Former Louisiana governor (also former HHS secretary) Bobby Jindal and Charlie Katebi wrote an editorial in the Washington Examiner explaining how to rein-in high drug costs. To start with they don’t like the Inflation Reduction Act (IRA). President Biden championed the IRA as a way for Medicare to lower drug costs for a small, insignificant number of hyper expensive drugs. For the uninitiated, the IRA allows Medicare to identify 10 high-cost drugs and negotiate the cost down, using punitive excise taxes if drug companies refuse. Jindal and Katebi have a point. The IRAs price negotiation formula is a Rube Goldberg-type of policy mechanism that only Democrats’ legislative writers would think up.
Category: Policy & Legislation
Bidenomics
Real incomes at every decile were lower and income inequality was greater than in 2019. Americans in the bottom 10% of earners were 6.3% poorer last year than in 2019 while those in the top 5% saw their incomes decline 4.1%.
Insurers are Marking Up Drugs that Should be Cheap
Why do people buy health insurance? The most often cited reason is to transfer the risk of illness to a third party by paying a premium. University of Minnesota economist John Nyman has studied this for many years. He argues that people buy health insurance as an income transfer in the event they become sick. People who are ill often lose their income and health insurance pays a benefit that patients would use their income on. A commenter on the NCPA Health Blog a few years ago said he believed that people buy health insurance for the negotiated discounts. That makes a lot of sense.
Why Health Care is Not Competitive and How to Fix It
Technology is a significant driver of high health care spending. For instance, many treatments common today were not available 50, 40 or even 30 years ago. There are far more drugs and medical procedures than there were in the 1990s when I first began studying health care. Yet, treatments and therapies that have been in use for decades are still quite expensive. In typical consumer markets, the quality of technology gets progressively better while the inflation-adjusted prices often falls as older technology is surpassed by newer technology. This is especially true of consumer electronics but also true of automobiles, appliances and other types of consumer goods.