How to slow the growth of health care costs.

Thanks to Susan Voss for her thoughtful essay about the complexities of our health care system, and how difficult it is to reduce costs. (See link to Register essay below.)   I don’t claim to have “the answer”, but I do suggest that the following cost saving ideas be given serious consideration.

  • Medicare, Medicaid and private insurance should not be required to cover every new drug, product, or procedure that is approved by the FDA. Some are very high cost but provide only marginal improvement over alternatives that cost much less.  Also, at least some covered products and procedures would likely be considered not medically necessary by most people.
  • Consider shortening the amount of time that government grants a monopoly for patents.  Patents are not natural property: humans have copied one another since the beginning of time.  Our U.S. Constitution allows patents to be granted to encourage inventiveness, but there is no objective reason why a patent must be granted for 20 years. Why won’t five or ten years work?  Maybe the length of the patent should be based on the cost to develop the patented item and whether or not government funds were used to help develop the item.
  • Don’t require limits on out-of-pocket payments such as co-payments, especially for very high cost items.  A person should have “skin-in-the-game” if they expect their insurance to cover very high cost items.  Today, we see the opposite: drug companies offer to help pay people’s out-of-pocket costs so there won’t be so much political pressure on them to lower their prices.
  • Allow both pharmacies and individuals to purchase drugs from sellers in other countries that are “deemed” to have sufficient safety procedures in place.  If drug companies are free to charge lower prices in other countries, then pharmacies and individuals should be free to purchase the drugs from those other countries.
  • Allow Medicare and Medicaid to negotiate with drug companies on prices they pay for the drugs that are covered by the programs.  Right along with that, Medicare and Medicaid should be allowed to develop formularies (lists of drugs that are preferred over other therapeutically similar drugs), that give beneficiaries a financial incentive to use the preferred drugs and a penalty for using higher cost drugs.

Our health care wants are unlimited.  Our ability to pay is not.  We, as citizens, should not expect private insurance or our government health care programs to cover everything, regardless of cost.  We should expect our government to NOT do things that increase costs, or reduce our choices.

Link to Register essay:  https://www.desmoinesregister.com/story/opinion/columnists/iowa-view/2018/09/19/dont-fooled-when-someone-claims-have-answer-soaring-health-care-costs/1355890002/

 

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EpiPen fiasco was caused by the FDA – don’t blame free market capitalism

Our government, not free market capitalism, is to blame for this situation which has allowed Mylan Pharmaceutical company to jack-up prices for its EpiPen. The FDA is has created a huge delay in approving generic epipens.  This has effectively given Mylan a monopoly.  Established drug companies should have some type of fast-track authority to manufacture generic products without having to get advance approval from the FDA.  Don’t blame private enterprise for problems created by government.

Reduce monopoly protection.

Patents are not natural property rights.  They are government created and enforced monopoly rights.  It is debatable whether patents encourage or hinder innovation and inventiveness. Even if patents promote inventiveness, there is no specific optimal number of years of protection.  In many instances, there is a good case to be made that no patent right,s or very limited patent rights, might spur more invention.  The case of pharmaceuticals and medical devices is more complicated because of government regulations that require much greater spending before a product is allowed on the market.  Even in those cases, we should err on the side of more limited monopoly rights and less use of government force and protection.  Humankind has made tremendous progress by being free to copy the ideas of one another.  What if fire, or the wheel, had been allowed to be patented?  Would that have spurred invention?  Our elected representatives should support shorter periods of time for monopoly patent protection.
Links to Register guest opinions:

Patents gone wild!

Patents are government enforced monopolies that are granted to encourage innovation.   There is no natural property right in “intellectual property” (IP).  Natural property rights exist in physical things.  If you create or obtain property by peaceful and honest means, then you have a natural right to keep and defend that property against those who would use force or fraud to take your property from you.  Governments are created to help protect those rights.

Throughout most of human history there has been no recognition of  patents.    Anyone could copy a good idea from anyone else.  Only Kings or other dictators bestowed monopolies to favored groups and used force to stop those who infringed on the monopoly.  The inventor of the first wheel had a natural property right in that specific wheel.  Other people who made similar copies for themselves did not take anything away from the original creator.  Why should force be allowed to stop someone from copying from someone else?  Do the ends justify the mean?  Isn’t it immoral to use force to stop a peaceful person from doing something that does no harm to others?

It is wrong to assume that people would not be inventive if they had no patent protection.  They might be more inventive and more creative.  Do a thought experiment:  What would happen if there were no patents?  Might there not be more and faster invention?  As much as possible, inventors would try to keep their manufacturing processes secret.  But keeping such secrets would be very difficult, if not impossible in many cases.  Inventors would also try to use contracts to prevent people from copying their inventions.  Contracts would give them some protection, but only against those who are party to the contracts.

Patents are supposed to be granted only for original inventions that are not obvious.  In the recent case between Apple and Samsung, one of the patents which Apple successfully defended was the “look and feel” of the IPhone, including the rounded corners and the “bounce-back” screen.  Mercedes Benz has a new TV ad where they tout that they have over 80,000 patents.  (See: http://www.youtube.com/watch?v=yc6CejduPP0)  Is that a good thing?  Today, it is becoming very difficult to create anything technical without infringing on someone else’s patent.  What government gives, government can take away.  Until we get rid of patents, our government should get much more conservative about what types of inventions get patent protection and about how much time the patent is granted for.

In the case of drugs and medical devices, I would feel much better about our government providing for our “general welfare” by funding medical research if no patents were allowed if taxpayer money is used in anyway to fund the development.  Inventions based on taxpayer funded medical and technological research, or based on research done at public universities should not be patentable, either by the States or the universities.  They should be left in the public domain for the benefit of all citizens.