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| Issue #5, November 30, 2005 |
Study: Medicare Rx Program Creates Constant Threat of Price Controls
The coming Medicare prescription drug program has set a dangerous trap, warns a Cato Institute study released today. The enormous tax burden required to fund that program will forever pressure politicians to impose price controls on prescription drugs. The only way to avoid that trap is to repeal the program.
In “Avoiding Medicare’s Pharmaceutical Trap,” Cato senior fellow Doug Bandow writes: “Existing federal price controls have already cost Americans an estimated 140 million life-years. . . . Applying these controls to Medicare purchasing would eliminate approximately 40 percent of all future pharmaceutical R&D and cost another 277 million life-years.”
According to Bandow, “That’ s like saying that everyone currently under age 65 should die one year sooner so seniors can save some money on their drug bills.”
Healthy Competition Now #1
After a successful book forum at the Cato Institute this week, Healthy Competition: What’ s Holding Back Health Care and How to Free It has climbed to the #1 best-selling book on Amazon.com (in the category of books about health insurance).
Raytheon Drops Retiree Rx Coverage in Response to Medicare Program
Add defense contractor Raytheon to the growing list of corporations that are dropping retiree drug coverage in response to the Medicare prescription drug program. The Massachusetts-based firm expects to save $170 million after subsidizing some of its retirees’ out-of-pocket drug expenses.
“There’s a reduction in the cost because somebody else is paying for the drug benefits,” a company spokesman told the Boston Globe. “Not the retirees, and not Raytheon.”
Massachusetts secretary of state William F. Galvin commented: “Is this whole program about enabling companies to reduce costs, or is it about providing drug relief to people? If it’s the government’s policy to encourage employers to ditch coverage, it’s not what we had in mind.”
Regulation Thwarting Dissemination of High-Quality Care
Research suggests that many Americans do not receive the highest-quality health care available. Entrepreneurs are working to fix that via services like e-Cleveland Clinic and Partners HealthCare Telemedicine, which provide online second opinions from leading specialists at the nation’ s most prominent hospitals and medical schools.
But e-Cleveland Clinic is prohibited from providing such consultations in Georgia, Kentucky, Louisiana, Nevada, North Dakota, South Dakota, Oklahoma, Wyoming, and D.C. Partners HealthCare Telemedicine is prohibited from consulting with patients in Iowa, South Carolina, Louisiana, Tennessee, and Oregon.
Why? According to American Telemedicine Association executive director Jonathan Linkous, such laws amount to trade barriers: “It is an anti-consumer law done to protect the health care provider. . . . It’s wrong.”
In Healthy Competition, Cato Institute scholars Michael F. Cannon and Michael D. Tanner echo the recommendations of the American Telemedicine Association and the Federal Trade Commission that states should reduce barriers to telemedicine and allow competition to improve health care quality while reducing costs.
Recent Cato Institute Events & Media Appearances
The Great Depression, Will Wilkinson, November 27, 2005.
The State Healthcare Debate, feat. Michael F. Cannon, NPR's On Point, November 18, 2005.
Medicare's Muddled Meddling, Alan Reynolds, Townhall.com, November 19, 2005.
Eight Reasons to Delay the Imprudent Drug Program, Michael F. Cannon, The Hill, November 9, 2005.
Medicare Drug Plan: Repeal or Join?, Michael F. Cannon, Detroit Free Press, November 7, 2005.
Out With the HSAs?, Michael F. Cannon, Nationalreview.com, October 31, 2005.
Healthy Competition is a periodic newsletter produced by the Cato Institute. It features news and commentary on current health policy issues from a free-market perspective. If you wish to subscribe to this free weekly newsletter, update your address, or be removed from our list, please click here and follow the instructions.