5.  The Great Medicare Drug Fiasco
    by Todd Andrew Barnett
    mailto:libertarianman{at}comcast.net

Special to TLE

If the recent congressional plan to spend $400 billion on Medicare drug
benefits for the elderly is a practical joke, then none of us who see right
through this politically-motivated agenda are laughing. After all, the idea
is to place seniors who are already on Medicare under a new plan, which
would subsidize private health insurers. (Let's face it -- the new plan,
which was just passed by the House and the Senate, should make taxpayers
and senior citizens queasy in their stomachs.)

President Bush has just stolen the Democrats' ideas and tweaked them to
suit his agenda. He is touting his new plan to expand Medicare to include
prescription coverage for our grandparents, and he is doing this to score
points with them. Remember -- the elderly happens to be the largest voting
block on this issue, and for them to find out that the government will cut
deals with private medical insurers -- deals which include subsidizing them
and pharmaceutical firms to cover their drug benefit costs -- is enough to
satisfy them. After all these are our grandparents we're talking about, and
this issue should be a big concern to us, considering that the statists on
Capitol Hill just want to place our retirees more on medical welfare and
that they want to nationalize our health care the GOP way.

If there is a difference between the Republicans and the Democrats, it's
this: Democrats want to subsidize the elderly with checks coming directly
from Medicare, just so that they could use the tax money to pay for their
drug costs. Republicans, on the other hand, want to subsidize private
insurers and pharmaceutical companies, just so that those seniors can sign
up for inferior drug coverage plans from either traditional Medicare or
HMO/PPO organizations.
It would also allow them to purchase coverage from insurance companies.
(Incidentally, the plan would restrict alternatives to traditional Medicare
to three low health bidders per region.)

Those who think that seniors are given greater choices in drug coverage are
deluding themselves. The choices are like the choice between socialism,
communism, and fascism. Individual liberty and free enterprise are
nonnegotiable and are not included in the package.

But you say, "What's the problem here? The seniors need assistance
with purchasing medicine. As a wealthy society, we can afford it."
Right?

Wrong! The tenet which says "a wealthy society can afford it" is
terribly misleading on all counts. Such a government-mandated program will
require taxes to pay for it. That means that working people like you and me
will be
fleeced to finance the program. And this is said to be done for the
"moral good" of our society. But where's the "moral
good" in that? Obviously, those who are coerced to pay and those who
will end up receiving the benefits are unaware that they are acting in
accordance with Marx's "From each according to his ability; to each
according to his need." In a nutshell, sheer collectivism.

Even if "we" could afford to do this, does anyone in his or her
right mind think that it would be worth it should the artificially-inflated
price undercut the pharmaceutical industry? While many Americans like to
think that the entire industry operates on the principle of greed, perhaps
they should keep in mind that it is the reason why so many life-saving
drugs have often eliminated the need for more expensive surgeries.

If Bush and his collectivist stalwarts have their way, we can expect to see
a gamut of problems plaguing the health care -- problems that can be
exacerbated by the following:

A NEWER AND STRONGER BUREAUCRACY FOR MODERN MEDICINE

If President Bush signs the plan into law (which is very likely at this
point), one of the most obvious dilemmas that elderly patients can expect
to witness is a new and stronger bureaucracy imposed on the health care
profession
and pharmacies. It will determine who pays for the costs of drugs, which
patients are covered, for whom the drugs are paid, how pharmacies and
physicians are remunerated, how private information is being distributed,
which
pharmaceutical companies benefit the most, and so forth. Since that is
likely to be the most obvious case, we must -- and should -- say that this
is nothing but government control.

AN INCREASE IN CONSUMER DEMAND AND A HIGHER PRICE RX PROGRAM

We can expect an increase in consumer demand, simply because when the price
is closer to zero, the more the product is consumed. There is no difference
in medicine. Let's keep in mind that the $400 billion ten-year cost is not
the actual cost, but rather a projected cost. This means that the projected
cost will be significantly far below the actual cost, considering that
Medicare's original estimates were off the mark. For example the 1990 cost
of Part A hospital insurance was initially projected by Medicare as $9
billion. However, it turned out that its true cost was $66 billion.

