The Buffett Rule

[detbuch]

Originally Posted by spence

I'd think that if the consumer can't afford the care or taxpayers can't fund Medicare the rest is moot.

Being as how the consumers are the taxpayers, then neither the pre-HCB "system" nor the impending "HCB" system (fixed or not), are a "solution" to costs. At least the pre-HCB system had more of a relation to market forces, and would have even more with less regulation.

Before Medicare, 1/2 of seniors didn't have any health coverage. I
think there's a reasonable argument to be made that the States alone either can't or don't want to address the issues. Sure, we could do what Rand says and just let the sick ones die, but the taxpayers would still have to clean up the bodies.

Before medicare health costs were much lower.

As for the Economist, they had a good article some time ago stating exactly that. I thought you'd appreciate another sovereign nations perspective

Wha . . .? All nations are sovereign. Our nation has levels of sovereignty. The individual being the most sovereign. Well . . . it sort of used to be that way.

Good to agree we don't think polls are necessary on the subject. I think the average person can see the yearly increases in their contributions to coverage and reductions in services, if they actually have it in the first place.

So far, though the average person bitched about the rising costs, he was able to pay. There certainly have arisen many market options (cadillac plans, cheaper ones, medical savings, catastrophic insurance, etc.) to lower the cost. Wasn't the impetus for the HCB to cover the so-called uninsured. It doesn't, other than fictitious projections which we know are most always over-optimistic, seem to have lowered the price.

I believe the CBO did estimate cost reductions of 7-10% long-term, primarily to Medicare. While perhaps the benefits of tort reform are over-estimated, I think this would be an easy savings. Interstate competition and ending the price fixing on prescription drugs would also help, but good luck getting them passed. Reducing fraud would be a big savings buy might require more government oversight (certainly centralized records) that many oppose.

Yeah, there a lot of "solutions" but Federal mandate is not even legal, never mind more expensive to our debt problem.

The crazy thing is how much more the US spends on health care per person (40% or so?) than other developed nations and how little we're getting for that extra investment. I don't really see how just regulating less will address this issue in a meaningful way. Increasing competition might certainly lower costs but also bears the risk of reducing quality of service below existing standards...and then you're back to more regulation.

Others see how over-regulating was the problem

I've seen proposals that believe that if health care providers were paid on total treatment rather than individual treatments doctors would have an incentive to administer less unnecessary medications and tests.

The bottom line is that more action is needed to continue to reform the system. I'd prefer a combination of the best ideas where complimentary, but the reality is nobody has the perfect solution...at least not that I've seen.

-spence

That "perfect" thing is not resolvable. Market solutions, ugly as they seem to some, work out problems more sustainably than centrally planned economies.

[spence]

Originally Posted by detbuch

Being as how the consumers are the taxpayers, then neither the pre-HCB "system" nor the impending "HCB" system (fixed or not), are a "solution" to costs. At least the pre-HCB system had more of a relation to market forces, and would have even more with less regulation.

We let Pharma companies charge what ever they want for patentable drugs without any negotiation.

Not my idea of market forces at work...

Before medicare health costs were much lower.

Over simplification. I could see medicare raising some costs as it put more people into the health care system. And unlike many industries, health care is still pretty manual and doesn't scale well.

But there are a lot of other reasons costs have increased. A big one is the proliferation of advanced (i.e. expensive) technologies that are now standard and expected. I'd also think that we treat so much more than we did 50 years ago...ailments and diseases that simply weren't diagnosed previously.

Wha . . .? All nations are sovereign. Our nation has levels of sovereignty. The individual being the most sovereign. Well . . . it sort of used to be that way.

Joke. Although I do like the perspective of the Economist. Usually pretty smart.

So far, though the average person bitched about the rising costs, he was able to pay. There certainly have arisen many market options (cadillac plans, cheaper ones, medical savings, catastrophic insurance, etc.) to lower the cost. Wasn't the impetus for the HCB to cover the so-called uninsured. It doesn't, other than fictitious projections which we know are most always over-optimistic, seem to have lowered the price.

Being able to pay doesn't mean it's painless. I remember when my first son was born in 2003 my out of pocket was maybe a few hundred bucks. Fast forward to 2010 and my second son cost easily 10X that out of pocket. Same company and relatively the same plan. While I'm fortunately "able to pay" that few thousand bucks would put a damper on a lot of families budgets.

