Asymmetrical Information

So that is why Senator Kennedy (Democrat-party of the rich and powerful) threatened to filibuster the drug plan if it was means-tested.

It made no sense to me why he would do that but now I understand-he is just paying back his rich and powerful friends.

I hope the Republicans (party of the little guy) have the guts to continue their fight for a means-tested drug plan. After all 80% of the seniors have no problem paying their private drug insurance premiums now.

I much prefer what Maine or Washington State did. I don't understand why this has to be a federal issue. Big Gov't shouldn't be handling this at all. Of course it's going to be terribly expensive, and not worth the cost to us. But hey, Bush doesn't want to be the guy who promised perscription drugs to seniors and then not deliver.

And let's not blame any one party for the mess, this is bipartisan stupidity.

What Maine did may well put the pharmaceutical industry out of business.

Actually, no, it won't. The Pharmacedical Industry makes a huge profit. Far more than most industries and that's after you deduct spending for R&D. One of my close friends is an IP guy at a LARGE drug co., and while he would never say it in public, he has told me the pharmacedical companies will be just fine even with Maine's new laws.

The real problem the drug companies foresee, the one that give them chills, (and it should) is if every state adopts the same policy as Maine, then the government, as a whole, will be buying about a 52% share of the market. Therefore the government could be able to set the price (sort of a reverse monopoly). Then the Drug Companies could go out of business. Or, more likely, they could pass the costs on to you and me as non-medicare/non-medicaid purchasers of drugs, or they could just stop all R&D. It is not likely that they will just take their ball and go home.

I actually like Washington's plan better. Drug companies don't like that plan either because it encourages doctors to perscribe Ibuprofen even if Vioxx will work slightly better (using a cost benefit analysis). It's an interesting idea, certainly better that the horrendous programs currently being thrown around in DC.

I really understand the economic point of view to all of this, and from an IP standpoint, I sypathize with the drug companies, they have a limited window in which to recoup their costs for all R&D, which is why something like Viagra costs $10 per pill, but I also understand the implications of having the elderly receive, say $1,200 a month in fixed income and then have to pay $800 of that in perscriptions to keep themselves from ending up in a hospital. I mean, if they are using medicare then the cost of the hospital stay for one day is more expensive to me, as a tax payer, than one month worth of drugs.

This is a much more complex issue than just "the program in Maine will bankcrupt the pharm industry." The real problem is there is no easy solution. Although I'd love to hear suggestions for reasonable ones.

Am I right in that I am arguing that the Fed Gov't has gone beyond it's authority (even though I'm a liberal) and that you are arguing that the federal government should take more control (even though you are a conservative)?

Next I'll see Spock with a Go-tee. I think I need to lie down.

I'm not arguing that the federal government should do anything -- I'm just arguing that Maine shouldn't have done what it did, either.

"Or, more likely, they could pass the costs on to you and me as non-medicare/non-medicaid purchasers of drugs, or they could just stop all R&D. It is not likely that they will just take their ball and go home."

Stopping all R&D sounds like a fair approximation of taking one's ball and going home. Anyone who thinks that would be an acceptable outcome is free to drive their Model A over to their physician's office to get a mustard-pack the next time they catch pneumonia.

What amazes me about these entitlements is that if enough politicians talk about it, it becomes a god-given right of the American people. We stop saying "should we" and start saying "how can we."

Here we arguing which goverment control of prescription drugs is better, Maine's or Washington's. And we start arguing over how much profit a company should be allowed to make.

Amazing. I need Dick Gephardt, Tom Daschle, and unfortunately, George W. Bush (George, you forgot your principals!) to start talking about how we really need to provide aid to people named Bob.

It's getting harder and harder for Bob's across America to get by on their fixed incomes. (I'm salaried) Is it right for all of these companies to make so much money off of hardworking Bobs in this country?

Bucks for Bobs, I say!

Pretty soon, they'll be arguing about who can propose more money for ME!

Ridiculous.

Bob

One problem with govt is that I can't short the stock.

Actually stock shorting isn't quite what I'd like to do. I'd like to make loss-limited bets that a given company, or govt program, will turn out to be a disaster in say, 5 years.

BTW - Why is Ms. Galt so certain that it's an unintended consequence?

But Andy, do you think any of us wouldn't make that bet? It would have to be more like a football pool, "When do you think X government program will be an acknowledge failure and how much money will it have to cost them before that happens." We could all put our 5 dollars down and the winner will be a millioniare!

Jane,

So the fight is that the government shouldn't have a role in healthcare at all. We shouldn't provide free shots to kids whose parents can't afford it (not my problem), we shouldn't allow someone who can't afford it to go to the hospital (again, not my problem). We shouldn't give grandma her fosomax so she doesn't break a hip and have to live in a hospital/assisted living facility that she can't pay for anyway. We can stick our head in the sand and say this is the way we should do things, but very few of us want kids dying from the mumps, adults not admitted to the hospital after a stroke or grandma to dye because she broke her hip and can't get up to feed herself anymore. So now we come to the crux of the problem. What do we do?

The expense of drugs for the elderly has become a big enough problem so that it is no longer cost effective to ignore it, so we need to come up with a solution. Both Maine and Washington have come up with solutions. Regardless of what you think of them, they are trying, and they are certainly better than the complex systems the federal government's coming up with (which I think we're all agreeing will fail).

So what should be done?

Kate :So the fight is that the government shouldn't have a role in healthcare at all. We shouldn't provide free shots to kids whose parents can't afford it (not my problem),

Exactly. We shouldn't force people to pay for someone else's health care. It's not a complicated philosophy.

