The coronavirus pandemic flipped the U.S. inside-out. Too many Americans passed away, even more became violently ill and alarmism brought the economy to a virtual standstill. But every cloud, or in this case more of a category five hurricane, has a silver lining. The experience acts as yet another case study showing the superiority of the U.S. healthcare system and the power of the free market when government steps out of the way. Policymakers should be careful to keep it that way.
Although not perfect, the U.S. healthcare system offers the best medical services and treatments in the world. Countries like the U.K. and Canada, which have fallen for the trap of government-run healthcare, are plagued with service rationing and long wait times. According to one think tank report, tens of thousands of Canadians leave the country annually to receive non-emergency medical treatment—partly to “seek out superior quality care” and avoid long waits.
Government has creeped into the U.S. healthcare system as well, but thankfully, we have maintained a free-market backbone.
The response to the recent health crisis is the latest success story. After the government temporarily removed some of its own regulatory hurdles and provided a more robust financial incentive to private companies, not one, not two, but three coronavirus vaccines were developed in record time. The creation and swift distribution is not only a triumph of the broader healthcare system, but an example of the agility and innovative nature of the country’s prescription drug industry when operating within a free market framework.
As the pandemic fades, some policymakers want to include healthcare components
Unfortunately, Speaker Nancy Pelosi, D-California, and Sen. Bernie Sanders, I-Vermont, are among prominent lawmakers that are teaching a masterclass in what not to do. Among the proposals, congressional democrats recently re-unveiled a system of price controls that cap the cost of prescription drugs to a proportion of what foreign countries pay. While the high cost of medicine in the U.S. is a problem that warrants action, using government edict to manipulate prices (when, in fact, government intervention was a major driver of those high prices to begin with) will have major unintended consequences that harm patients, and even compromise our response to future pandemics.
Pegging domestic pharmaceutical costs to artificially low prices overseas will mean smaller budgets for research and development initiatives at drug companies. According to the Trump administration’s Council of Economic Advisors, the decline in revenue would translate to 100 fewer lifesaving treatments and therapies brought to market over 10 years.
There are better strategies.
Policymakers should instead remove unnecessary bloat from the prescription drug supply chain that contributes to inflated prices at the pharmacy counter. Pharmacy Benefit Managers, often called middlemen, siphon multiple billions of dollars annually in profit that should partially be passed down to consumers as lower drug costs at the point of sale. In 2018, for example, these middlemen pocketed more than $160 billion at the expense of patients.
Additionally, Congress should consider injecting more price transparency into the complex web of hospital networks and insurance companies, while also providing patients with more choice, rather than doubling down on Obamacare’s one-size-fits-most approach. It’s a strategy the Job Creators Network Foundation and Physicians for Reform have been pursuing through the Healthcare for You reform framework.
The coronavirus pandemic has uncovered weaknesses in the U.S. healthcare system, but has also emphasized its strengths. Reform proposals should focus on fixing what’s broken, rather than upending what works. That way we can lead the world yet again when the next health emergency comes our way.
Elaine Parker is the president of the Job Creators Network Foundation. C.L. Gray is the president of Physicians for Reform.