The Washington Post today editorializes on the Democrats’ plan to allow the federal government to negotiate drug prices for Medicare — a logical move, even if there maybe some flaws in the specific legislation on the table.
The Post, however, see it quite differently, preferring to continue with a purely market-driven approach.
Not only are the Democrats too optimistic about government negotiation; they are also too pessimistic about the current system in which private insurers administering Medicare drug benefits do the price bargaining. These private insurers stand to profit if they can secure discounts and cut premiums and thus attract more customers: Witness the fact that the average monthly premium has fallen since the program began a year ago. Private insurers can do this precisely because they are free to establish formularies, but market discipline ensures that these lists are not unappealingly narrow. The insurers need to keep customers.
The New York Times, while disagreeing with the Post and supporting the measure, makes the same — though not as explicit — defense of market-based healthcare.
The bill also does not require the secretary to negotiate prices for all 4,400 drugs used by beneficiaries. A smart secretary could simply determine which prices paid by the plans seemed most out of line with the prices paid by other purchasers and then negotiate only on those drugs. The private plans are explicitly allowed to negotiate even lower prices if they can. This sort of flexibility should pose no threat to the free market. It is time for the Medicare drug program to work harder for its beneficiaries without worrying so much about the pharmaceutical companies.
This is an overly narrow approach that takes each element of the nation’s healthcare crisis and attempts to treat it independently, which is the basic flaw in the Democrats’ current approach, as well.
We’ve been living with market-based healthcare for a long time and it is pretty clear that it doesn’t work particulary well. Yes, some Americans have access to a level of treatment and an array of technologies unavailable to many outside of the country. But too many of us lack access to decent, affordable healthcare — I’m talking about the basic stuff. And too many of us face the uncertainty of access in the future because much of our coverage is provided through employers who may opt to either cut back on what they provide or cut back on payroll, leaving workers not only without jobs but without health coverage, as well (Cobra coverage is expensive and runs out after a while).
Our first priority should be ensuring that everyone has access to general practioners — this, I believe, can only be done via a single-payer system (it doesn’t necessarily have to be on the Canadian model).
The drug-price debate should be looked at in this larger context.
South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
Hank Kalet 