The passage and signing of the bill for a government takeover of American health care should remind of Jefferson's prescient words: “I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”
On Sunday, 219 of our supposed Congressional "representatives" approved Obamacare. This so-called health-reform bill, costing nearly a trillion dollars, commits us to a yet more devastating deficit.Cobbled together with undisclosed, unintegrated special-interest deals, the only people whose wishes it does not address are thetax-payers. You and I just get to pay.Worse, America lost. This administration flouts the precious principle of representative government, fundamental to our republic. Monstrous deficits undermine our economy, inflating costs and decreasing jobs. No longer a beacon of freedom, our government becomes just another corrupt, deal-ridden, coercive mire."Leaders" ought to serve as both public servants and exemplars. That outrageous shenanigans and skullduggery were deployed to compel Obamacare votes is wrong for America.But the November election is less than eight months away. Now we know precisely who puts party politics and petty deals ahead of our interest. Now we can issue 219 pink slips.
(Centennial Fellow) Fred Barnes's wrote in today's Wall Street Journal that the health-care plan, if passed, will be "a paramount issue in the 2012 presidential race, regardless of whether Mr. Obama is on the ballot." (See full quote and link at the end of this post.)
If Obama is on the ballot? I have said that there is a reasonable chance Barrack Obama will not get the nomination of his party. Why? First, the progressive wing will spin off a candidate or even rend the Democratic party. History is against me as no sitting president has ever been ‘evicted’ by his party; think Gerald Ford, who came close. Second, Hillary is in the wings. Does anyone think she is not plotting to get the big chair? If I were in charge of her campaign for the White House I would show clips of her 2008 campaign when she was attacking Obama, e.g., 'his need for on the job training,' etc. the fact is that Hillary had it exactly correct in 2008, Obama was not ready. Lastly, Obama might not even run. I don't think he likes, enjoys being president. Why wouldn't he enjoy being president? Obama is the product of far too may wine and cheese parties with the intellectuals, elites and academics of the left. As a grad student at NYU in the 1980s a fellow student, a reporter, snuck me into two of these parties held on the Upper East Side of the city. These were the most insular people I had ever met; not one had ever mown their own lawn. I was reminded of the, possibly apocryphal, comment of New York Times movie critic Pauline Kael upon the election of Richard Nixon. “I don’t think Nixon was really elected” she supposedly said, “I don’t know a single person who voted for him.” The one thing I do remember was walking by two women who didn’t believe there were any women who were against abortion. If I am correct and this was Obama’s preparation for the presidency, it would make sense that he truly believes he and his friends have solved all the problems and they only need to implement their brilliant policies and opposition would melt away. But he went to Harvard Law, you might say. This is the most puzzling thing to me. He has taught constitution law and was a U.S. Senator for two years. Yet, when asked in one of the first press conferences, “what has surprised you the most...” his response was how long it takes to get things done. If you understand the Madisonian system of government, the constitution, this is the essence of our system. The assumption is we are a liberal people who have differing opinions, ideas, etc. Thus, there are no ideal policies. For one faction to ‘win’ would be cause political violence. Thus, the main aim of the constitution is to avoid factional violence, not create the best policy. Factional or political violence is avoided by forcing compromise through checks and balances. The end result is that everyone comes away from government equally unhappy but not thinking the other guys got more than me. My limited imagination can come up with only two possibilities: Obama was never exposed to the Madisonian system of government or, the Constitution is merely an auxiliary precaution which must take a back seat to the enlightened statesmen.
Fred Barnes in WSJ 3/18/10... "Assuming it passes, ObamaCare wouldn't go into effect fully until 2013. This fact alone would make the health-care plan a paramount issue in the 2012 presidential race, regardless of whether Mr. Obama is on the ballot. As long as he's president, Mr. Obama would surely veto legislation to repeal or gut ObamaCare. With a Republican in the White House things would be different. Republicans might be successful in dismantling the program."
('76 Contributor) Ignoring constituent concerns about the constitutionality of the federal government controlling healthcare did not work. Citing Article I, Section 8 of the Constitution held no water. Claiming that he has “not heard legal scholars suggest the health reform bill is unconstitutional” is not even close to believable. So what did my congressman, Peter Welch (D-VT), do to justify his vote for the House healthcare bill? He punted … the constitutionality issue off to the court stating that the court is “ultimately responsible” to ensure policy is constitutional.
