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Originally Posted by PaulS
When I wrote that I was thinking along the lines of the government negotating the prices of drugs that it purchases through Medicare. I'm pretty sure that they are prohibited from doing so. I also think that in many other countries the govern. negotiates the prices of drugs and services and there may not be any 3rd parties (insurers). I think they also regulate things like what/how many hospitals can perform cat scans and negotiate with the seller what they'll pay for that equipment. So if Medicare negs. the cost of drugs does the cost curve still get altered given there are still 3rd parties? Also, with the price of some drugs over $100,000 per year or treatment as they may be under patent, isn't the supplt/demand curve being altered?
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Government becomes the third party if it negotiates prices for individuals. And when it mandates that everyone over a certain age must enroll in one of its plans (e.g. Medicare, etc.) it is not only a negotiator, it is a master regulator of the market, so it can alter the cost curve far more than private third party negotiators.
All third party payers alter the curve because a false price equilibrium is established between the third party and the seller. It can be an advantage for those who contract with a third party payer if the market price is based on what average individuals could afford and be willing to pay out of pocket which is the true equilibrium in a free market. But when third party pay becomes the norm, the price curve shifts in the direction of what the third party can and wishes to pay. And the individuals who contract with the third party will no longer have much to say about it, and will be at a disadvantage without third party help. And prices will escalate beyond their ability to pay. And when the third party can control prices, and can regulate what and in what manner drugs are produced, and has as the regulator an agency such as the FDA which can be and is influenced by lobbyists to create such stringent regulations that competition becomes economically impossible, some astronomical prices can and do occur. Our government has been at the forefront of creating higher costs in the medical field through its mandates and regulations for many years. It creates a problem by supposedly "solving" another problem as, for instance, forcing hospitals by law to accept patients whether they can pay or not, creating a cost/price distortion in the market, as well as doing so with various other medical regulations including the overly stringent process of bringing drugs to market and the crony capitalist favoring of big pharma as well as a constant flow of new regulations on the various suppliers to the medical and pharmaceutical industries. Then the government seizes on the new problem, which it has manipulated into being, by even greater seizure of control so that all will be "affordable" to the individuals who have long ago been taken out of true price equilibrium (their ability and desire to pay for goods and services). And, magically prices go up even higher. Of course, that problem will be solved down the line, by government, and it will have total control of the medical field. And we know that government is the leader in innovation, and in new, smart things. And, as Nancy Pelosi said, then the people will be able to do the things their hearts desire, such as write music or novels or make paintings or whatever. Government will make it so. And as the third, or rather, the only payer/regulator, it has unlimited pockets to pay. And as for a minor item such as the national debt, pshaw! It will somehow find a way to forgive the debt. Perhaps it will finally be the controller of all things, and, as such, the debt will be owed to itself. Pffft.
By the way, as a small aside, it is easier in other countries to bring new medicines to market, and for those in need to have much earlier access to them. Less government control and regulation of the process makes it feasible.