Speaker Pelosi wants to reform healthcare – that much is clear - and for reforming healthcare, she has support from everyone in Congress. However, after that, things get a bit murky because almost every single one of her proposals ignores the business decisions that go into providing healthcare, innovating new drugs, taking care of patients, or even the investment of going to medical school. In other words – the car is beautiful, but it doesn’t have wheels or an engine.
We all want cheaper healthcare, we all want more access to care, we all want better care, but to get those things, you can’t just snap your fingers and make it happen. There needs to be an incentive to build hospitals, an incentive to develop new drugs, payment for treating patients, and a reason to spend so many years and so much money on education. The supply of healthcare needs a reason to grow.
And, although the government’s involvement in healthcare can make the market less efficient, and the free-market nature of the market is sometimes murky – the reason to take a risk in healthcare, or any market, is profit. For some, “profit” can take on different definitions – from money in the bank to job security. But, profit is what people want. However, Nancy Pelosi wants to take all of that potential profit away. And, in the place of the incentive to profit her proposal is to…well actually, she doesn’t have an answer to that.
So, like a bad used car salesman pointing out what a lemon of a car could be if you just close your eyes and imagine it, Speaker Pelosi relies on make-believe and deception.
For instance, if we look at HR 3, which was recently re-introduced in the House, she wants lower drug prices. That is something that everyone agrees on. However, instead of figuring out what the cost drivers are in the market – like pharmacy benefit managers (PBMs) – and why those cost drivers exist, Speaker Pelosi just wants cheaper prices. So, her bill sets the price lower and threatens a 95 percent tax for those that don’t comply.
The Speaker's plan relies on everyone continuing to take the same risks, make the same investments, and work the same amount of hours for less money. That isn’t what is going to happen. Businesses won’t invest the same amount of money – and that means fewer new drugs and, therefore, worse quality of healthcare in the future.
That is the reality – Speaker Pelosi is selling a lemon – but telling us it is a luxury. If we look at the places with cheaper drugs – all driving around the same lemon that the Speaker is selling – they are all reaping the results. They have access to fewer innovative drugs. So, while the drugs they have access to might be cheaper, if they need something cutting-edge, it might not be available. In other words – it is a healthcare system built for healthy people while ignoring the sick. A pretty car with no engine.
For instance, over 290 new medical substances were created between 2011 and 2018. The U.S. has access to 90 percent of those new drugs, while Canada only has access to 44 percent of the drugs. Therefore, if you need one of those drugs, and are Canadian, the only options are to either go without or visit America. However, what if those drugs did not exist at all because Nancy Pelosi took away the profit incentive? Then that Canadian would only be left with one option – U.S. citizens would only have one option – and that option would be to go without because the new drug would not exist.
There are ways to make drugs cheaper, but they involve the government getting out of healthcare.
A small doctor’s office in Kansas that sells drugs cheaper than Walmart or Target, and his model is catching on. He can sell drugs cheaper because he isn’t playing by the normal market rules. He has taken the middlemen out of the equation. Now, the government shouldn’t do that by decree. Still, they could look at the market and figure out why middlemen – additional layers of bureaucracy and cost increases – have taken over healthcare. They could look at why so much administrative staff is needed in healthcare – or they could ignore it all and sell a lemon.
Charles Sauer (@CharlesSauer) is an author and a contributor to many publications. He is the president of the Market Institute and previously worked on Capitol Hill, for a governor, and for an academic think tank.
Join the conversation as a VIP Member