Does Congress have a lesser degree of responsibility to uphold the Constitution than the Court? Is Congress inferior to the Court? While Americans have little confidence in Congress, I think it is both wrong and unwise for Congress to take a back seat to the Court. The Supreme Court is supreme among courts, but it is not supreme among the branches of our government. Indeed many of our present day problems stem from a weakening of the legislative branch of government as members of Congress and state legislators create cover for their actions or inactions by pushing their rightful duties off to either government agencies or the courts.
Ensuring policy is presumptively constitutional, prior to implementation, is a primary responsibility of every member of Congress, the President, and the courts. Every member of Congress took an oath to responsibly understand and abide by the intent of the Constitution. This pledge requires studying the writings of the framers to understand exactly what was intended by the specific words and phrases they chose to dictate the constitutional consequences of their deliberations. Words and phrases may change in perceived meaning over time which, if taken face-value at any given moment, may allow for altered application of the Constitution if not checked against their original context.
From those historical writings (see the link to my open letter at my 2006 congressional race website: www.ShepardForCongress.org) I, and a growing number of Americans, see no way to construe the Constitution as giving the federal government the power to control healthcare and mandate all Americans purchase a federally prescribed health insurance policy.
If any of the three branches of government should have more governance capability than the others, it must be the Legislative - by its constitutional design being the closest to the people and having the power to make laws that regulate both the executive and judicial branches as well as having the power to remove, under prescribed circumstances, the “President, Vice President and all civil officers of the United States” from office (Article II, section 4) as well as the power to create and abolish entire circuit courts. However, despite that power, the legislative branch remains neither above the law nor the Constitution. Congress can only change law by lawful means. Thus, if Congress desires to pass a bill along the lines of the massive Senate or House healthcare bills, its appropriate genesis would be the introduction of an amendment to the Constitution framing that desired outcome.
This is a matter far larger than this single healthcare bill. The very form of our government, with appropriate checks and balances and citizen input, is at stake. Putting the Court as the supreme authority ultimately puts five people – a majority of the Supreme Court – as the ultimate deciders of the direction of our country. That perspective is far removed from how, and why, this nation was founded. It also undermines the rightful responsibility of the legislative body, and in doing so, undermines the people’s ability to guide our government. Inattention to the constitutional framing of our federal government by many members of Congress is moving our government further and further away from a government “…of the people, by the people, and for the people…” as Congress inches America closer and closer toward tyranny.
Mark Shepard was a Vermont state senator, 2003-2006, before running unsuccessfully as a Republican for Congress.
(Centennial Fellow) Legislators talk frequently about the Law of Unintended Consequences but rarely seem to recognize when a bill they support will, if passed, inevitably collide with that law.
Such is the case with House Bill 1021, which would require individual insurance policies to cover a normal pregnancy, childbirth, maternity care, pregnancy management and contraception.
At first glance, that sounds like a reasonable idea: women who buy their own health insurance ought to be able to purchase coverage for pregnancy.
Now stand in the shoes of another woman - one who isn't pregnant, or plans not to become pregnant, or is beyond childbearing years, or is unable even to have children: if state law requires all policies to cover pregnancy, then state law requires everyone to pay for pregnancy coverage, whether they want it or not.
Why is it necessary for the state to require women in the latter group to pay for something they don't want, won't use, or cannot afford?
This bill is sponsored by Reps. Jerry Frangas and Beth McCann, both Denver Democrats. Frangas is one of the nicest people in the legislature, and McCann has demonstrated in other cases that she clearly understands the economics of insurance, both for consumers and insurers. Their sponsorship, while undoubtedly well-intended, is nonetheless frustrating.
Two years ago, my wife and I had our first child. We are both self-employed and buy policies through the individual market. We specifically chose not to buy pregnancy coverage, although coverage for "complications of pregnancy" were standard with our Assurant Health policy.
The reason we didn't want to buy coverage for a normal pregnancy is the same reason everyone should have that choice - a normal pregnancy is not an "insurable event." An insurable event is defined as something that occurs without warning, is unlikely to occur, and is unwanted.
