I wrote the below back in 2004. While we do have a huge new health care reform bill, we also have not changed the basic pathology of the American pharmaceutical industry, or the pathology of the American Congress, and I for one believe that if we can't do that, why do we think we will muster the courage to face down the rest of the health care industry, not to mention the Tea Party?
We spend roughly $1.5 trillion on health care and costs are shooting up again. Per capita we spend about double what other democracies spend and they provide universal health care to boot. Tens of millions of Americans go without good health care because we can’t control health care costs
But as someone who toiled in the health care reform vineyards for many years I sense the public has become deeply pessimistic that health care reform will ever happen.
We need to prove this pessimism wrong but going for broke is not the way to do it. We first need a big success in changing one critical part of the whole system showing the public it can be done. Then health care reform will be hard to stop.
I have a modest reform proposal to do just that.
We spend about $150 billion on prescription drugs; in recent years spending for drugs has risen twice as fast as other health care costs; one-quarter of all health care cost increases come from out-of-control prescription drug costs.
I propose that we give the feds the power to put an exorbitantly profitable part of the health care industry on a diet. To stop this runaway spending I propose a simple change: federal legislation that requires that all prescription drugs made or imported into the U.S. must first be ‘sold’ to the U.S. government, a legal fiction that would grant an independent federal board the power to limit overall drug prices and wasteful spending and the power to match the prices other nations pay for drugs made in the U.S.
It would also sharply reduce the prices for drugs that are sold to other nations for a fraction of what we pay. The board would have the power to pay only for reasonable costs for research and development, create incentives to spped up generic drug use and limit drug marketing that promotes overprescribing. For the first time, the U.S. government would possess the bargaining power to put an exorbitantly profitable and unpopular part of the health care industry on a diet.
Holding the line on spending for drugs for one yer will save roughly $22 billion. And holding the line is just for openers; many experts believe total spending for prescription drugs can be sharply lowered, not just held constant.
The tens of millions we save could be used to finance an honest-to-God drug benefit for Medicare patients. But our biggest success would lie elsewhere.
For decades now, we have debated the health care crisis in terms of free-market versus socialized medicine. But there is no free market for health care and there is no need to ‘socialize’ American health care. This false debate hides the real reason we can’t solve the health care crisis: the public lacks the bargaining power to face a monopolistic industry on a level negotiating field.
This lesson will become absolutely clear when we successfully oppose an unpopular, monopolistic part of the American health care industry with what economists call a monopsony, a “single payer” of buying power acting on behalf of the public, a step many other democracies take to hold down drug prices.
The odds may seem strongly against my proposal but the chances may be much better than we think. The pharmaceutical industry leads in campaign contributions in Washington. But this hints at how vulnerable they may well be.
The nation’s governors have called for strong federal action; several states are forming buying coalitions for drugs to be used for Medicaid. None of this will make much difference until the whole industry is forced to face a single payer for prescription drugs: the federal government.
Democrats could offer the proposal and get back on track as the party of progress; Republicans might see the wisdom of sacrificing one of their corporate patrons on the altar of doing the right thing. How do we get the ball rolling for this big change in the way we pay for prescription drugs?
The Democrats and some Republicans might begin by calling for the repeal of that provision of the new (and hideously expensive) Medicare program for prescription drugs that prevents the government from using its 'single-payer' purchasing power to hold drug costs down.
Who knows, if we get this one big change right, the public just might demand that we face doctors, hospitals, and insurance companies on the same level bargaining field.
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