Yeah, there a lot of "solutions" but Federal mandate is not even legal, never mind more expensive to our debt problem.

I'll let the SCOTUS decide on legality...

Others see how over-regulating was the problem

Like I mentioned above, there are a lot of problems.

Another big one is simply how the system works, where people never really see the cost as it's passed to an insurance company and then you see only your part weeks after. People don't even question the costs they're being charged.

I switched to an HSA this year and it's making me much more aware of what's actually being billed. If the tax exemption will really save any money remains to be seen, the shyte is so complicated I can barely figure out what's going on.

That "perfect" thing is not resolvable. Market solutions, ugly as they seem to some, work out problems more sustainably than centrally planned economies.

I think market solutions are more desirable but are also easily corrupted and can be self consuming when not monitored.

Health care is somewhat unique in that most everybody needs it, we have a very complex system to deliver it, the massive size of the industry attracts a lot of R&D, hospitals are obligated to dispense some of it and most of the system is for profit.

The consumer is in essence quite detached from the market in many ways. If a market solution is the answer, perhaps that's really the root of the problem.

-spence

[detbuch]

Originally Posted by spence

We let Pharma companies charge what ever they want for patentable drugs without any negotiation.

Not my idea of market forces at work...

Free market does allow big pharma to charge whatever they want--usually what it thinks the market will bare. Charging more diminishes sales. The negotiation in a free market is between seller and buyer, usually expressed as sale or no sale. The reason big pharma can charge "whatever they want" is because of the controlled market regulated by the "negotiation" between it and the Government (FDA), which precludes competition from smaller companies and entrepeneurs due to the high price and length of time required by the regulations, and due as well to the cozy collusion between the FDA and pharma.

Over simplification. I could see medicare raising some costs as it put more people into the health care system. And unlike many industries, health care is still pretty manual and doesn't scale well.

Usually, volume permits price to drop. Unlike many industries, health care payment has been put in the hands of third party payers, medicare being one, and the third parties have deeper pockets than most individuals, medicare's being the deepest, which allows higher prices by the sellers (doctors, hospitals, etc.)

But there are a lot of other reasons costs have increased. A big one is the proliferation of advanced (i.e. expensive) technologies that are now standard and expected. I'd also think that we treat so much more than we did 50 years ago...ailments and diseases that simply weren't diagnosed previously.

Again, because of wealthier third party payers, the health industry can pay more for technologies (similar to how government is ripped off as it pays for its technology when buying for "the people"--especially the military). In those industries that have to sell directly to individual buyers their costs, including technology, is lower.

Joke. Although I do like the perspective of the Economist. Usually pretty smart.

OK. Smart, unfortunately, doesn't always equate with right.

Being able to pay doesn't mean it's painless. I remember when my first son was born in 2003 my out of pocket was maybe a few hundred bucks. Fast forward to 2010 and my second son cost easily 10X that out of pocket. Same company and relatively the same plan. While I'm fortunately "able to pay" that few thousand bucks would put a damper on a lot of families budgets.

Please don't tell me that you believe it's the governments responsibility to make our life painless. And if your paying an insurance company to do likewise, then it better come across or you should drop it. At least in a free market you are allowed to drop it. But when government mandates, you have no choice. Suffer the pain and rejoice.

I'll let the SCOTUS decide on legality...

So you have no opinions on Constitutionality? You just blindly accept SCOTUS opinion as infallible? You don't see the obvious mis"interpretation" of the Commerce Clause that presumably gives Congress the power to tell you that you cannot grow your own vegetable garden because if everyone did, in the aggregate it would affect the price of food and destroy or distort the commercial market? You cannot see the obvious fallacy of using the General Welfare clause to give Congress the power to give succor to a select few to be paid for by others when "general" refers to all, equally, and in the construction and syntax of the Constitution the clause refers to general welfare (welfare of ALL in the same manner) as given through its enumerated powers not in any way it chooses, else it would have greater, if not exclusive, power to attend to your welfare than you would have yourself? You do not plainly see that the Necessary and Proper Clause refers to the "foregoing powers" (the enumerated powers) not any power Congress chooses to impose? The Constitution is not that long and difficult, and was meant to be understood by all, not just a select few lawyers and judges. The SCOTUS was meant to interpret whether Congress acted within its powers, not to interpret what the Constitution meant, and to apply the Constitution as written, not to apply it as the judges think would be more "responsible." The individual is supreme in our system, and as such is as much responsible to be involved with governing as are all the "servants." When the citizens "let" judges or politicians act according to their view of "responsible," and don't voice objection when they see bad judgement, they give their Constitutional power of self governing over to those servants and deserve the tyranny they allow.