Consumers understand this concept well in every situation except health insurance. We buy home insurance to pay for losses due to fire, hail storms, tornadoes or theft - not to pay for repainting the family room or updating the kitchen. We buy auto insurance to pay for accidents, storm damage or vandalism - not to pay for a new set of tires or an oil change.
Over the years, health insurance has moved away from the concept of insurance and become a complicated financing scheme for everything related to health. That's why it's so expensive.
Pregnancy isn't a complete surprise, most of the time, so my wife and I had saved money to pay for it. (Yes, it's costly, but not nearly as expensive as buying a car and people manage to pay for that without "insurance.")
We visited two hospitals to ask about costs if we paid the bills ourselves. When our son was born, he decided to show his posterior first, so a C-section was necessary. We paid for everything associated with a normal delivery, plus our deductible - about $7,500 in total. Our insurance paid some $8,300 for the surgery and extended hospital stay.
Everyone understands that one way to reduce costs is by eliminating the middleman. That's what we did by paying for normal costs of pregnancy ourselves.
HB 1021 would eliminate that choice for everyone by requiring that every procedure related to pregnancy be financed through an insurance company - the very insurance companies for which so many legislators profess profound disdain.
Worse still, the bill encourages cost-shifting and irresponsible behavior by prohibiting insurers from denying coverage for pregnancy as a "pre-existing condition." Translation: a woman can wait until she learns she is pregnant, buy insurance for a few months to cover pregnancy, and then drop the insurance.
Who pays the bill for that? Everyone else who pays their premiums month after month and year after year - including those women who need affordable coverage for serious illnesses and conditions which, unlike pregnancy, are undesirable and unavoidable.
While HB 1021 will likely help the handful of pregnant, uninsured women who can buy their own coverage, it's unintended consequences are costly and destructive for everyone else.
('76 Contributor) It seems to me that in spite of the near-paralysis of government at all levels on meaningful reforms for health care, our runaway costs need someone’s attention. Fewer and fewer small businesses can now afford anything but an insurance package that has a huge deductible. So as a totally inexperienced drafter of such proposals, but with my share of business experience in the real world, I am so bold as to offer the following simple start: 1) Tort Reform (obviously a difficult area to get passed due to connection of Dems with Trial Lawyers)
a) Lost case the loser pays the opposition attorney's fees
b) the settlement for "pain and suffering" be capped at $250,000 (I believe that is the present cap in Colorado)
c) maximum for plaintiff attorney to participate in award for "pain and suffering" make it 5%. (be willing to settle for 10%)
d) 3 successful suits where malpractice has been adjudicated makes the Doctor uninsurable from any state authorized insurance company.
e) More than 5 unsuccessful suits within one year (from initial filing) bars the lawyer personally from any participation in this type of litigation for 3 years anywhere USA (purpose is to put that lawyer permanently to pasture).
f) Excess reserves accumulated by a “malpractice” insurance company (est. 2X annual Claims) shall be rebated to Doctors as a refund.
g) Standardize accounting for insurance companies so Administrative costs can be tracked and limited to 30% (Make total revenues less 30% to equal the definition of reserves for claims. If the balance accumulates to 2 X annual payout rebate back to Doctor) 2) Unrestricted marketing across state boundaries.
3) Mandatory posting of prices by the doctors for ALL specific procedures - to enable consumer to shop prices and judge if premium is worth going to a "high" reputation Doctor. That does not imply that any price controls would be enacted.
4) One ought to be able to buy a “Cadillac Medical Insurance policy for an “appropriate” price without government penalty to cover the higher priced procedures. Let the market work it out.
5) Standardize “Basic” mandatory electronic medical records - Doctors and health institutions may maintain more detailed records, but those need to be electronic by 2012 and compatible so that if requested by a third party (proper permission) they can be delivered electronically without delay.
6) Medical savings accounts for all and ability to purchase health insurance with PRETAX dollars. This is probably just a start, but keep the "bill" to less than 10 pages and if it requires more, prioritize the items and only pass some with the understanding that there will be another opportunity. Focus should be on cost reduction without destroying the healthcare system.
