Medicare Drug Follies

Published November 1, 2002

Our senior citizens should have the life-saving medicines they need without going broke or giving up life’s other necessities in the process. However, we need to inject or infuse a dose of common sense into the treatment plan.

We won’t anesthetize you with a scorecard on the current congressional “bidding wars” (as Grace-Marie Turner of the Galen Institute calls them) regarding Medicare drug coverage. Suffice it to note our legislators get re-elected by bringing home the tofu. Suffice it also to note Medicare is a political animal, and subject therefore to all the vagaries and ills of that sadly un-endangered species. And so it will be if and when the government assumes a virtual monopoly on providing prescription drugs to Medicare patients.

Biting the Hand

Members of Congress apparently believe, as did the HMOs in the beginning, that they can bring down costs by “negotiating” with the drug companies. Yes, there can be short-term savings by squeezing out “inefficiencies.” But after the squeeze, what happens? Rising costs force cutbacks in drug development, which is a notoriously risky and inefficient undertaking.

As Turner points out, “Between 1975 and 1994, the United States developed 45 percent of new major drugs, while France produced 3 percent, Germany 7 percent, and Britain 14 percent.” The European problem wasn’t lack of pharmaceutical smarts—it was lack of funds, and the unlikelihood (caused by weak patent protections) of a reasonable return on investment.

So far, the United States has been relatively lucky with Medicare, given that even its original backers—a combination of welfare-state zealots and venal pols—knew the system wasn’t sustainable.

Unfortunately, it took several decades for the predictable problems to meld into the Insanity that Dares Not Speak its Name. In a rational, i.e., market, economy, when people want more of something, they get it, often at reduced cost. In government-run medicine, the more people want, the less they get, and at increased cost to all.

Members of Congress know that nearly all legislation ends up in court, where the judges decide what they think they meant. Congress also knows bureaucrats will write, usually in secret, detailed “interpretative” regulations. But Congress also loves its loopholes and set-asides and special constituents and exceptions, so vague verbiage now co-exists with hundreds of pages of micro-management and dishonesty.

Turning Issues into Laws

Which brings us to another normal-seeming, yet foolish pattern : how social engineers turn issues into laws. The tactic has worked since the Progressive Era.

First, find some problem, real or imaginary. Next, redefine the problem as a “crisis”—an imminent calamity only the government can solve. Next, redefine the proposed “solution” as a “right” or an “entitlement.” Then pass legislation that not only won’t work, it can’t possibly work … and it will in fact create more problems, which can in turn be redefined as new crises.

Federal control of drugs must inevitably lead to rationing. When something is perceived as “free,” especially something as vital to seniors as medical care, demand soars beyond any government’s ability to provide. So we all end up with the worst of both worlds: fewer new drugs, straight-jacketed access to current drugs, and yet another crisis requiring yet another government solution.

The mess is totally unnecessary. Most senior citizens in the U.S. already have drug insurance. Others, who may not have such insurance because they don’t need it, use their own resources to pay for their prescriptions. And there’s no shortage of workable proposals for getting insurance to those who need it.

For one example, consider the Prescription Drug Security Card Plan developed by the Galen Institute and American Enterprise Institute. The plan would provide a subsidy directly to needy seniors “to purchase needed medicines and also to provide them with insurance protection against the risk of high prescription drug costs.”

When Failure Is a Success

But perhaps the greatest madness lies in our failure to recognize that the advocates of government medicine benefit from their failures. Their goal, after all, is to create a crisis situation in which complete government takeover of the health care system appears to be the only rational course of action left. Perhaps we’re not many years away from that final, graceless surrender.

Today, the health care policy choice may be between two very different visions: one that would create a genuinely open market for medical care, in which a variety of systems and plans compete; the other a monopoly government-run system that says “Yes” to all your needs when it really means “No.”

The choice would appear to be ours.

Michael Arnold Glueck, M.D. is an award-winning writer who comments on medical-legal issues. Robert J. Cihak, M.D. is a former president of the Association of American Physicians and Surgeons. Both doctors are Harvard-trained diagnostic radiologists.