When people don't have to pay for something straight from their pocket, they're not feeling the ripoff so strongly, so they don't revolt.
That's why I personally think that the systems where people vote with their wallets are much more efficient.
Monopolies can dictate terms, which is why monopolistic companies are regulated. But if that monopoly is the state, then it actually works in the citizens favour if the monopoly presses down costs.
Also, it's important to distinguish between true R&D aimed at developing actual cures and iterative R&D aimed at developing medicine that will get you hooked on long-term courses that maximise profits.
As far as I understand it, yes. http://www.xconomy.com/seattle/2014/09/02/which-countries-ex...
As far as your claim about most drugs being a scam, I can't speak to that as I'm not familiar enough with the industry.
Uh, that's precisely the point of regulatory capture. Ensure nobody else can compete but you.
Beyond the pharmaceuticals, is that the most expensive healthcare services are provided by hospitals that are mostly locked in by proximity.
http://www.bizjournals.com/triangle/news/2016/07/19/where-gs...
Yes, assuming the monopoly actually wants to keep its costs low. In the US, corporate-funded legislators made it so that Medicare is not allowed to negotiate drug prices. It willy-nilly pays whatever the private drug companies prices its drugs at.[1]
This is why it's so profitable for companies to "purchase legislation". The return on investment is 10x or something insanely high, like in this case. Spend $10 million "donating" to the campaigns of a few unconscientious politicians, and soon you are milking an extra $100 million in profits from unwitting taxpayers.
[1] http://healthaffairs.org/blog/2016/09/19/the-politics-of-med...
Transparency could strip off lobbying. If we know who gets what money, and we know how people vote, a bit of clustering etc ought reveal patterns...
What's needed is something gimmicky that gets popular appeal and covered on mainstream media for fifteen minute fame...
E.g. an iphone app that you point at the live news on your TV and it OCRs the senator's name and queries opensecrets.org or something bigger and better and tells you how much money they got, from whom, and how this correlates with their voting record etc.
Something that makes politicians accepting money very counterproductive.
They realize that if they only cover marginal cost, and don't allow for development, they will only get the right product for a limited amount of time.
What often happens is that they agree on a more realistic price that will allow for that.
In many cases the company will go low to still be the supplier for a whole country - especially as they can still keep their margins in other countries, like US.
I'd compare it to a 'tragedy of the commons' scenario where one farmer keeps paying his son to re-turf the meadow, so the boy can have a job (and thereby feeds everyone else's sheep).
They can set up non-profit-driven suppliers, but it seems probable that normal for-profit suppliers will flourish.
I agree that the 'internationals' who control domestic drug consumption have little incentive to set up their own drug production systems, but if my supposition is correct, they need the US to keep paying higher prices for the same drugs.
http://www.bizjournals.com/triangle/news/2016/07/19/where-gs...
The government is responsible for using a fair price, both for itself and the supplier.
His non-profit nature ensure that it will not try to lower the price too far.
If a politician is dumb enough to make companies go bankrupt, it's the responsibility of the people to vote him out of office.
That's the only way to have a fair price on drugs. A free market cannot exist in these industries and the inelasticity of the demand will always, always distort the prices.
Yes, America will have to face its demons and trust its government. The alternative is to continue paying exhorbitant prices to greedy scumbags and let fellow citizens die as a result.
In this scenario, consumers drive the prices too low and put suppliers out of business. It's the same argument coming from the other direction.
Markets don't seem to work like that. Prices get driven down, but not to the point where suppliers go out of business, because they won't sell at that price. Sometimes if margins are too low new players will find efficiencies or new inventions that allows them more profit for awhile.
For this to happen you need a balance of power between buyer and seller. It's obvious to me that such a balance is radically absent in the US system right now.
Putting governments into the role of buyers is not anti-market - it's pro market because it allows an informed, more powerful buyer that balances the market forces and allows the market to work. (It's certainly possible that other entities, such as insurance companies, could fill the same role.)
