I have been thinking about the issue of health care in the US for the past couple of days after reading the sample blog that Mrs. Channell gave us. At one point the author of the blog states:
“A National Healthcare system would not deny anyone coverage because of price, all individuals would be able to enjoy medicine, doctor visits, and treatment required to continue to live.”
The writer then goes on to say that the government would be able to limit the prices of medical treatment and keep prices “in check.”
The point that I would like to make is by limiting the price of medical services, you lower the incentive of pharmaceutical companies to make their product. You also lower the incentive of researchers to look into new ways to cure illnesses. I don’t mean to get into the economics of the issue but any economist will tell you that a price restriction or price ceiling NEVER increases efficiency and results in a shortage. <http://en.wikipedia.org/wiki/Price_ceiling>
So in summary, free/price restricted health care = shortage of health care.
In fairness, the writer does address these points later in his blog, and I am only using his blog to put my point into context. I do believe that that National Healthcare is a very complex issue, and I do not intend to provide a solution.
My only intention is to point out that price-restricted healthcare is not the most efficient solution regardless of how nice it sounds.
2 comments:
Good post. You show careful reading of the other student's blog. The question of whether "big pharm's" high profits are justified by the need for research and development of new drugs is worthy of inquiry. There's a lot of debate. The problem is that in Europe, where drug prices are lower than in the US, there is as much if not more research into new drugs. More government money has gone to support that research than is the case in the US. Also, US drug companies are hindered in developing new drugs by strict FDA requirements that delay the availablity of new drugs by as much as ten years behind Europe.
I agree with you, Barry, that nationalizing health insurance may not be the most efficient solution, but it may be a suitable temporary one. And it's true the price caps are not always effective, but I would argue that, at least in the case of pharmaceutical companies, it would encourge them to invest in new drugs as a source of further revenue.
I do not, however, advocate for government-run health-care. That may work in small centralized countries, but in a coutry made up of independant states I just don't see how it could be made efficient. So, maybe market regulations like price ceilings are a viable alternative while the health-insurance industry is nationalized, broken apart, and re-privatized in smaller, more manageable parts. (which, incidentally, is what I sincerely hope they have the wisdom to do with Fannie and Freddie.)
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