Bismarck, Prussia's Iron Chancellor, once said, “Laws are like sausages. It's better not to see them being made.” In the case of the current government, bound and determined to take over our health care system regardless of public opposition, never have so many Americans been privy to the making of sausage—and it hasn’t been pretty. One must wonder if this much bribery and corruption are in plain view, what must be going on behind the scenes?
It seems that Liberal Democrats have a very limited number of tools in their toolbox. Their tool of choice always seems to be the one of bribery. Seek out the greatest weaknesses and deepest self-interests of your opposition, offer it to them and they'll sell out anyone or anything. Mary Landrieu, Ben Nelson and the SEIU are but the most blatant examples.
Isn’t this what Democrats have done with large swaths of voters? They give out crumbs in order to chip away at self-sufficiency, and recipients vote their greatest weaknesses and their deepest self-interests even if government dependency is not in their best interest. This is all wrapped in the most amazing paradox of all; the bludgeoning banner of “compassion” so as to claim moral superiority.
That’s quite a feat for an ideology with so few tools in its toolbox.
What’s the solution? Make self-sufficiency popular again, as a function of self-esteem and happiness. Do that, and the Democrat machine is disabled with no tools to restart its engine.
(Regis Student) In an arrogant display on Christmas Eve morning, the U.S. Senate gave the American people a big, dark piece of coal when it passed a massive healthcare package that simply does not address the primary problem with our system: skyrocketing costs.
According to the non-partisan Congressional Budget Office, premiums would rise by as much as $2,000 for a family policy. The government’s Centers for Medicare and Medicaid Services assert a 5.1 percent increase in healthcare-to-GDP spending (to 21.1 percent, currently 16 percent) with reform compared to a 4.8 percent increase by doing nothing. And for those under 30, premiums could rise by 50 or 60 percent, according to Robert Zirkelbach of America’s Health Insurance Plans.
Congress should just scrap their big-government healthcare schemes and instead adopt the “Capitalist Manifesto for Healthcare Reform,” several specific, free-market fixes for healthcare. With two previous articles in this series, I proposed several cost-cutting initiatives: increasing competition for individual consumers and permitting it across state lines, decreasing pharmeceutical regulation and permitting the importation of prescription drugs.
Now, in the final installment, we will examine lowering costs by freeing up medical malpractice, the regulatory system and Medicare and Medicaid, all critical reform components.
Reforming Medical Malpractice: If you’re a doctor, you better have malpractice insurance. Otherwise, you’re taking a huge risk. No matter what happens, even if a doctor does her job right and everything turns out well, you’re in danger of a class action lawsuit, known as “tort.”
According to Dr. Russell Turk, “[A] September survey of more than 5,000 obstetricians/gynecologists conducted by the American College of Obstetricians and Gynecologists' (ACOG) [found that] in Florida, the state with the highest premiums, ob/gyns pay an average of $195,000 annually…The ACOG survey found that 63 percent of ob/gyns report making changes to their practice due to the fear of liability claims or litigation. In addition, 8 percent said they had stopped practicing obstetrics altogether.”
Doctors across the country are in such risk of getting hit with a massive lawsuit that their costs in malpractice insurance are astronomical. I agree with Dr. Turk when he says, “I fully support the idea of doctors being penalized and disciplined when they have been negligent. But you can do everything right and still get sued for a poor outcome.” As he notes, this also affects how doctors practice medicine, like what risks they’re willing to take to save lives.
Medical malpractice concerns also encourage greater use of defensive medicine, meaning doctors conduct tests they wouldn’t otherwise do to prevent lawsuits. In fact, defensive medicine costs the system an estimated $70 billion a year. Doctors should neither be prevented from doing what is necessary to serve their patients, nor forced into doing what is unnecessary and costly, just to protect themselves.
Tort reform, therefore, is absolutely essential for doctors, which will in turn pass on lower costs to consumers and insurance companies. It is imperative that punitive awards for medical malpractice be capped. In addition, those things for which one can go to court to seek damages should be reexamined and limited somewhat to prevent the application of inappropriate pressure on doctors from doing what may really be necessary to serve the needs of their patients.
