2003 July 14 Monday
Medicare Drug Bill Has Become Christmas Tree For Interest Groups

The United States is heading toward more and more socialized medicine. Lots of additional extensions of old age medical benefits are being added to the Medicare drug bill.

Congress's $400 billion Medicare prescription drug bill, advertised as a way to help elderly Americans pay for their medicine, has become a magnet for dozens of unrelated provisions benefiting hospitals, doctors, medical equipment companies and an array of other health care interests.

Never mind that Medicare, like Social Security, is headed for bankruptcy. Retired people want their benefits now and to hell with the future. The Medicare drug benefit will usher in other extensions in Medicare benefits as well. Plus, it will lay the groundwork for future extensions of the drug benefit to pay even more of drug costs. Once seniors get partial benefits according to complex formulas they will complain about how the formulas are unfair to them under various circumstances. The benefits will gradually be extended in lots of amendments to future appropriations bills.

One thing that bothers me even more than the amount of additional money that will be spent is that as the US federal and state governments become larger purchasers of drugs it is inevitable that they will seek to levy more price controls on drugs. Price controls will inevitably lead to cutbacks in research and development budgets in big pharma companies. That, in turn, will reduce the rate at which new medical treatments are developed and of course that will delay the introduction of life-extending treatments.

Since much of the rest of the world already has price controls on drugs any decrease in US prices for drugs will have a huge impact on drug development. This is very worrisome.

What the United States needs are more market-oriented reforms of how medical care is paid for. Having employers as the main providers of medical insurance of those not yet retired leads people to either go without insurance between jobs or to not have insurance because their employers do not provide it. Plus, because people switch jobs and switch medical plans those who develop chronic illnesses can find themselves uninsurable when they lose coverage from their previous employer's plan. There ought to be medical spending accounts that do not have to be spent by the end of each year which people can accumulate money in tax-free throughout life. People who are not employees ought to pay medical insurance premiums and out-of-pocket treatment costs in pre-tax dollars. This would at least decrease the number who have no medical insurance.

Since Hispanics are medically uninsured at two and a half times the rate of whites a wall on the US-Mexico border would prevent future rises in the percentage of the population that are uninsured. Also, since those immigrants drive down the cost of manual labor if they stopped coming the wages and benefits of less skilled workers would rise and more would be able to afford medical insurance.

Share |      By Randall Parker at 2003 July 14 04:23 PM  Politics American Domestic


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