Like I mentioned above, there are a lot of problems.

Another big one is simply how the system works, where people never really see the cost as it's passed to an insurance company and then you see only your part weeks after. People don't even question the costs they're being charged.

That is the nature of third party pay, whether it's private or government. And we should question both. Just as we should absolutely question our judges bad decisions. It's our money and our freedom that's at stake.

I switched to an HSA this year and it's making me much more aware of what's actually being billed. If the tax exemption will really save any money remains to be seen, the shyte is so complicated I can barely figure out what's going on.

Yes, and as regulations need to be reformed, new regulations pile on old ones and the complexity and lack of transparence becomes greater. That is the nature of law. The more detailed your regulation, the more parties, points of view and opinion are involved, the more it requires finer and more complex points of law. The Ten Commandments just wont do.

I think market solutions are more desirable but are also easily corrupted and can be self consuming when not monitored.

Government is also easily corrupted. And the corruption of Central government reaches farther than most other corruptions.
And who or what is the monitor? And who monitors the monitor? In a free market, there is a, granted loose, self regulation. This can be enhanced by limited governance that is a result of consent of the people on local levels. But Central power over a large diverse market tends to create static, unevolving markets--not only stagnant, often imploding, but, in our case, UNCONSTITUTIONAL.

Health care is somewhat unique in that most everybody needs it, we have a very complex system to deliver it, the massive size of the industry attracts a lot of R&D, hospitals are obligated to dispense some of it and most of the system is for profit.

The consumer is in essence quite detached from the market in many ways. If a market solution is the answer, perhaps that's really the root of the problem.

-spence

Most everybody needs food, and shelter, and energy. And we have a very complex system to deliver them. When the cost of delivery is paid for by the individual buyer, it seems the price is generally lower than when a richer third party, especially the government, pays for it.

[scottw]

this is great...James Madison vs. Mao

[justplugit]

Originally Posted by spence

We let Pharma companies charge what ever they want for patentable drugs without any negotiation.



-spence

Spence, are you for price control???

You are wrong about negotiations, every hospital in the country, community,
county, state and fed has a formulary and belongs to a buying group who put out bids for all compatiable drugs.

As for the price of exclusive drugs, their price is not set on the active
ingredients but on all the costs from finding a compound to bringing it
to market. It costs many millions of dollars to find a compound, test it,
do clinical trials under FDA regulations and getting approval takes years
under stringent government regulations.

Drugs represent 10.5 cents of medical costs and saves millions in
keeping patients out of hospitals. Diseases like pneumoniae, heart failure,
diabetes, depression etc. can now be treated at home.

Pharma is a big political football because people don't want to be sick and
have to pay for it. Of course they won't think twice about buying a six pack,
$5 a day cigs or a bottle of Jim Bean but moan about paying $5 a day
for a drug that gives them quality of life, keeps them out of the hospital
and prolongs their life. Politicians know it and slam Pharma knowing they can
make points because it is popular to do so by the folks.

[spence]

Originally Posted by justplugit

Spence, are you for price control???

You are wrong about negotiations, every hospital in the country, community,
county, state and fed has a formulary and belongs to a buying group who put out bids for all compatiable drugs.

As for the price of exclusive drugs, their price is not set on the active
ingredients but on all the costs from finding a compound to bringing it
to market. It costs many millions of dollars to find a compound, test it,
do clinical trials under FDA regulations and getting approval takes years
under stringent government regulations.

Drugs represent 10.5 cents of medical costs and saves millions in
keeping patients out of hospitals. Diseases like pneumoniae, heart failure,
diabetes, depression etc. can now be treated at home.

Pharma is a big political football because people don't want to be sick and
have to pay for it. Of course they won't think twice about buying a six pack,
$5 a day cigs or a bottle of Jim Bean but moan about paying $5 a day
for a drug that gives them quality of life, keeps them out of the hospital
and prolongs their life. Politicians know it and slam Pharma knowing they can
make points because it is popular to do so by the folks.

I'm well aware of the business process regarding FDA regulated product development.

