treatment? I guess you like the protocols because government can have a bigger footprint.

        “I do think it’s unfair, … they can make it up by charging what the market will bear in the U.S. market.”

        Yet at the same time you strongly support Part D where liquidity constraint has been muted. That helps the pharmaceutical companies make up the money on the backs of the US taxpayer.

        • Barry Carol says:

          “but the fault lies in the policy that you support.”

          Other first world countries exert considerably more government control over their health insurance and healthcare systems that the U.S. does. Yet, they don’t have the same issues related to end of life care and excessive litigation that we do.

          The issue isn’t policy; it’s culture. The culture in America is I want what I want when I want it and I expect someone else to pay for it. In other first world countries, it’s we don’t impose unreasonable costs and expectations on our fellow citizens. That’s a huge difference.

          While we hear about long wait times for non-life threatening procedures in Canada and the U.K. we don’t hear about them in Germany, France, Switzerland, Sweden, Japan, etc.

          Even if our healthcare costs were 30% lower than they currently are as a percentage of GDP, millions of people still couldn’t afford health insurance on their own, especially if they can’t pass underwriting or are older than 50. Huge numbers of people would have to be subsidized while Medicare and Medicaid would still be part of the system with the government rules and regulations that go with them. I don’t expect cultural attitudes to change anytime soon.

  11. Allan says:

    “Other first world countries exert considerably more government control over their health insurance and healthcare systems that the U.S. does.”

    Who has the oldest continuous constitution? The United States, not all those other countries. Should we have followed their examples and created a monarchy?

    Who would be speaking German if it weren’t for the United States entry into WW2? The other countries.

    I am not saying the other countries are worse than America, they aren’t. They have good ideas, but your logic, because these countries do something, it therefore it is a good idea for Americans forgets history and forgets how the United States is the leader in free government, raising the standard of living all over the world, trade and wealth production, not to mention science including the healthcare sciences. Our ideas behind freedom and free markets must be working. Your ideas have been total failures in many countries and demonstrate a lack of sustainability in the present.

    “The issue isn’t policy; it’s culture.”

    If it’s culture then one must remember Alexis de Tocqueville who wrote about American Exceptionalism and its likely causes. We were different than the monarchies of Europe. That is a major part of why we grew to be so great, but the culture you promote is quite the opposite of 19th century exceptionalism.

    The socialists are the ones that “impose unreasonable costs and expectations on our [Their] fellow citizens.”

    “Even if our healthcare costs were 30% lower than they currently are as a percentage of GDP, millions of people still couldn’t afford health insurance on their own”

    That is why insurance exists, but you promote a phony type of insurance so that it becomes unaffordable, overly complex and frequently unusable. If we were to practice the quality, liability, access of these other nations our costs would fall as well. Remember, building into our costs are the research and development that others copy or take at lower prices because those in power would like to see an end to American exceptionalism.

    • Barry Carol says:

      We can have our healthcare good, fast or cheap. Pick any two. If we want it good and fast, it will be expensive especially in light of the cultural headwinds of litigiousness and defensive medicine along with aggressive end of life care as compared to other countries. Throw in the high student loan debt that most new doctors, NP’s and even nurses enter their profession carrying and salaries need to be higher than they would otherwise need to be if that debt burden weren’t so onerous.

      I don’t think getting rid of third party payer / ESI and moving commercially insured people into high deductible health insurance plans paired with a Health Savings Account will make a meaningful debt in U.S. healthcare costs. The headwinds outlined above will all still be there.

      • Allan says:

        “We can have our healthcare good, fast or cheap. Pick any two.”

        The real statement is that there are three components to healthcare. Quality, access and cost, but you can only have two of the three. In other words one should expect that any positive alteration of 2 out of the 3 components will cause a negative effect on the third.

      • Allan says:

        “I don’t think getting rid of third party payer …”

        What can I say, but you are dead wrong.

        Your headwinds are partially a result of third party payer and If we had a true marketplace in healthcare which means getting rid of all third party payers (including Medicare, Medicaid and the VA) while permitting a free marketplace the savings would be huge.

        Medicare alone would have saved a huge amount in just my practice. I remember when I would charge for doing outside labs. The total bill to Medicare for the lab was $20 to $30 for an annual physical. After the law passed preventing me from doing so the prices sky rocketed and the Medicare was paying the lab around $40 to $60 while I started an in-house lab that cost Medicare < $20.

        With managed care most practices increased their overhead tremendously say from 25%-35% to 40% to 60%.

        In hospital procedures such as colonoscopy cost double than for outpatient surgical centers. More recently physicians bought up by hospitals are having their fees reimbursed at much higher levels.

        Dermatologists that were removing many items from the skin stopped removing them all at once and started to remove them on different days to maintain a higher reimbursement. They also would limit the area treated to what was approved even if other things were noted at the time of the initial visit. The patient would have to get new approvals and return.

        Marginal medical care, one of the biggest cost factors, increases as the patient is divorced from the costs.

        Medicare HMO's according to the GAO were paid around 1/3 too much when risk was factored into the calculations.

        Today many doctors are estimating the extra time spent dealing with EHR’s to be in the vicinity of 15-25%. That is approximately the equivalent of a 15-25% rise in hourly costs for physician bills.

        Physical therapy is not needed for many patients yet it is included in their outpatient costs.

        Durable Medical equipment is higher than it needs to be because of a lack of a true marketplace.

        Tremendous amounts of money is spent simply on gaming the system.

        I have just provided you a small smattering of costs in no specific order that are increased because a true free marketplace doesn’t exist in healthcare. You can believe whatever you want no matter how foolish that might be.

  12. Barry Carol says:

    Correction: make a meaningful dent in U.S. healthcare costs, not debt.

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