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Saturday, February 21, 2004
Marginal Revolution explains in simple terms why government pharmaceutical programs, while intended to work for the benefit of all, actually benefit few:
The Medicaid pricing formula can create a vicious spiral. Medicaid pricing causes prices to rise which pushes more people into Medicaid thereby shrinking the private market and increasing the incentive to raise prices yet further. To add insult to injury, high pharmaceutical prices are then said to demonstrate why we need more government involvement.
This is an irony that few seem to understand. In this scenario, there is no incentive to lower prices, but bureaucrats always profess to have a solution. This is, sorrowfully, what we have to look forward to with the new drug benefit program in Medicare.
Labels: Archives_2004
.: posted by
Dave
9:40 PM
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