July 14, 2009

When the Last Bastion Falls

Justin Katz

On healthcare, as on several other issues, it's long been my contention that the touted (but debatable) successes of other nations are heavily dependent about the United States of America being its different self. That's one of the points worth taking from Peter Morici's op-ed on healthcare reform:

Americans subsidize health care globally by paying most of the costs for developing new drugs. Single payers in Canada and elsewhere force drug companies to charge little more than manufacturing and marketing costs, and they must recoup all their development costs by charging Americans oppressive prices.

And what should we expect to happen if the U.S.A. no longer stands as a revenue opportunity for drug developers? Correct: They'll develop fewer cutting-edge drugs. As much as doctors and scientists may want to develop new treatments, everybody's got to make a living, and the profit motive has brought them the funding they require.

A second point of Morici's touches on another common theme of mine:

Unlike U.S. health-insurance companies, single-payer systems abroad don't pay executives salaries in the millions, impose multiple systems of private rationing second guessed by buccaneering lawyers, and create massive paperwork burdens to justify high rates.

Americans have created a "competitive market" for private insurance that is less efficient than the French bureaucracy. What a triumph of free enterprise!

What healthcare needs is not more regulation — even unto the extent of making the entire industry a government enterprise — but deregulation. The higher the hurdles, the more advantage those with the resources to jump them will have.

The third point I'll leave directly quoted, without comment:

My very expensive education in economics tells me: When prices are too high for an essential service, subsidizing purchases for those who can’t afford it increases demand and pushes prices up even more.

Americans will be stuck paying both higher health premiums and new taxes.