National Review - October 30, 2017

2 | w w w. n a t i o n a l r e v i e w. c o m OCTOBER 30 , 2017

Letters

Price Controls for Health Care?

In “The Price Is Right” (October 16), Peter Laakmann gives much-needed insight

into why per capita spending on health care in the U.S., although higher than in

other developed countries, is appropriate to our circumstances. However, he does

not address why the price of health care is so high in the first place.

As a physician in Kentucky, I am amazed at the disparity between price and

cost. A local lab bills the patient $125 for a blood test for which they bill me $4.

When the FDA took generic colchicine off the market in 2010 in favor of Colcrys,

its price jumped from $0.09 to $4.85 per tablet. When insurance companies began

paying for CT scans to screen for lung cancer, the out-of-pocket price went from

$175 to over $500.

While some would argue that market forces should always determine price, I

think health care deserves special treatment. For one thing, there is a third party,

the insurance company, that prevents a direct financial relationship between

provider and consumer. For another, health care is a necessity on the order of food,

clothing, and shelter. For those who cannot afford it, it must be publicly subsi-

dized. But even those with decent incomes often cannot afford it as it is currently

priced, and I’m not just talking about catastrophic care.

My recommendation is price controls on high-end providers such as drug com-

panies, hospitals, imaging centers, and laboratories. That would lower premiums

and make health care more accessible.

David Marwil, M.D.

Lexington, Ky.

PETERLAAKMANNRESPONDS: I don’t dispute that the prices of some items and ser-

vices are too high in some instances. It is challenging to reach general conclusions

without systematic analysis. However, OECD researchers indicate that the aver-

age effective price paid for health care in the U.S. was approximately 10 percent

above the OECD average in 2014, which is at or below the average effective price

in several rich countries.

Domestic health-care-price indices suggest that inflation explains approximate-

ly none of the increase in health-care costs relative to incomes. As in other coun-

tries, our high and rising health-care expenditure is overwhelmingly attributable

to a high and rising use of health care. (The U.S. real per capita volume of health-

care use was 110 percent (!) above the OECD average in 2015.)

The potential to broadly reduce costs by cutting prices is much more limited

than is popularly supposed. For instance, while we pay higher prices for pre-

scribed medicines in the U.S., they make up a modest fraction of national health

spending (10.6 percent in 2015, comparable to other rich countries). Valuable

medication innovation is one of the last places we should impose price controls.

Incentives matter, and the pharmaceutical industry is not unreasonably profitable

when one accounts for risk, time value of money, etc.

Instead of painting whole sectors and practice areas with a broad brush, we

should consider the sorts of concerns you mention on a much more granular basis,

paying close attention to the ratio of total cost to value and to the affordability of

the costs borne by individualpatients. We can do more as a society to ensure that

essential, highly efficacious medicine is accessible, affordable, and straightfor-

ward (especially as concerns questions of coverage and reimbursement).

Letters may be sub mitted by email to [email protected].

OCTOBER 30 ISSUE; PRINTEDOCTOBER 12

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