However, the reforms that are necessary to lower costs and doctors’ concerns cannot all be undertaken at the federal level, due to federalism. Therefore, there are actions that must be taken at the federal and state levels, and the feds should perhaps consider providing incentives to states to do their part. It is imperative that, as part of a comprehensive healthcare reform package, both levels of government begin taking steps to reform the oppressive tort laws that are strangling the nation’s medical practitioners and pushing costs up.
Don’t Hate; Deregulate: I know what you’re thinking. Deregulation…isn’t that what got us into financial crisis in the first place? In fact, as economist Walter Williams points out, “In the banking and finance industries [from which the crisis stems], regulatory spending between 1980 and 2007 almost tripled, rising from $725 million to $2.07 billion.”
Economist Jeffrey Friedman noted, “The financial crisis was caused by the complex, constantly growing web of regulations designed to constrain and redirect modern capitalism. This complexity made investors, bankers and perhaps regulators themselves ignorant of regulations previously promulgated across decades and in different ‘fields’ of regulation.”
Deregulation was not the real cause of the financial crisis; regulation was. Furthermore, the healthcare and financial sectors are entirely different in nature, and the fact of the matter is, healthcare is one of the most heavily regulated industries in the country. According to Duke University’s Chris Conover, a policy analyst at the Cato Institute, the net cost of health regulation is $169 billion a year, after subtracting beneficial regulatory costs. As with any industry, in order to pay for the dictates of the government, institutions of health are forced to raise costs, which extends to consumers in the form of higher prices—a whopping $1,500 per household in this case.
Bear in mind that the regulations I’m talking about are not your essential safety regulations, but $169 billion in excessive, burdensome regulations, like the tort system, FDA regulations like those addressed in Column #2 and regulation of health facilities.
In fact, Conover’s research has shown that while roughly 18,000 Americans die from lack of health insurance, 22,000 die due to health services regulation, and seven million uninsured owe their state to excessive regulation. Cutting back on those unnecessary and cumbersome, but targeted and non-essential requirements/restrictions at both the federal and state levels would free up the market and enable health providers to lower costs.
Fixing Medicare and Medicaid: Medicare and Medicaid are the two most prominent government-run healthcare programs currently on the books. Medicare provides medical insurance for the elderly, and Medicaid is a massive federal-state partnership affording healthcare to the poor and indigent. While both of these programs are well-intentioned, they are financially unsustainable and require updates for application in a 21st century world.
Medicaid is a drain on federal and state budgets. To help control costs, states should be given near-absolute flexibility in determining how Medicaid is to be doled out—not more money. In fact, how Medicaid funding is given to the states encourages fraud and waste. And both Medicaid and Medicare reimburse doctors at as much as 30 percent below the normal rate—meaning costs are distributed to others. Fraud, abuse, waste and inefficiency need to be identified and cut from both of these programs. Fund distribution methods must be altered, and we must reexamine who is allowed to benefit from them, particularly from Medicare.
We need to start taming the Medicare leviathan, which has $89.3 trillion in unfunded liabilities. The layman’s solution to Medicare lies in allowing qualified individuals to opt out of the program if they so choose; slapping a grandfather clause on the 2003 Medicare Part D prescription drug benefit, meaning that those who are not currently on the program will not receive expansionist Part D benefits; and making Medicare means-tested, meaning that folks like Bill Gates would be ineligible for benefits.
Whether or not a person qualifies for Medicare benefits should rely on several factors, principally income level but perhaps also including yearly expenses, savings and the number of dependents. The switch to a means-tested structure should pertain solely to those who are currently under the age of 50 or 55; that way, all who are already anticipating on entering the Medicare program soon will be able to. The program will slowly work its way down, and the increased cost burden it shifts to the private healthcare industry will shrink as a result.
By taking these three critical steps toward reforming what we've got right now and thereby expanding freedom in the marketplace, we will undoubtedly be able to pull the brakes on skyrocketing healthcare costs as our system speeds on its way to the cliff of no return.
Jimmy Sengenberger is a sophomore at Regis University, where he hosts an Internet radio show and organizes for conservative causes. This is the third in a series of columns proposing specific, free-market alternatives for healthcare. To see the previous installments, click his byline at the top.
(CCU Student) Remember the news of an uninvited and uncredentialed couple that snuck into the White House for the State Dinner? I’m starting to believe that couple happens to be Mr. and Mrs. Barack Obama.