Here's the issue. There's competition for drug prices inside the US but the development is done for a global market. All that R&D funding to create the next category killer drug is being subsidized by US consumers because drugs are sold at lower costs (often via price controls) in pretty much every other nation. There really isn't a lot of real negotiation. This is government regulation that the industry is highly dependent on.

Hence my comment being in context of "market forces".

-spence

[justplugit]

Originally Posted by spence

All that R&D funding to create the next category killer drug is being subsidized by US consumers because drugs are sold at lower costs (often via price controls) in pretty much every other nation.

-spence

So as per my first question you are for price control ?

[spence]

Originally Posted by justplugit

So as per my first question you are for price control ?

I don't think the government should set prices arbitrarily but can see scenarios where regulations impacting price could be justified.

Take Canada for instance, they have price controls and as a result cheaper drugs. They also have a government system that provides healthcare for everyone, which creates almost a guaranteed customer base. So in this case the price control is balanced (to some degree) with a sure customer. Without price controls they'd risk having to ration some drugs if the manufactures decided to price them above value.

The drug companies don't have to sell to Canada, but they do anyway because the incremental production cost of the drugs is usually small compared to the development, approval and tooling processes...not to mention the tens of billions of dollars it takes to scare us all into demanding drugs for ailments we didn't even know we had.

So price controls in Canada seem to be a win/win for both the consumer and industry, but if you applied the same policy here you'd kill (or perhaps injure) the golden goose.

There is government regulation that helps pharmaceutical companies maintain higher prices across a very large market as well as regulation to ensure quality and safety which adds cost.

I don't think the pharma companies are bad, but when you do hear stories about Americans unable to afford some drugs here that are available across the border 10X cheaper it raises some questions. The pharmaceutical industry is one of the most profitable in the world. Regardless of what happens I'm sure they'll find a way to make a buck.

-spence

[justplugit]

[QUOTE=spence;889454]I don't think the government should set prices arbitrarily but can see scenarios where regulations impacting price could be justified.

Take Canada for instance, they have price controls and as a result cheaper drugs. They also have a government system that provides healthcare for everyone, which creates almost a guaranteed customer base. So in this case the price control is balanced (to some degree) with a sure customer. Without price controls they'd risk having to ration some drugs if the manufactures decided to price them above value.
_[QUOTE]

Spence, I would love to see Canada's national formulary. Guarantee it is limited
to one drug per class which means you won't have a choice when it comes
to efficacy or side effect profile. For instance there are many statin drugs
on the market for lowering cholesterol. They are all variations of statins
but each works a little differently. When there is only one,that will be based on the cheapest, and you can't tolerate it or it's not efficacious for you, too bad.
That is One of the biggest problems with government health care, no choice AND
mediocore medicine.

Rationing drugs based on age becomes another problem as expensive chemo
drugs etc. will be too costly to add another 5 years to say maybe a 75 yr old.

Good point on killing the Golden Goose. It is already happening. Companies
will not go out on a limb in R+D if they find a compound that has a limited
use. For instance, Amphotericin B was developed years ago to treat fatal
San Juakien (sp?) Valley ,a disease limited to the valley. They won't
be willing to spend millions and years of development when there will be
no return on investment. They will stay with the large markets for cardiovasculars
and anti effectives.

Same old story, you get what you pay for.

[detbuch]

Originally Posted by spence

I'm well aware of the business process regarding FDA regulated product development.

Here's the issue. There's competition for drug prices inside the US but the development is done for a global market. All that R&D funding to create the next category killer drug is being subsidized by US consumers because drugs are sold at lower costs (often via price controls) in pretty much every other nation. There really isn't a lot of real negotiation. This is government regulation that the industry is highly dependent on.

Hence my comment being in context of "market forces".

-spence

When you said that pharma charging "what ever they want" without any negotiation is not yoiur "idea of market forces at work . . ." it seemed on the one hand a contradiction since market forces do not negate charging what you desire so long as the buyer needs your product and is willing and able to pay your price. But pharma's prices are obviously not a result of market forces, so your comment was gratuitus.

Perhaps you are mixing market "forces" with market "economy"? Market "forces" are thos economic factors strictly peculiar to the market without government input, such as supply and demand. Market "economies" are largely driven by market "forces" but may have varying degrees of government intervention. As government control becomes greater, it becomes a mixed economy, and if that control is great or absolute, it is a centrally planned economy where market "forces" play little or no part.

