(01-16-2017, 02:20 AM)Warren Dew Wrote: First, perhaps the main reason they are cheaper is that alll the drug research is paid for by us, and they only pay the costs of manufacture.We charge Americans boku for drugs because people like you are willing to accept it. I make bulk drugs. The cost of all of our drugs is about 1.5% of sales. Formulate costs a bit more so total cost is maybe 5-6% of sales. R&D is about 14%. The rest is administration, sales, profit, and merger/acquisition/restructuring charges.
If Medicare bargained for Japanese-style prices, and private insurers followed, then we would adopt life-cycle pricing. We would continue to develop more drugs but spend a lot less on advertising and administration. For example, after Pfizer swallowed us, the closed down a pile of R&D facilities, Skokie Il. Kalamazoo MI, Ann Arbor MI, Sandwich England, and some of the legacy Pfizer facilities. They nuked a bunch of production facilities, closing maybe 40 plants. But they kept our old corporate HQ. So now we have two huge sites filled with administrators. One of these would likely have to go with life-cycle pricing.
Quote:Second, their systems aren't like Medicare. The most successful of the European systems, which is questionably more cost effective than our private insurance system after adjusting for drug prices mentioned above, essentially has the government paying for private insurance selected by the individualIt's not just drug prices. Most elements of our health care are significantly more pricey that elsewhere. The Japanese get more cat scans and MRI than we do, but pay less for them, because the price is much lower. Japan gets the best deals because they are the largest single buyer, so like Walmart they can demand low prices. Their health administrator negotiates the price of everything, and all the many private insurers pay the same price for the services they cover. The national service also sets the premium they can charge. So there is no price-based competition, the completion is all over quality. All the companies offer the same basic plan at the same cost, but there are things they offer that are not part of the basic plan. An efficient firm that can process claims for less, has extra resources to offer goodies than attract for customers. The competition is intense, but it is all over the extra nice-to-have but not have-to-have things.
Quote:Third, if we're going to have a major revamp of the system, why not move to a genuinely free market systemBecause it doesn't work. Lots of poor countries have free market insurance. When or if they become developed, they switch to a universal system. For example, Taiwan in 1994. Even Switzerland, a bastion of free-capitalism, went to a universal system in the 1990's. A country like ours would typically have gone to a universal system in the 1940's, when it would have been easy to do. And it was proposed by the Truman administration and would have passed except for opposition by Southern Democrats. Under the proposed national system, all folks, black and white would have access to medical facilities, that is, it would mandate race-mixing, and that doomed the plan. America probably could have gotten national health care, were it restricted to whites as significant portions of the New Deal programs were. But Truman wouldn't go there.