Rationing Health Care - it's a lie!

[Newtons Bit]

What? Your mates who got the $4,000 discount by negotiating on the free market are stealing from you, because you have decided you don't want to bargain with the dealer for a similar deal?

That's crazy talk, man!

Rolfe.

No, they forced the car dealer to give them $4,000 off of every car they buy. They did it at the point of a gun (a metaphorical gun).

I (the USA) could do the same thing (we actually can't, we don't have the political willpower to do it, nor the legal authority, but whatever) and then what happens?

 

[Rolfe]

I can't get the bargain that my friends get. My friends went to the car dealer and told the dealer, "you will charge me X amount". My "friends" have the power to make that happen.

What mystical "power" do your friends have that you don't have?

Lack of morals.

It's immoral to bargain for a good price on behalf of your own citizens who are sick? To make sure you get the discount the dealer is prepared to give to customers?

You have the power to "make that happen" too. Quite obviously. But you choose not to, and penalise your own sick citizens.

Rolfe.

 

[Newtons Bit]

I like the metaphor. But you phrase it in the wrong way. The "fourth" friend in your story leaves earlier and says the bartender to write it on his tab, whatever the price is. The three other friends haggle with the bartender over the price and talk it down to $10, and so the bartender writes $20 on the tab of friend 4.

The US system itself has said to itself: we don't haggle, we pay whatever the pharma companies ask.

ETA. You want to win a discussion about bargaining from Scots and Dutch?

They haggle what down to 10$? They were already paying 10$ in this scenario.

 

[Rolfe]

No, they forced the car dealer to give them $4,000 off of every car they buy. They did it at the point of a gun (a metaphorical gun).

Please explain this metaphorical gun. The dealer is entirely free to refuse to sell to the customer, where's the gun?

Rolfe.

 

[INRM]

Simple question. In that bill is there any mention of a person's "Level of Productivity" determining their health-care?

 

[Rolfe]

You mean it's okay to pay a fair price for a good with an inelastic demand curve if it saves lives? No! We must worship the free market as people die! This is hysterical. You'd put the free market above lives.

The bizarre thing is that it's the countries who negotiate the better deals who are using the free market. That's how it works.

I don't know how NB's universe works.

Rolfe.

 

[Newtons Bit]

It's immoral to bargain for a good price on behalf of your own citizens who are sick? To make sure you get the discount the dealer is prepared to give to customers?

You have the power to "make that happen" too. Quite obviously. But you choose not to, and penalise your own sick citizens.

Rolfe.

Hey, you're okay with putting your own sick people ahead of my countries sick people. I think that's pretty damn sick, but whatever.

Now I think we should all be paying the same price. We all more or less on the same economic level. We can all afford to do so. This idea that you can just barter a better deal is :::. The drug companies need X number of dollars to produce and research new drugs. If they don't get it, they're not going to produce new drugs.

What the US needs to do is start penalizing Western Europe for fixing prices of drugs. Call it a fair market adjustment if you will. We could start adding tariffs on European goods in the US to even the gap. They screw with our prices, we screw with them financially. I would call that fair play.

Hell, I'm going to write my congressman a letter.

 

[ddt]

They haggle what down to 10$? They were already paying 10$ in this scenario.

You said yourself in your scenario: the four of them drink equal amounts, and run up a tab of $50 dollars in total. That means that if all four ask for their tab simultaneously, they'd all get a tab of $12.50.

ETA: OK, I'll retell your metaphor as I think it really is.

Four friends - an American, a Belgian, a Czech and a German - sit at a bar and drink equal amounts. The American leaves early, waves with his hand and says to the bartender: "write it on my tab, whatever the price is". The other three empty their glasses and ask the bartender for the bill. According to the bartender, the tab has run up to $50, so he asks them $12.50 each.
The Belgian says: for that price, I could have gotten a real Trappist next door.
The Czech says: you realize that the price of hops has gone down dramatically, don't you?
The German says: this American beer you served isn't even real beer, ever heard of the Reinheitsgebot?
So the bartender says: OK, I'm fine if you all pay me $10.
And so they do.
And the bartender writes $20 on the tab of the American, who just pays it without questioning where the amount came from.

 

[Newtons Bit]

You said yourself in your scenario: the four of them drink equal amounts, and run up a tab of $50 dollars in total. That means that if all four ask for their tab simultaneously, they'd all get a tab of $12.50.

Okay, that makes more sense.