A worry comes because of the label "single buyer" which is the inverse of a monopoly and is anti-market. But in practice drug companies are global and there are many governments.
All this would lead to much lower profits for drug companies, of course, but that's not a pro-market argument, that's a pro-monopoly concern.
I don't think I have heard such an argument, and I understand the parent comment just fine.
What he means is that, since pharmaceutical and medical supplies companies have large upfront research costs coupled with negligible marginal costs, they face a falling average-cost curve. However, a firm operating under competition has it output at the point where marginal and average costs are equal. The point is that for a firm who profits off research, reaching this point is unfeasible. What all this economic gobbledygook is that, in order to survive, firms have to charge above what would be otherwise the "warranted" price (like the price of the components and labor that go into a kit).
This is more obvious in the case of software, since the cost of copying any piece of software is pretty much zero, anyone trying to sell it for it's marginal price won't ever get what he put in by having written it in the first place. In such markets the socially efficient outcome, the one which makes both consumer and producer better off, is actually to have a single or few firms regulated firms operating under imperfect competition. And all this happens because of the cost structure of the firms, not because of the market itself.
Though I'm rather skeptic that pressing on the suppliers will push them near their marginal costs in this particular case.
Deadweight losses are a joke, if the sole buyer buys too much, they are at a loss. It just does not happen in this sector.
In concrete terms, this means something like "the price of a doctors visit is low enough that a nearby clinic closes down. Even though you were happy to pay the higher price for the convenience, and they were happy to provide service at that price, we no longer get to have that experience."
Insisting that moving to a single-payer system is the only solution is very one-dimensional thinking.
It can also be said that drug companies use Americans to make their profits and sell to other countries for the best they can get, we could well be paying for an unfair portion of the "real" cost and other countries are only doing better because we're paying the bill.
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I'll switch to talking about something entirely different to expand on the last point. You'll often see people arguing about how the US has the highest military budget, higher than the next N countries combined.
The thing is, we're providing security for those next N countries, and the world as a whole. Many of those N countries are NATO allies who would have to spend a whole lot more if the US didn't. And also by making real war outside regional and civil conflicts impossible for the whole world with military dominance.
In other words, in an American military spending blackout, the game would change and everyone else would be spending a whole lot more. We couldn't simply reduce our defense spending to something comparable without significant consequences.
My personal opinion is that we should absolutely say no to a lot of scenarios when it comes to single payer. That and we should absolutely stop providing care in the worst cases if there is a strong likelihood that the patient will not make it out alive. We spend way too much in the last six months of a patient's life holding on to every last bit of hope grasping to keep their heart beating. I've heard doctors express frustration about this as well.
> In other words, in an American military spending blackout, the game would change and everyone else would be spending a whole lot more. We couldn't simply reduce our defense spending to something comparable without significant consequences.
Consequences for us too. We have to keep spending to maintain the status quo.
I mean I get that there are certain common goal costs that we contribute perhaps a little more than our tab but it isn't nice to point it out like this. At the end of the day, we aren't spending on our military prowess to be charitable. I'm not an expert so it is likely that some cost saving would be possible. I'd welcome efforts to do that.
With medicine, I think a single payer should be able to negotiate with manufacturers and suppliers to keep costs low.
We have to rethink end of life care for humans. I'm very willing to sign a medical release form that says pull the plugs if my treatment will cost over $10M regardless of who pays for it.
But that's a different topic. This current issue with epippen is a simple issue of rent seeking. There is no way anyone could side with the company of this one. I hope that the spotlight means their efforts will fail.
Are you suggesting we spend more than we can get away with hoping the slimeball companies will reinvest their profits into R&D?
We don't disagree that there's a problem: medically fighting to the last breath should be replaced by gracefully accepting the end at the appropriate time (for both cost reasons and for the quality of life at the end for the patient, etc.)