The genius that brought you a whopping 1.4 trillion dollar debt, with his vast credentials, now brings you the following statement: “Choice, competition, reducing costs -- those are the things that I want to see accomplished in this health reform bill.”
Throughout his 2008 Presidential campaign, Obama told us that we wanted to insure every American with three things:• Quality, Affordable and Portable Coverage for All• New Health Initiatives, including for Autism and AIDS• Lower Costs for the U.S. Health Care System, including Drug Costs
Speaker Nancy Pelosi and Senator Harry Reid praise the bill, claiming that the bill would fulfill all promises made by Obama, and more. But, if you take a look at the numbers, you may believe differently than portrayed by these senseless public figures.
Our revenue for the 2009-year as projected by the government is roughly $4.64 trillion dollars. According to the latest bill, passed in the Senate and awaiting approval in the house, totals the cost of healthcare at $.87 trillion dollars. Divide the two together, and you will see that 19%, or nearly 1/5, of our economic revenue will be consumed by the bill’s cost. On top of that, Obama faces the $787 billion dollar stimulus package cost, plus the cost of sending 30,000 more troops to Afghanistan. Now, I am very much in favor of the war, and in some regards the American Reinvestment and Recovery act; but this healthcare bill is absolutely ridiculous.
Let’s take a look at Promise #1.The senate bill states that individuals and families who do not buy into healthcare would pay fines of $750 and $2,250, respectively. I don’t see how that will ensure quality or affordability, but let’s keep going. The second part of the bill tells us that companies with over 200 employees would be forced into buying a healthcare plan, with no way to opt out under ANY circumstance. Companies with any less than 200 employees would not be obliged to buy insurance, but would face a steep fine of $750 per employee if they decided not to. Again, the integrity of his statement is becoming more and more compromised by the hour by what is reflected in the bill.
Promise #2 and 3 go hand and hand with number one, showing the lack of validity and follow through by the President. What I would like to talk about, however, is the statement he made about choice and competition. First of all, competition would be completely abolished with the house’s version of the bill, which includes a mandatory public option. The government would muscle Americans into buying into only the government’s healthcare, and over time, would eliminate any other option. Reducing costs would likewise become a distant memory, as on top of the $10,000 a year families are spending to pay the stimulus plan, the Congressional Budget Office states average families would face another $15,200 more in health care fines.
I believe the founding fathers would be rolling in their graves if they knew that the government was assuming roles in the auto, banking, health, education, and other various industries. We could follow the model that big government advocate Bill Clinton proposes, which states: "We can't be so fixated on our desire to preserve the rights of ordinary Americans." Or, we can expound upon the ideas that our founding fathers placed before us, which protect individual rights and liberties.
I believe that this healthcare bill will be a disastrous thing that will destroy lives, jobs, and economic revenue in this country. I guess Ronald Reagan was foreshadowing to us what role the government would play when he said, "Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."
The uncredentialed guest at the White House has fulfilled Reagan’s prediction, and in the process, broken just about every promise that he made to us during his campaign. This will not be affordable, better quality, or whatever other lying assurance that he fed us. Please take the initiative and write to your nearest congressman as soon as possible, and prevent our health system from heading into severe amounts of turmoil.
(Regis Student) Ronald Reagan once said, “Individual freedom and ingenuity are at the very core of everything we’ve accomplished.” Indeed, everything that has made America great has come from empowering the people, including and especially when it comes to the market. Capitalism has been the engine of prosperity for this country going back to its founding. As such, I am now proposing that Congress and the President consider the “Capitalist Manifesto for Healthcare Reform,” several specific, free-market fixes for the healthcare problem.
In the first article of this series, I examined the importance of breaking down two critical barriers to competition: the third-party based system that sets consumers apart from paying and decision-making and state laws prohibiting insurance purchases across state lines. Cost and affordability, not quality of care, are the key issues with our healthcare system. So let’s look at another way in which we can directly empower the individual beyond increased choice and expand affordability—by adjusting policies surrounding the importation of cheaper prescription drugs.