So in your scenario then, the first three friends all convince the bartender to stick the fourth guy (who already left) with $20 so that they can all only pay $10. I think that the fourth guy needs to find better friends. Especially since he keeps doing it over and over and over again.

 

[Newtons Bit]

Please explain this metaphorical gun. The dealer is entirely free to refuse to sell to the customer, where's the gun?

Rolfe.

Edit: the gun is the fact that he has to sell at the price or not sell at all.

The dealer is still making more money than his manufactoring costs. It doesn't cost him anything to scale up his manufactoring so he's still making A LITTLE bit of money on the deal. But that price isn't enough to sustain his entire worldwide business operation.

 

[GreyICE]

Okay, that makes more sense.

So in your scenario then, the first three friends all convince the bartender to stick the fourth guy (who already left) with $20 so that they can all only pay $10. I think that the fourth guy needs to find better friends. Especially since he keeps doing it over and over and over again.

Scenario 2: Four guys are drinking and split the tab. Three ask the bartender how much it is, he tells them it's $40. Since the 4th guy is asleep in the beer spilled on the table, they give the bartender $30, and tell him to take the rest from their friend.

After their drunken friend wakes up, he asks the bartender what happened. The bartender tells him he owes $20. After he sobers up and meets up with them later, he asked his friends how much they paid. They tell him $10 each. Doing the math, he decides that his friends cheated him. He tells the bartender this in a very angry tone, shortly before passing out at the bar again. When he awakes, he discovers that his friends have taken out yet more beer on his tab and then left. But the bartender will be really nice and not charge him the full amount.

He decides the bartender is a great guy, who is getting cheated by these boozy losers who try to stick him with the tab. And he then sticks his fingers in his ears and yells at anyone who suggests otherwise.

 

[ddt]

Now I think we should all be paying the same price. We all more or less on the same economic level. We can all afford to do so. This idea that you can just barter a better deal is :::. The drug companies need X number of dollars to produce and research new drugs. If they don't get it, they're not going to produce new drugs.

What the US needs to do is start penalizing Western Europe for fixing prices of drugs. Call it a fair market adjustment if you will. We could start adding tariffs on European goods in the US to even the gap. They screw with our prices, we screw with them financially. I would call that fair play.

I think you missed this bit I wrote earlier:

In fact you're strongly arguing for health care reform. What you're saying, in effect, is that the rest of the world does negotiate with pharma companies about the prices of drugs, but the USA is so daft to pay whatever they're asking. To put it even more rhetorically: the USA doesn't understand how capitalism works. That's glaringly apparent in the Medicare part D law, which explicitly specifies that government is not allowed to negotiate over the price of drugs.

Price bargaining is universal. Not when you buy at the local supermarket, granted. But haven't you tried to bargain over the price of a new PC? Or a car, as in Rolfe's example? Or a house? You're a thief of your own wallet if you don't do that.

American insurers have every right to bargain over the prices of drugs as anyone. But the largest one - Medicare - isn't allowed to!

Let's take paracetamol as example. Granted, that's an OTC drug and can be available as a generic. But the idea is the same.

In the Netherlands, the drug stores and supermarkets that sell paracetamol, have pooled together and put out a request for quote for the whole need of paracetamol for the whole country. I pay EUR 2 for a package of 50, I think, unbranded paracetamol. In Belgium, only pharmacists may sell OTC drugs, and they buy in individually - brand name paracetamol, and it sells for EUR 4 for a package of 20. A couple of months ago, someone else on this forum - from the USA - told that he paid $60 for his Tylenol.

Buying in wholesale can drive down prices significantly.

 

[ddt]

Okay, that makes more sense.

So in your scenario then, the first three friends all convince the bartender to stick the fourth guy (who already left) with $20 so that they can all only pay $10. I think that the fourth guy needs to find better friends. Especially since he keeps doing it over and over and over again.

While I like GreyICE's story even more, I'd like to stay out of the discussion which price is fair for the moment.

But then the rest of your story is wrong. This is how it continues:

The three Europeans tell the American proudly they bargained 20% off the price. They tell him, he should do that too; bargaining is fun! However, the American pays his inflated bar tab, and the next night, he again leaves earlier and gives the bartender carte blanche.

A week later, the Czech guy emails them all: "I've found this really great bar called Generic. They sell a beer that tastes just like Pillsner Urquell, but it's half the price!"
So the Belgian and the German follow him, but the American not; he still goes to bar Pfizer.

