Price Controls and the Medicare Bill

I agree with Tyler that the special interest subsidies in the new Medicare law are outrageous, albeit to be expected. What really depresses me, however, is not the subsidies (which are mostly transfers) but that we are now on an inevitable path towards price controls on pharmaceuticals. True, the law as written explicitly forbids this but political pressure will burst that dam of parchment. (Recall that the original Medicare act forbid the federal government from exercising control over the practice of medicine – try telling that to a doctor today.) Costs will soar as increased demand pushes up prices and more people are added to the program and when this happens the public will demand controls. With controls you can expect significant curtailment of R&D in new pharmaceuticals. I only hope that the drugs that will help me deal with my old age will already have been discovered.


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