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A study has found that senior citizens choose more expensive, branded drugs, when Medicare picks up the bill, but generics when they pay for them themselves. There are actually two distinct switches, due to the Medicare gap where benefits phase out, then phase back in. The seniors choose branded drugs initially, under the original coverage, then switch to generics when the gap hits, then back to the branded when they resume coverage.
This is predictable human behavior, and why the market is the most efficient regulator. There is only an incentive to control costs when you bear them. It is the same reason people use more gas/oil/water when it is subsidized. Subsidy is the enemy of conservation and efficiency. When gas reached $4 a gallon, all sorts of things happened that "couldn't" happen before. People carpooled and cut back unnecessary trips. Car companies announced electric and hybrid cars.
The solution is not interfere with the market, but to allow the market to operate freely, and find solutions within it. Distortion of the market will only lead to delayed and exaggerated forms of the problem that was originally avoided.
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2 comments:
So, what would you do in the case of the Medicare prescription drug plan? If you think that seniors can't afford all of the drugs that we want them to have, then you can't abandon the prescription drug program (Perhaps that's something you want to do, and we can argue about whether that's a tenable policy position, but in terms of political feasibility, I think that ship has sailed). Implicit in your post is the judgment that individuals really ought to be using the generic version of drugs, when available, because their effects are virtually the same. Why not mandate that through the program? Or, if you think that people should still have choice, why don't we provide insurance coverage for generics but no coverage for branded drugs? This would, by definition, be a subsidy that affects consumer choices.
You claim you want to minimize distortion in the markets. If that were the case you need to either support (a) eliminating the prescription drug plan entirely or (b) subsidizing all drugs equally. But, the logic of your argument doesn't support either of those conclusions.
Well, as in many of my beliefs, my preference for health care in America is too large a departure from established policy to do abruptly.
Simply put, I believe that we should reduce all subsidies on medicine, and focus heavily, and dare I say, near brutally on prevention. Health care providers, including the government, should institute reward/punishment policies for those things proven to affect a persons health. Smokers already pay more for health care, so should those with an unacceptable body fat percentage(though I should note, not BMI, since it is inaccurate) those who do not exercise, who have poor diets, who do not supplement correctly, those who are risk-takers, etc.
This is not a matter of freedoms, as they are free to do what they like. They simply must pay a premium in order to have their health care costs mitigated.
The health care system rewards the wrong things. It rewards unnecessary procedures and prescriptions by covering them, and compensating doctors for them. Meanwhile, there is not enough incentive to simply be healthy in the first place. If a person could save several thousands of dollars a year, that hopefully would motivate them to get in shape. It would at least provide counterbalance to the costs of fitness. The system as a whole would save billions if the population was significantly healthier.
To narrowly answer your questions, there should be a surcharge on brand names at all points. If a person feels it is so important, find a way to pay for it. Beggars can't be choosers.
In the beginning of your post you dismiss eliminating the drug coverage, then present it as one of my alternatives at the end, which you reject. This, of course, is my preference, eventually, along with the elimination of virtually all government subsidies, and is clearly in line with my central point that it is a subsidy which distorts the market.
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