High Costs: Prescription drug costs often contribute greatly to higher healthcare costs. According to the Kaiser Family Foundation, the number of prescriptions purchased in the U.S. between 1994 and 2004 was a whopping 68 percent, with prices averaging increases of 8.3 percent yearly during that period. “Although still only a modest part of total health care spending in the U.S (11 percent),” they note, “with so many people relying on prescriptions, the cost implications loom large for the American public, health insurers, and government payers.” The problems lie in Research and Development spending—specifically, patents and FDA regulations—and the fact that importing prescription drugs is illegal under current U.S. law.
Patents: Both patents and FDA regulations are significant contributors to $800 million in costs to launch a single new pharmaceutical product—costs which result in higher prices for consumers. First, patents are designed to give a company temporary monopoly on the product so that they can recover their R&D spending. A patent lasts 20 years, yet as the CATO Institute’s Roger Pilon points out, “the effective life for drug patents is about nine years.” Logically, the shorter the time, the higher companies must charge per unit during that time to make up for the costs. This process must be changed to permit the same amount of patent time that other products have.
FDA Regulations: Then there are regulations. Today, according to PHRMA, the process of discovery to FDA approval takes an average of 12 to 15 years. As such, many people who would accept the risks involved suffer during this time. As economist Milton Friedman suggested, “[T]he one big development you could make would be to go back [to the situation where you have] the FDA certify safety…but not efficacy, and let the market itself work in determining efficacy.”
Indeed, the FDA should test only for safety and allow doctors and consumers to judge efficacy, which would decrease costs substantially and thus allow for cheaper medications. By altering the regulatory process, more innovation and development will result in addition to lower prices.
Prescription Drug Importation: Finally, current law makes it illegal for prescription drugs to come to the U.S. from anyone other than the American producer. As of now, they must be approved by the Food and Drug Administration (FDA) for importation. Consequently, competition between prescription drug providers is stifled, as U.S. manufacturers lack the incentive to cut prices to beat out lower-priced contenders. But individuals, states and cities are already beginning to avoid these laws and import drugs from other countries. This should be made official: by permitting the importation of lower-cost prescription drugs from countries like Canada, consumers will have a larger list of affordable, cheaper medications to choose from.
Of course, we do have a right to know if what we’re buying hasn’t been FDA, so what’s to say that the government can’t mandate that imported prescription drugs say “NOT APPROVED BY FDA” in big, bold letters and be placed in sections stating “NOT APPROVED BY FDA” in the pharmacy? Leave it up to me and my doctor, not big brother Sam, to decide whether or not I want to buy a cheaper drug from Canada, approved by their version of the FDA, instead of the more expensive product from Georgia.
There are other concerns as well. The Heritage Foundation’s Nina Owcharenko, for instance, makes a good point: prescription drugs in other, Westernized countries are fixed in accordance with price controls, which would distort the international market and advantage foreign manufacturers.
However, we must recognize that the vast majority of R&D costs are being paid for by the Americans, with other countries essentially getting a free pass. The U.S. is the only nation where market dynamics of supply and demand play out in pharmaceuticals—and with good reason. Price controls in other countries, as Owcharenko points out, reduce R&D spending (not costs) for new drugs by as much as $5 to $8 billion each year and trials for new medical compounds by as much as 50-60 percent.
But as long as the ban on importation is in effect, American drug manufacturers are going to recoup their R&D costs here instead of pushing supply and demand principles on other countries—meaning higher prices for us. Essentially, prices are set differently in the U.S. from other countries, meaning the U.S. shoulders the cost burden.
By eliminating the importation ban, other countries will have no choice but to react to supply and demand principles, as American manufacturers will find it necessary to cut prices at home and raise them abroad. Thus, other countries will have to share in R&D costs, which is long overdue.
As Roger Pilon notes, pharmaceuticals can use contractual agreements (to do such things as restrict drug resale), limits on supply, and export pressures, among other things, to help ensure that foreign countries are not undercutting the company. In effect, American manufacturers will be encouraged to do whatever they can to discourage importation in order to maintain their market share, which can be done by lowering prices here and raising prices elsewhere.
Should the U.S. government repair the patent process, refocus FDA regulations and permit the importation of prescription drugs, Americans of all stripes will surely benefit from a noticeable reduction of healthcare expenses.