HELTHКAЯE ЯEFORM (Part 1)

While going over the numbers I discovered that this blog received its longest-distance hit last week: Moscow, and I’m not talking about Kansas. So I asked myself, “Who was in Moscow last week?” Coupling this with the several hits I have gotten from Washington, DC, and a complete absence of scientific inquiry, I am left with just one conclusion: Barak Hussein Obama reads this blog. With that kind of attention how can I not address Helthkare Яeform?

I’m going to jump right in and explain how the healthcare reform is structured. I know what you’re thinking: But there are already problems with the proposals, and it seems there is no way it will even pass. True, there is a good chance that the current proposals will not pass, but you must realize that the ball has begun rolling. Healthcare reform will come; today, tomorrow, several years from now… no matter. And there are elements being bandied about today that will be a part of it. So let’s take a look at the basic structure.

Democrats, gladhanders, socialists, bleeding hearts, and lawyers want every single individual in this country to have healthcare coverage. The only way to realise this is to demand it through governmental policy. This policy will require every person/family in the country have health insurance. Of course, many won’t be able to afford it so the government will offer “affordable health insurance.” In the event this coverage is refused fines and penalties will be levied. There you have it. Poof! Everyone’s insured. There is no more illness. We all live forever.

I know what you’re thinking: What about paying for this affordable health insurance the government is going to provide? Yeah, that’s a tricky bit. Congress knows it, too. And why shouldn’t they? Just look at the bang up job they’ve done with Medicare and Social Security. How on earth could they promise to provide even more coverage? I suspect that ultimately these insurance policies will be “offered” through various private insurance companies. I say “offered” because it won’t be voluntary on the part of the insurance companies – it will be required.

Governments already do this in states that require auto insurance. Let me explain. You see, there is such a thing as too many DUIs or accidents in the private sector, if not in Congress. At some point a driver becomes uninsurable. But in some states insurance companies (based upon a rotation) are forced to provide the minimal coverage. Of course, this comes at a premium, because driving an auto is optional. But living isn’t.

If the government is going to require insurance companies to “offer” affordable health insurance, it will have to make the coverage affordable for the insurance companies themselves. If the companies are limited in the premiums they can charge individuals for such policies (it’s hard to bill poor people for something they already can’t afford, unless you’re Walmart), the government will have to take a multi-pronged approach to lowering the effective costs of those policies. Let’s examine some of those prongs.

PRESCRIPTION: Cheaper Drugs

First, the government can try to lower the cost of prescription drugs. Now, as we all know, prescription drugs – especially new, and thus, exclusive drugs – are extremely expensive. And it takes a whole lot of them to survive previously fatal conditions such as heart disease, cancer, erectile dysfunction, and old age to name a few. In order to lower these costs the government will have to get the drug companies to lower their prices. This is not easy.

Pharmaceutical companies spend billions and billions of dollars every year developing new drugs. In the end most of the drugs that hit the market (the ones that aren’t dropped before the very expensive R&D is even completed) are financial losers. Patents and exclusivity rights help offset these expenses and provide a much-deserved profit. Capitalists will see the complications with the government stepping in and demanding that prices be reduced. But the government already has.

Pharmaceutical companies currently give the government discounts. Medicare, Medicaid, and vaccination inventories are already supplied at steep discounts. (How would one refuse a regulatory body a requested price reduction?) So, if this is true, why are the drug makers already lining up with Washington and agreeing to “forego” much of their profits, around $50 billion over the next ten years in the current proposals? There are two answers to this question and I will provide an example for each.

Think back when you were young enough to “get in trouble” for breaking a rule, like staying out too late on your bike or burning down the neighbor’s cat. At some point an adult – could be a parent, a Sunday school teacher, or social worker – tried to bring you into the fold of responsibility by asking you what your punishment should be. Remember that? It was great! You’d assume a look of deep and serious introspection, let out a long and resolute sigh, and name the lamest punishment this side of Baretta. The drug industry knows how important it is to have input on one’s own punishment, so they are participating. Why not give up some “profit” over ten years if you can continue to enjoy exclusivity rights? Why not indeed.

Just like everything else in DC, there’s more to it than that. Let’s say, for example, your alcoholic uncle drove off a bridge, injuring himself and killing his young female passenger. He is prescribed medication for the pain. Sometime later you discover his abandoned OxyContin bottle in the trashcan next to his liquor cabinet. Now, if you were going to sell this on the street would you want the refill quantity to read 1 or 50? Fifty, of course. Again, the drug industry is counting on the fact that although they may have to reduce their prices for those with “affordable health insurance policies,” there will be more potential addicts- uh, I mean patients lining up for their prescriptions. Volume, baby, is not just for Vidal Sassoon.

So, Uncle Sam has the drug industry pulled into the game. And while $50 billion is a lot of money, it isn’t quite enough to offset the estimated $1 trillion cost of healthcare reform. In the next installment we’ll look at how the medical industry will have the glorious opportunity to contribute to the healthfare of their American Comrades.