Another prime example of this was the law that insurers had to spend 80% ( or was it 85%) of what they collected in premiums towards actual healthcare expenses.
This law lead to increased prices across the industry. Because it turns out that the insurers don’t have a lot of incentive to haggle with their suppliers if they don’t get to keep their savings.
And while I am HIGHLY critical of the pharmaceutical industry, it don’t think they are evil price gougers cackling insanely while killing people. (And I don’t call them Big Pharma). And I think dismissing legitimate criticism as a liberal meme only serves to make the situation worse. It’s denial of a real and serious set of problems.
They are a business. They are doing what businesses do. They are developing products and trying to get those products consumed by as many people as possible. They are developing pricing and marketing strategies to make as much money off these products as possible. They are lobbying for laws that will make it easier for them to accomplish these goals
Even though I’m liberal, I’m a capitalist and a successful business owner. I generally believe in these principles. But the biggest problem here is that the products aren’t iPhones, they include powerful psychiatric medications and highly addictive drugs with serious side effects. And the constant push to expand the customer base for these products has the potential to cause great personal and societal harm.
(There are other problems with the industry such as the widespread use and acceptance of surrogate endpoints leading to drugs that reduce a “number” or shrink a tumor without providing any evidence that the drug action confers a benefit to survival or quality of life, but that’s for another discussion.)
And when you combine the pharmaceutical industry with the insurance based healthcare system, you end up with a massive free market distortion where there is no force applying any downward pressures on pricing.
The patients, if insured, are paying a flat rate per month and have little incentive to be cost conscious regarding individual items. And any attempt to control costs by the entity that’s actually paying the bill makes them the bad guy.
For example, many insurance companies require that patients try a 30 day course of an older cheaper drug before they will pay for an ultra-expensive version that is virtually identical except for a few insignificant molecular tweaks. Now I think this is a perfectly reasonable policy in most cases. And I bet that any patient forced to make a rational economic decision between a drug that costs $30 a month and a drug that costs $3000 a month would agree to that condition if they were paying the bill themselves.
But this policy is wildly vilified.
Several years ago, 3 doctors at Sloan-Kettering refused to add a drug to their formulary because they did not feel the benefits it conferred were worth the outrageous financial cost. This was a bold move that I truly hoped would catch on, but unfortunately it didn’t. I think they did succeed in getting the prices lowered for that particular drug that one time, though.
The medical industry has conditioned us well. We are taught to demand the best and most expensive treatments for even the most minor conditions. And if you don’t think anything is wrong with you, there will be always be a TV commercial or industry funded “awareness campaign” to convince you otherwise.
Then once we are at the doctor, we have been conditioned that it’s wrong to bring financial considerations into the picture. We are used to be overdiagnosed, overtreated and overmedicated. And unfortunately, it’s going to be hard to change that norm.
But I do think the whole system needs an overhaul and that any discussion of health care reform has to be more than playing hot potato with the bill. And I don’t see that happening.