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« Risk Inversion and Risk Perversion | Main | A New Knowledge Economy or Just Plain Stupid? »

October 04, 2007


Bond investor

ZB, managed care didn't cause the overmedication of America. It started in 1997, when the FDA relaxed the disclosure requirements on Direct-To-Consumer marketing. That allowed pharma to load-up a 30-second ad with all the good things the drug could supposedly do, while referring viewers to a website or "see our ad in Cooking Light magazine."

Managed care insurance still creates agency costs (overspending on interventionary health care and underspending on preventative, to name a big one), but it diversifies the risk pool and introduces some accountability. We can't all have the very best, state-of-the-art systems right now, right away, test after test. But there has to be a happy medium....

I agree with you that Social Security is an unfunded, unsustainable system. (Medicare is worse.) But other than pointing out the problem, what's the solution?

Charles Murray (who first floated the welfare reform idea) does:

Zero Beta

While I agree the 1997 bill was a major contributor to the overmedication, managed care has enabled people to not have to pay the entire bill for these drugs. If I am only paying a $20 copay on prescription drugs, I am much more inclined to go ask my doctor about restless legs syndrome than if I had to pay for the entire prescription myself. If the market were indeed free, money would not be given to researching bullshit drugs and would go towards researching drugs that would actually sell. We would find that many drugs that would actually sell are far fewer than they are today and many drug companies would have to change their entire business plan and/or would have to go out of business. Sure something like Viagara would still exist but would be much more expensive. However, the person who is taking preventative care probably wouldn't have such high blood pressure - a main factor that causes ED.

I had an argument with my father the other day about the existence of the FDA as we know it. I told him I don't think it should even exist in this day and age of information. Since we all know the FDA is a political mess and often swayed by special interests, the best course of action is to remove it. He believes that drug companies would go out and kill people, but I argue that they still do, and they are not in business to kill people. If I go buy a new car, I go online and check out reviews, I research safety reports and whatever else. Many more people are killed by cars each year, albeit the majority not because of faulty cars. When I enter a car I know I have certain odds that I may die. When I take a drug I understand the same. Drugs will always kill people because they are experimenting with our chemistry, and like many chemists will tell you, every now and then an experiment goes wrong. Laws should be developed that prohibit poor due diligence in development and should be followed. Business would develop that would buy these trial drugs and test them out and disseminate the information to the public. They trial on people anyways and I know I would not ingest something that is highly risky because that is who I am. I'd much rather wait until thousands of people have taken it to know that my odds of immediately dropping dead are poor. Drug companies don't want the bad press of such things anyways. They spend millions of dollars to develop a drug, and would not want to release such anything that kills people beyond some sort of random error.

I think there is also a bit of moral hazard associated with managed care even in its application to cancer and heart attacks. If I know that I have a good chance to survive a heart attack, because I can buy the best doctors to help me due to my health care coverage I am more likely not to take care of myself. If I know that something such as that is expensive I will be very likely to exercise every day and eat right. Cancer is the same way.

Good article on that welfare reform idea. I am very supportive of African Americans in general and believe that the welfare system coupled with the war on drugs is almost slavery to them. They were essentially bought out by the government are now owned and are property. We put them into jail at will and they are forced to go off and fight our wars. It is very sad. I was watching the Republican debate at Morgan State and many people in the audience were clapping when people mentioned abolishing the welfare state, which would be great for our country and for the African American community if coupled with drug law reform, but is so difficult in this day and age now that we so many illegal immigrants who command a much lower wage rate.

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