Another example of the weaknesses of a government-run healthcare system, and a weakness the MSM is unlikely to report, pharmaceutical company Roche was forced to cut its price $1000 of its lung cancer drug Tarceva in an attempt to persuade UK’s NICE to approve it for use.
People may not feel bad for Roche having to cut prices, but the point isn’t that Roche will lose profit margin (although that would stifle incentives for innovation), it’s that a government healthcare system must limit supply based on cost benefits. Ed Silverman discusses at his Pharmalot blog several recent instances of NICE limiting supply. One unfortunate case involved a NICE decision to reject kidney cancer drugs because they were too expensive, essentially denying many patients (some who perhaps could afford to pay the price) an effective treatment because a government’s decision to allow or reject a medical treatment must take into account the entire population, not just the individual patient.
Any serious proponent of government healthcare acknowledges this limit of supply as a consequence. Paul Krugman criticized John McCain’s healthcare plan yesterday in the NYT, shamefully perpetuating the Democrat talking points that the free market lead us to the current economic crisis, and suggesting that McCain’s health care plan would have similar consequences. Krugman’s criticisms of the plan focus on full coverage. This is the general concern of most national health care proponents.
The number of uninsured is not the problem, but a symptom. The real problems are combinations of economics, regulation, and politics. Krugman points out that many would drop their employer coverage if the tax code were revised to favor the individual instead of the employer, but his criticism of the gap created by the tax revision ignores the likelihood of increased wages and lower premiums. Why will premiums decrease for most people? Because most people wouldn’t be pooled with their entire company in a pre-selected plan. Premiums are also more likely to decline if government would cut many of its insurance mandates, which force us to pay for services we’ll likely never use.
Krugman does bring up some points for debate, such as how to accommodate the elderly and the poor with public programs. But he offers nothing serious when he ignores obvious benefits of McCain’s plan and doesn’t acknowledge the necessary limitation of supply in a government plan. Krugman is also either naive or assuming you’re not intelligent enough to realize that Obama’s healthcare plan will lead to government control, even if it’s not a full-blown nationalized plan. Krugman writes:
So what should be done? Barack Obama offers incremental reform: regulation of insurers to prevent discrimination against the less healthy, subsidies to help lower-income families buy insurance, and public insurance plans that compete with the private sector. His plan falls short of universal coverage, but it would sharply reduce the number of uninsured.
I find it hard to believe Krugman believes that a competition of the public and private sector would be much of a competition. Speaking of such a competition, maybe Krugman will examine the current economic crisis and ask himself if it was deregulation or Democrat-defended distortion of the markets that caused this.
I attended a forum in Chicago last year where an Obama healthcare policy representative spoke about Obama’s plan. When asked why Obama wasn’t completely behind a nationalized plan, the woman answered that Obama understood that a nationalized plan wouldn’t sell politically, and that most Americans were unlikely to support a fully nationalized system. I scoffed at this response, because it suggested that Obama, like Krugman, knows that he cannot pass a nationalized healthcare plan, but both men know that when given the choice in a public-private hybrid, many people opt for government care (this is known as “crowd-out” and it has happened significantly in SCHIP).
Knowing that Obama’s plan will introduce the government as a player, just like in the subprime mortgage market, it’s Obama’s plan that should terrify Americans, not John McCain’s.
