I'm a bit freaked out to read such a cogent and smartly argued health care op-ed on the editorial page of The Wall Street Journal, but Nobel Laureate Daniel McFadden goes ahead and shocks me anyway. The piece recounts the author's research group, which has tracked the implementation and performance of Medicare Part D. McFadden, like most of us, is relatively pleased with Part D's performance, though it's worth saying that he seems to think liberals believed the program wouldn't work at all, rather than would simply cost more than it had to. The left made the latter charge, and I think it remains correct.
Regardless, these are quibbles, particularly in the face of such an anti-WSJ conclusion. First, he notes the cost benefits increased insulation from certain prices can bring:
Dana Goldman at RAND Corporation has found that making at least some drugs available to seniors at lower cost more than pays for itself in decreased incidence and cost of health problems. For example, reducing the copay on statins to $10 from $45 for a 30-day supply increased plan prescription drug payments, but the increased adherence of patients to the therapy at the lower copayment reduced cardiovascular incidents and attendant hospitalization costs, so that total annual health costs per patient in his study fell to $5,180 from $5,470.
A recent study of the VA population indicates that statins increase adult life expectancy by nearly two years, apparently because they act as anti-inflamatories as well as reducing cholesterol. Anecdotal evidence indicates that Part D coverage will reduce medical problems and hospitalization costs enough to offset a significant portion of its cost. However, reduced adherence to therapies by consumers who hit the gap will probably have a significant adverse effect on health outcomes that we will begin to see in 2007. A humorous proposal is that employers could lower their total health-care bills by putting statins and anti-hypertensives in the water cooler.
So just forcing them to pay the full price for protected-patent statins won't lower total costs? Weird. More surprising yet is the conclusion:
