A drug to fight parasitic infections used to cost $13.50 per pill. Now it costs $750 per pill. This is price gouging at its worst, rivaling any of the abuses of America’s now-controversial Gilded Age, and plainly exposes the need for universal health care. A greedy CEO just made a move to make excess profits off the back of sick and dying individuals. While Hillary Clinton has unveiled a plan to try to limit consumers’ out-of-pocket costs for medication, the plan, like most of the former Secretary of State’s proposed reforms, is insufficient.
We need the full monty. We need universal health care. Allowing profit-seeking producers to control the pharmaceutical industry is wrong. It has not been working. Drug prices are rising and consumers are suffering.
Many people fear Bernie Sanders’ comprehensive reforms, such as universal health care and tuition-free public higher education, because they blindly believe that all industries should follow “market forces” and experience the benefits of “competition.” I am an economics teacher, and I love market forces. I love the central pillars of capitalism. I believe in the profit motive, consumer freedom, and private property rights.
I also know that market forces do not work in all industries. I know that market forces do not function properly when monopolies form or when oligopolies engage in collusion. I know that there are many forces, some less controllable than others, that cause market failure. The free market is great…when it is working.
The free market does not work in all industries. It does not work in K-12 education (hence the rise of “socialist” public schools), national defense, higher education, or health care. It is the reason we have created public goods, which are provided by the government. These public goods, including national defense and public K-12 education, complement our private sector and competitive markets. They protect our private property rights and ensure a well-functioning factor market for resources, including labor.
Health care and higher education must be added to this realm of public goods, for our factor market is suffering. We are inefficiently educating college students and are hindering our labor force by allowing it to suffer illness and injury. When workers cannot get medical treatment because they cannot afford it, we all suffer. We suffer from lost productivity, the excessive costs of emergency room treatment, and the cost of welfare payments when workers become permanently disabled from untreated illness or injury.
As profit seekers in an imperfectly competitive market, pharmaceutical companies naturally underproduce and overcharge. This results in a loss of efficiency to our society and our economy. Any reforms that leave profit-seeking health care providers of oligopoly size in the market will not succeed over the long term. These large firms have too much power. I have no doubt that they will find ways around Clinton’s milquetoast reforms.
Bernie Sanders’ comprehensive demand for universal health care, however, would likely involve turning profit-seeking health care oligopolies into regulated firms controlled by the government. The government would impose top-down cost controls that would encourage firms to compete to reduce costs while maintaining required levels of quality and service. If firms were allowed to keep the savings, they would still have the powerful market force of competition to encourage efficiency and innovation.
Right now, health care is inefficient because it can be. Nobody is forcing performance. In K-12 education, where I work, high performance is mandated by the government. It ain’t always fun, but it works. It works for America.
$750 per pill for life-saving medication does not. Bernie2016!