As far as pharma's prices go, they seem to be a product not of market forces, but of more centrally planned forces--both in the U.S. and abroad.

In a "free" market, driven basically by market forces with little to no government intervention, prices would have to go down in the U.S. and up abroad. This would be so even with basic safety regulations, not with the super cautious, draconian ones of present which have massively ballooned since the thalidomide scandal of 1961-62 and have created a cozy, corrupt partnership between pharma and the FDA at the expense of free market competition and "affordable" drugs.

[spence]

Originally Posted by detbuch

When you said that pharma charging "what ever they want" without any negotiation is not yoiur "idea of market forces at work . . ." it seemed on the one hand a contradiction since market forces do not negate charging what you desire so long as the buyer needs your product and is willing and able to pay your price. But pharma's prices are obviously not a result of market forces, so your comment was gratuitus.

Perhaps you are mixing market "forces" with market "economy"? Market "forces" are thos economic factors strictly peculiar to the market without government input, such as supply and demand. Market "economies" are largely driven by market "forces" but may have varying degrees of government intervention. As government control becomes greater, it becomes a mixed economy, and if that control is great or absolute, it is a centrally planned economy where market "forces" play little or no part.

I'd think that government influence (here and abroad) as part of a free market economy would have a large impact on both supply and demand.

As far as pharma's prices go, they seem to be a product not of market forces, but of more centrally planned forces--both in the U.S. and abroad.

In a "free" market, driven basically by market forces with little to no government intervention, prices would have to go down in the U.S. and up abroad.

Today we have regulation that impacts both profit and loss, take away it all away and the results would be unpredictable. Perhaps lower prices from competition but also increased costs if quality standards are not maintained. Undoing a heavily regulated industry is a lot different than pretending it never existed in the first place.

This would be so even with basic safety regulations, not with the super cautious, draconian ones of present which have massively ballooned since the thalidomide scandal of 1961-62 and have created a cozy, corrupt partnership between pharma and the FDA at the expense of free market competition and "affordable" drugs.

I wouldn't say that proving a drug is safe and effective, or that it actually does what you claim it does...is "draconian". This relationship must be pretty unbearable what with all the private sector profit it creates.

-spence

[detbuch]

Originally Posted by spence

I'd think that government influence (here and abroad) as part of a free market economy would have a large impact on both supply and demand.

You're creating a different context here. The original context was pharma charging whatever it wants not being your idea of market "forces." Government influence does not play a part in the traditional usage of the term "market forces". Now your also being loose with "free market." If government regulation on a market is LARGE, it is not, strictly, a "free" market, but a controlled market in either a mixed economy or a centrally planned economy. Hence, your unnecessary remark about pharma's pricing not being your idea of market forces at work. Of course, THEIR PRICING IS NOT A RESULT OF MARKET FORCES, BUT A RESULT GOVERNMENT REGULATION, that is, a result of central planning.

Today we have regulation that impacts both profit and loss, take away it all away and the results would be unpredictable. Perhaps lower prices from competition but also increased costs if quality standards are not maintained. Undoing a heavily regulated industry is a lot different than pretending it never existed in the first place.

The results can be fairly predictable if done right. The result of current conditions is obviously unsustainable. Safe quality standards can be maintained with far less government regulation and, thus, at far less cost, by allowing good manufacturing practice (GMP) certified facilities to produce generic drugs with a warning label that they are not produced under the same standards required for FDA approved generic drugs, etc. This would also help to eliminate the big problem of drug counterfeiting that exists now since it would not be as profitable to produce fakes of cheaper drugs. And it would help to reduce the problem of defective generic drugs produced in China or India. Another way to lower costs is not to ban all other forms of a drug that is granted orphan drug status. These drugs are for rare diseases, and not profitable to produce unless exorbitant prices can be charged.

I wouldn't say that proving a drug is safe and effective, or that it actually does what you claim it does...is "draconian". This relationship must be pretty unbearable what with all the private sector profit it creates.

-spence

When regulation is so expensive that it can bankrupt a country, I would say that it is draconian. Medicare has an unfunded liability of $24.6 trillion (downgraded from $37 trillion in 2009 by fictitious "assumptions" to hide the true liability). That's just Medicare. Not Social Security, the national debt, the military, etc., just Medicare. Subsidizing drugs are a major portion of that liability. And, as you have implied several times, the "relationship" (between the government and pharma) is what sustains the profits that bother you.