CASE Report: More Regulation Will Increase Healthcare Costs for Consumers
Americans have diverse opinions on what the federal government’s role in the healthcare sector should be, but almost everyone agrees that rising healthcare costs are unsustainable for both consumers and the government.
Unfortunately, too many voices, particularly from the left, champion polices that would reduce choice for consumers, risk patient safety and limit access to lifesaving prescription drugs. Last week, the National Academy of Sciences (NAS) published a report entitled Making Medicines Affordable: A National Imperative, which threatens to do all three.
NAS is right, ensuring that Americans have access to affordable medicines is vital. Unfortunately, the report could have been written by socialist Bernie Sanders. It recommends a number of bad ideas that would require more government regulation and intervention in almost every segment of the health care market.
NAS’s recommendation that the government interfere in private Medicare Part D negotiations is particularly egregious. NAS believes that government negotiations would lower drugs costs, but the Congressional Budget Office found the opposite to be true. Part D has successfully kept drug prices affordable because it is structured to foster competition between plans and providers, allowing market competition to bring costs down for consumers.
In fact, the CBO found that Part D costs are almost $350 billion less than the initial 10-year estimate, almost unheard of for a government program. Government negotiations would create artificial floors and ceilings in this market, driving costs up rather than allowing insurers, manufacturers and other parties to compete for business.
It’s also puzzling that NAS recommends importing pharmaceuticals from foreign countries. The World Health Organization released a study in November that found that upwards of 10 percent of pharmaceuticals in developing nations are substandard or falsified, meaning fake. Importing drugs just doesn’t make sense. Many of the drugs purchased from Canada actually come from China and Pakistan, countries with drastically inferior testing and regulatory standards. Recommending drug importation is simply irresponsible.
NAS recommendations would also likely lead to the creation of a closed formulary, where only specific drugs in each class would be covered by plans. The study cites Massachusetts’s recently requested Medicaid waiver as an example of what a closed formulary might look like, but the Massachusetts waiver would allow plans to cover as few as one drug per therapeutic class, meaning patients may soon be left with few options and significantly decreased access to prescription medications.
Finally, NAS recommends increasing government intervention between you and your doctor by imposing loosely defined “quality” standards that would tell doctors what treatments they are allowed to consider prescribing their patients. Drugs work differently for each patient, so doctors and patients need access to many drugs in order to find the one that works for each individual.
Limiting what treatments doctors are allowed to consider is unethical; the government should not be in the business of restricting access to care. NAS’s proposal is a dangerous step toward the rationed care that Bernie Sanders wants to impose on the American people.
Reducing healthcare costs the right way isn’t easy. If it were, it would have been done already. But just because fixing our healthcare system is hard doesn’t mean we should resort to rationing care, allowing government to further interfere in markets or to import risky drugs from foreign countries. Simply put, the recommendations in the National Academy of Sciences Making Medicines Affordable: A National Imperative must be rejected.