Why is it that we have to deal with pot shots about poor single mothers who can't help out their children, when we are talking about Medicare? I would love to be behind a good anti-poverty program which helps poor single mothers get their children immunized. The fact that these programs already exist outside of of Medicare is just accounted for in Kate's post. Why should we be subsidizing drug care based on age instead of wealth?

Also: "The expense of drugs for the elderly has become a big enough problem so that it is no longer cost effective to ignore it, so we need to come up with a solution." What would you say if the proposed solution were that seniors couldn't get drugs due to shortages? Shortages are the one thing that price controls are good at creating, so in fact you are proposing such a solution. What if the solution were that new drugs were discovered at a much reduced rate? Would the downward price pressure on current drugs which is created by the existance of new and better drugs be worth destroying for a low price on a static number of drugs?

Sebastian,

1) As I think I made clear in my post, I was talking about where we draw the line between funding and not funding. Bob Dobalina says we shouldn't fund anyone and that's fine. I admire his resolve. I'm not taking pot shots at poor single mothers, I am pointing out the reality of a situation, saying we WANT kids imunized, we WANT people to get proper medical treatments when they have a serious illness, we WANT old people to live healthier and better lives...oh, and not cost us lots in hospital bills when a pill would save them the pain and expense. Right?

2) So if we would LIKE all that (not that we owe anyone anything, but for the greater good of society as a whole...) then we have to be willing to give up some things for it. I acknowledge the problem is that we have to make sure the drug companies make enough money so that R&D is profitable for them. We need to make sure patent laws don't become too week for them or the period too short so that they may not only recoup their costs, but the costs of the 20 other drugs that did not make it to market. But it doesn't mean that some changes in the system shouldn't take place, and it doesn't mean that discussions about the problem can't happen.

3) Let me point out that most elderly can't get health insurance. It's amazing how quickly the financial fortunes of people can be ruined if they get cancer and don't have health insurance. A large majority of the people in this country would have to declare bankcrupsy in order to protect themselves from the hospitals trying to collect on the bills. And if you only covered the poor, can you imagine the outcry "I'm rich and/or managed to get my own health insurance through my retirement plan...why should I have to pay for poor people?" At least if everyone is included then everyone gets the same benefit in Medicare.

4) And of course the drug cos. are against it, they have a pretty good deal right now and they certainly don't want to change it. I sypathize with their situation. I'm not the kind of person who doesn't see where they are coming from and I believe they have every right to make a profit. But every time any change to the system is made, they claim the sky is falling...and then it doesn't. I think I would have less trouble believing them if they came up with thier own compromise. If Eli Lilly said "20% off to anyone over 65 without a perscription plan." then at least they understand the problem and are willing to help allieviate it. But they aren't willing to do that and now the government has gotten involved.

I would rather the government (State and Federal) stay out of the problem, but there became enough pressure so they couldn't. So now what? I ask for the third time...instead of trying to bash my logic...How would you suggest we fix the problem?

If I remember the figures correctly, Medicare ended up costing 9 to 13 times what was projected, 30 years out.

So let's go not-at-all-far-out on a limb, and predict the prescription drug benefit will cost an order of magnitude more than Bush claims.

Kate,
As an example of programs that don't work, the government paying for immunizations for children of poor people doesn't result in significantly more immunizations than without such a program. This means to me that the problem lies elsewhere than with the cost to the poor parent. The causes of the problem should be identified and then, and only then, should a government program be fashioned to solve the problem. Like many other so called conservatives, I don't have objections to many governmental functions (such as public health), but I have vehement objections to programs that don't work or consist solely of throwing money at a problem.

Which this proposed prescription drug benefit appears to be doing--what is wrong with means testing this program? Shouldn't people who can afford it pay for their own medicines instead of society at large footing the bill?

"We can stick our head in the sand and say this is the way we should do things, but very few of us want kids dying from the mumps, adults not admitted to the hospital after a stroke or grandma to dye because she broke her hip and can't get up to feed herself anymore. So now we come to the crux of the problem. What do we do? "

No, we don't want any of those things. Unfortunately, grandmas keep dying by the truckloads for the very simple reasons that their bodies fall apart before their very eyes, and no one yet knows what to do about it.

The only thing that will save our grandmas (and, in the not-too-distant future, ourselves!) is medical research, more medical research, and yet more medical research, and the best way to ensure that happens is to (1) dangle obscene profits in front of pharmaceutical companies to entice them to spend big bucks coming up with ways to stop people's bodies from falling apart, (2) stop throwing roadblocks between sellers of new drugs and the people that would like to buy them (i.e., abolish the FDA), since each drug that takes off in the marketplace supplies funding and clinical data that is crucial in coming up with the next new treatment.

We are all under sentence of death. Only the medical researchers, and the evil businesses that employ them, can offer us any hope of reprieve. Don't let the government stop them. Your life depends on it.

This sort of thing is making me nostalgic for divided government. It looks like if you want spending and the growth of government under some sort of control, you want a democratic President and a republican Congress.

A republican Congress and President and we get the biggest welfare boondoggle in a generation.

> But Andy, do you think any of us wouldn't make that bet?

If it's generally acknowledged to be a bad idea, why are we doing it?

One of the nice properties of stock shorting is that there are folks on the long side who win if shorters are wrong, and lose if they're right.

One of the important properties of my "short the govt" plan is that losers pay winners, that there'd be a substantial penalty for being wrong. I suspect advocacy would be a bit more restrained if that were the case.

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