In the midst of a bipartisan stampede toward “prescription drug benefits for the elderly,” someone needs to ask the question: Why should seniors be singled out to be subsidized by the taxpayers, except that their votes are being sought by both parties?
We have all heard the terrible stories about people stricken with diseases requiring costly medications that they cannot afford. If we wish to do something to help such people, fine. But let’s help them based on the predicament that they are in, whether they are nineteen or ninety.
Health problems are of course more common among the elderly. But if you know it and I know it, so do others — including insurance companies, who are in the business of selling protection against all sorts of risks. Again, if there are people who cannot afford insurance and we want to help them, then the criterion should be their economic condition, not their age.
The most affluent segment of the American population has consistently been those from middle age on up. Even if people of above-average income and wealth were unable to afford to pay for health insurance or prescription drugs, how could others afford to pay their bills for them?
Arithmetic cannot be evaded by political rhetoric. We do not have any more money collectively than the sum of what we have individually. Even if it were true that we could not afford the kind of medical care we would like individually, then collectively we certainly could not afford that kind of medical care plus the cost of a government bureaucracy to administer it.
But it is not true that most people cannot afford medical care or prescription drugs. Only about one-fourth of the people without medical insurance have incomes below the poverty level. Many who could easily afford insurance prefer buying other things.
The poor are a relatively small problem that can be dealt with at relatively modest costs. But they are a major excuse for spending the taxpayers’ money on people who are not poor and imposing government controls on all of us.
Some politicians say that the government can “bring down the costs” of prescription drugs or of health care in general. But they won’t bring down the costs by one cent. What they can do is impose price controls — and price controls have a centuries-long track record of creating worse problems than they solve.
Rent control has led to housing shortages in Europe, Asia, Australia and North America. Price controls on food have led to hunger in 17th century Italy, 18th century India, 20th century Russia — and in many other places and times.
When politicians talk about bringing down the cost of prescription drugs they are exploiting a widespread confusion between prices and costs. Prices are not costs. Prices are what pay for costs — and if you don’t pay those costs, you are not going to keep on getting what you want.
The cost of creating a single new medication runs into hundreds of millions of dollars. You can play all the political games you want with prices, but if those hundreds of millions of dollars are not paid for, don’t expect people to keep investing that kind of money to develop new drugs to deal with cancer, AIDS, Alzheimer’s, and all the other afflictions of human beings.
That money comes from pension plans that millions of people pay into, as well as from banks and other investment sources. Politicians can always find ways to chisel these people out of their money in the short run but the public will pay in the long run.
Fewer new drugs mean needless suffering, disability, hospitalization and premature death. Higher hospitalization rates alone can wipe out savings from lower drug prices. Paying the mounting costs of medical care has turned into a shell game, where everyone tries to get someone else to be stuck with these costs. But these costs are not going away.
Why would Americans, with the highest quality medical care in the world, and a pharmaceutical industry creating more new major prescriptions drugs than anywhere else in the world, want to jeopardize all that for the lure and the promise of political miracles?
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