Quote:
Originally posted by Mmmm, Burger (C.J.)
Sure, but your assumption is that prices for drugs are currently at their optimal level. (By optimal I mean welfare maximizing, and that includes both producer and consumer surplus). They are not. Let's put aside the cross-border-subsidies and look just at the US. Each drug manufacturer charges a monopoly price for its drug. Right there, you've lost consumer surplus and create dead-weight loss.
|
Not sure I agree with this, other than in cases where there are no drugs competing with the manufacturer's or the patent has not expired.
Quote:
|
Originally posted by Mmmm, Burger (C.J.) But we can, because of the degree to which medicine is generally subsidized in this country. If people were forced to pay their own medical bills, do you honestly believe that 1/7 of all spending would go to medicine? No chance (and that's true even if wealth is distributed more fairly). Every insurance plan creates gross overincentives for treatment, either through testing or drugs, neither of which would happen if the full price were paid by the consumer (e.g., I recently went for a $2500 PET scan "just to rule out any possibility" of a certain disease. I paid a 10% copay, which meant I didn't question the need for the test at all). So, drug makers also benefit from artificially inflated demand induced by subsidized products.
|
This is a great point, though I don't believe it undercuts mine. I assume you are in favor of HSA and the expansion thereof?