We do disagree on how. If you want to make progress on that front we should have education and cultural growth around accepting death and doing what's best at the end for doctors, patients, and families. We shouldn't have a bureaucrat forcing the decision on anyone.
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>This current issue with epipen is a simple issue of rent seeking
It's not an issue of rent seeking specifically, but abusing government granted monopolies (patent protection, trademark protection, forcing schools to buy, etc)
> Are you suggesting we spend more than we can get away with hoping the slimeball companies will reinvest their profits into R&D?
No, the high cost of R&D and slimeball behavior are often intermixed, but separate issues. I'm suggesting that a whole lot of the money for expensive drugs is actually going towards R&D. Lots of foreign countries are getting steep discounts and not paying equal shares because the drug companies are taking the path of least resistance. They can get funded in America more easily so they don't fight as much in places that are more difficult to win.
America couldn't magically get the foreign prices because the R&D money wouldn't appear from anywhere else. America's prices go down but the rest of the world's prices go up to meet in the middle ... or a lot less drug research happens (or a bit of both)
There are lots of things happening, and a lot of the problems are due to lacking regulation. What can get patented and for how long is wrong; more research should be publicly funded with stipulations that the results are free to society; drug approval mechanisms need to be more efficient; some barriers between national drug markets need to be broken down (you should be able to sell across borders between economically equal nations)
There are a lot of things which could lead to a healthier medical environment which aren't being done. We've got some small reforms out of the way, but there are still huge inefficiencies.
Our single-payer system covers a pile of things that low-end insurance often doesn't in the US as it is, so most people are happy with it.
Looking at per capita healthcare costs in India would be pointless, as the vast majority of people go without proper healthcare.
Here's a generalisation for you: The US has lower life expectancy than most of the 'developed' world and yet spends twice as much (OECD 2007).
See Meeker's USA Inc. slide 111 https://s3.amazonaws.com/kpcbweb/files/USA_Inc.pdf
Indian healthcare has its own can of worms, but since we are not talking about that, I won't open it.
I have direct experience with the French system, so I'll use that as an example. When you go to the doctor for an outpatient visit, you pay the whole bill right then and there. Your insurance company will then reimburse you for some significant percentage of the "reasonable and customary" cost of that visit. Do you need a shot as part of that visit? Guess what -- you have to go next door to the pharmacist and buy the dose. The doctor will then administer it.
Inpatient is different (fully covered and no billing) and indigent patients are given a special card that directs the doctor to bill insurance directly.
We could do that here in the US without universal health care and it would make a significant dent in our spend without a corresponding decrease in outcomes.
Sources: lots of research I could link to but don't have handy and, with great dismay/frustration, I've spent a decade analyzing the root causes of US healthcare spend.
A manager replaces free coffee in the office with a paid vending machine to save expenses. Moral goes down. Production goes down.
A team member is fired because she has the worst production level of the team. What they did not know is that this team member was holding the team together.
So there are a lot of side effects to every decision. And therefore I think voting with your wallet is a bad idea.
A manager sees that workers work better when well caffeinated, but that they are sucking up time with starbucks runs. So she installs a Keurig machine, an investment that saves money and time in the long run.
Alternatively, we might have a manager who buys a coffee machine to give the employees free coffee, as the former sees the latter will be happier and more productive for a low price; this the manager buys productivity cheaply.
For example, you might choose a higher airfare with a carrier that has better customer service than the cheapest. This is voting with your wallet and it has nothing to do with cutting costs.
The manager hasn't "voted with their wallet" in your example.
If it's in regards to Obamacare, that's pretty recent compared to the trend of the medical lobbying getting one over on Americans... and definitely not "free healthcare" by really any measure.
The great grandparent comment also seemed to be speaking to the way the government has incentivized employer-provided health insurance, which insulates people from making cost/benefit decisions. I think that if individuals had to pay $100 per juice box their insurer gets billed, they would likely find a way to cut costs.