Me too! Me too!
...The lead exhibit is usually "me-too" drugs. Such a terrible waste, having all those drugs which target the same mechanism, even if the molecules are different. There are a lot of ways that this argument is rather silly, not least that many "me-too" drugs aren't the result of one company imitating another, but the result of parallel research targeting a mechanism, with no one knowing which drugs will work until they've cleared their regulatory trials, usually in fairly rapid succession. But simply at a gut level, for anyone who lives in a market economy this is a rather bizarre thing to say. In what other industry does anyone under the age of sixty still believe that each product category should have one, and only one, product produced by a single company—that competition is not a sign of a healthy market, but profligate waste? Has not one person making this argument (doctors included!) ever had to try multiple drugs for a condition until they found one that worked, or had bearable side effects?
But this is hardly the only example of bizarre economic thinking. Advocates of price controls* for medical services and products, when taxed with the usual results of such controls on quality and innovation, suddenly begin to insist that incentives have absolutely no effect on output. So if you slash doctor's salaries, you will not get fewer, or lower quality doctors; if you cut pharmaceutical prices, you will not get fewer new drugs; and so forth. They then attempt to bolster the basic silliness of the argument by launching a basically irrelevant tangent: to wit, pharmaceutical companies spend too much money on marketing.
Again, this has factual rejoinders: over half of that marketing expense seems to consist of handing free samples, which is not exactly a socially pernicious practice. But really, if you try to apply the argument to other industries, doesn't it sound utterly daft?
Problem: GM spends a huge amount of money advertising its cars
Solution: We should nationalise the auto industry
This is coupled with an insistence—despite all evidence—the consumers too do not respond to price signals. "People won't check into the hospital if they aren't sick", sneer those who would further drive down the cost to consumers of their care. And probably in most cases they won't, though one should keep in mind that some people will, because they enjoy the drama, or are hypochondriacs, or are afflicted with rare psychological diseases such as Munchausen's. But both studies, and personal experience, indicate that people demonstrably do overuse things like doctor's visits and tests, which have a relatively low marginal cost.
Why not get that MRI for your headache? Or run a few more blood panels, since you've already got the needle in your arm? Personally, I (a fairly healthy person in my thirties) have had two unnecessary echocardiograms, five unneeded electrocardiograms, at least one pointless chest x-ray, and uncounted numbers of blood tests for things there was no reason to think that I had. These not only ran the bills up to my insurer, but also cost me quite a bit of psychic peace, as the tests delivered false positives for potentially horrible diseases. Had I been paying half the cost, or even 20% of the cost, for all these tests, I probably would have waited until there was some reason to believe I might be sick.
Somewhat less strange, though still in need of massive proof, is the belief that a monopoly will be the most efficient supplier of services, even though this is true in no other market except possibly airframes, and certain public goods‡. I understand the belief that there are uncaptured positive externalities to health care spending: early preventative care may lower later spending, but as long as consumers are likely to shift between providers, this spending may not get done. However, I don't see a ton of evidence that this is actually, rather than theoretically true. The benefits of preventative care seem to be concentrated in a few conditions†, notably diabetes, high blood pressure, and pregnancy. Are private insurance patients really receiving substantially worse care in these areas than public patients on Medicare or Medicaid? The uninsured might well benefit, but the fact that some people cannot afford a good is not reason to nationalise that industry, any more than America needs to collectivise its farms or housing stocks because some low-income workers could not feed or hourse themselves without assistance.
It is undoubtedly true that there is some dimension along which a monopoly provider would be better, but this is true in any industry. GM, for example, could produce cars at much lower cost if it produced all the cars that Americans consumed, particularly if it did so as an official part of the government, and could thus bully its suppliers into submission. And we might well get our cars cheaper if the government were the only buyer of automobiles. But in this industry, we recognise that whatever those benefits, they are vastly outweighed by the negative effects of monopolies: the inefficiency, empire-building, indifference to consumer desires, and so forth. Why is a government monopoly in this area different?
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