Before long we will see a myriad of new restrictions on what prescription
drugs seniors can purchase when we see Rx prices skyrocketing. The Rx
program will be severely curtailed, although it will be touted as exquisite
and liberating. We can expect to see more reductions in choices of as well
as the freedom to choose one's treatment.

PRICE CONTROLS INDUCING SHORTAGES AND STULTIFYING INNOVATION

One of the most damaging side effects of this type of anti-capitalistic
intervention will be the imposition of price controls. Price controls are
merely government machinations designed to restrain the amount of return an
entrepreneur expects to make in order to manufacture, distribute, and ship
a new product to the market. It is often said that these controls are
designed to rein in the budget, but that is just plain sophistry. Such
controls eviscerate any entrepreneur's chance of productive output. Anytime
the leviathan mandates prices below market-approved prices, shortages will
be induced. This will affect the supply, development, and availability of
new drugs, which will in turn spike prices faster than anyone expects.

How will these controls stultify the development and creation of new drugs,
you ask? It's simple: said controls, imposed in an effort to rein in prices
for Medicare participants by placing restrictions on insurance premiums or
managed-care fees, will hike prices for non-Medicare participants in an
effort to recoup losses incurred on the pharmaceutical firms. Perhaps one
should have figured out from the beginning that, in order to market a new
drug, one must spend hundreds of millions of dollars to do so. Because of
these new cost restraints, no one will take the risk of investing in that
new product without an appealing return.

THE IMPLEMENTATION OF SOCIALIZED MEDICINE

If President Bush and his stalwarts have it their way, they will invariably
harm the American consumers; however, it will provide help to those who
want to nationalize the health care industry (in other words, placing the
entire
profession under the federal thumb). The so-called "medical
reforms," which were implemented within the last few decades, have
been paving the way for the implementation of socialized medicine.

Regulations, which were passed to improve things, have faltered, leading to
the passage of more futile regulations, culminating in the dramatic decline
of private "free" enterprise. (We must thank the liberal and
conservative collectivists, considering that they have assigned blame on
capitalism for this mess.) Inevitably advocates of socialized medicine will
demonize the
pharmaceutical firms and insurers and state that the industry must
acquiesce to the dictates of the government, resulting in the eventual
oblivion of the private health care industry -- long after all are
dissatisfied with the attempt to provide adequate drug coverage.

CONCLUSION

While proponents of health care reform coddle to the elderly by lulling
them with false, empty promises, health care costs have been shooting
through the roof, leaving taxpayers to foot the bill. While conservative
collectivists are too busy pulling the wool over our eyes by making us
think that we are still living in a capitalistic society (remember, there
is no evidence that capitalism still exists), liberal collectivists try to
point fingers at free enterprise, identifying it as the source of these
problems. However, both sides know that this is a lie, and that it always
has been such one.

When many physicians refuse to accept Medicare patients because of the low
payout Medicare gives to them for their services, we shouldn't be surprised
when pharmacies will eventually follow suit. But as usual the free
enterprise
system is named as the culprit behind this mess. The simple truth is that a
free market health care system ceased to exist decades ago. Such a system
would have not allowed cronyism -- along with government machinations of
these kinds -- to exist and flourish in the first place. A health care
system based on a true paradigm of free enterprise would have respected
freedom of contracts and private property rights, not a paradigm in which
special privileges and connections enrich health care special interest
groups and crony corporate interests.

Ten years ago conservatives attacked President Clinton, Hillary Clinton,
and Ted Kennedy for pulling a similar stunt on the American people. Now
they are following in their socialist footsteps. It is now apparent that
the "limited government" conservatives, who claim to idolize free
enterprise, personal responsibility, limited government, individual
liberty, private property rights, federalism, and the rule of law, are
truly worshippers of fascism -- a subtler version of socialism. Nothing
could be more obvious than that.

--
(c) 2003 by Todd Andrew Barnett. All Rights Reserved. Permission to reprint
any portion of or the entire article is hereby granted, provided that the
author's name and credentials are included.

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