 

[Newtons Bit]

Scenario 2: Four guys are drinking and split the tab. Three ask the bartender how much it is, he tells them it's $40. Since the 4th guy is asleep in the beer spilled on the table, they give the bartender $30, and tell him to take the rest from their friend.

After their drunken friend wakes up, he asks the bartender what happened. The bartender tells him he owes $20. After he sobers up and meets up with them later, he asked his friends how much they paid. They tell him $10 each. Doing the math, he decides that his friends cheated him. He tells the bartender this in a very angry tone, shortly before passing out at the bar again. When he awakes, he discovers that his friends have taken out yet more beer on his tab and then left. But the bartender will be really nice and not charge him the full amount.

He decides the bartender is a great guy, who is getting cheated by these boozy losers who try to stick him with the tab. And he then sticks his fingers in his ears and yells at anyone who suggests otherwise.

Look, I already used Pfizer as an example and showed that they're making an 8% rate or return. That's reasonable. They're not screwing anyone. If you think that a drug company is in fact screwing the USA over, please show me their financial statements where they're making huge rates or returns. Otherwise please drop this argument line.

This is pretty simple economics. It's not hard to understand the concept of "no free lunch".

 

[GreyICE]

Look, I already used Pfizer as an example and showed that they're making an 8% rate or return. That's reasonable. They're not screwing anyone. If you think that a drug company is in fact screwing the USA over, please show me their financial statements where they're making huge rates or returns. Otherwise please drop this argument line.

This is pretty simple economics. It's not hard to understand the concept of "no free lunch".

What? This is just a straight lie.

http://money.cnn.com/magazines/fortune/fortune500/2007/snapshots/1042.html

Revenues 52,415.0
Profits 19,337.0

I mean it doesn't take a rocket scientist to figure out a $20 billion profit on $52 billion revenue ain't 8%! Hell, if it were 8% I'd probably be agreeing with you!

The Europeans might be paying them only enough for them to make a mere 8% profit on their operation...

 

[Newtons Bit]

While I like GreyICE's story even more, I'd like to stay out of the discussion which price is fair for the moment.

But then the rest of your story is wrong. This is how it continues:

The three Europeans tell the American proudly they bargained 20% off the price. They tell him, he should do that too; bargaining is fun! However, the American pays his inflated bar tab, and the next night, he again leaves earlier and gives the bartender carte blanche.

A week later, the Czech guy emails them all: "I've found this really great bar called Generic. They sell a beer that tastes just like Pillsner Urquell, but it's half the price!"
So the Belgian and the German follow him, but the American not; he still goes to bar Pfizer.

Are you seriously trying to argue that USA has no limit on patent lengths? Pfizer's #1 drug, Lipitor, will lose it's patent protection in Canada in 2010 and in the USA in 2011.

Please try to use something other than argumentum ad ignorantiam. I get enough of that from truthers.

 

[Newtons Bit]

What? This is just a straight lie.

http://money.cnn.com/magazines/fortune/fortune500/2007/snapshots/1042.html

Revenues 52,415.0
Profits 19,337.0

I mean it doesn't take a rocket scientist to figure out a $20 billion profit on $52 billion revenue ain't 8%! Hell, if it were 8% I'd probably be agreeing with you!

The Europeans might be paying them only enough for them to make a mere 8% profit on their operation...

Rate of return does not equal revenue over profit, for crying out loud.

Rate of return is based on the initial investment. Look, it's not hard, if I start a company with 100 dollars, make a revenue of 50 dollars and a net profit of 20 dollars, then turn around and reinvest 10 of those 10 into R&D then I've made a rate of return of 10% on my initial investment. You might even argue that I've made a 20% rate of return, but you're completely missing the point about paying for research I've been making all along.

I even already spelled this out with Pfizer's financials, ffs: http://www.internationalskeptics.com/forums/showpost.php?p=4999191&postcount=288.

 

[ddt]

Are you seriously trying to argue that USA has no limit on patent lengths? Pfizer's #1 drug, Lipitor, will lose it's patent protection in Canada in 2010 and in the USA in 2011.

Please try to use something other than argumentum ad ignorantiam. I get enough of that from truthers.

No, I'm well aware of that - patent protection isn't that different around the world.

See post #312 about brand name and generic.

I see you're still not reacting to the main issue here.

The USA (and specifically Medicare) does not bargain on drug prices.

In the discussion about the banking bailout, someone made the remark that the USA uses capitalist principles when it comes to the common man, but when it's about (big) business, it suddenly goes socialist. Seems quite applicable here too.

 

[Newtons Bit]

No, I'm well aware of that - patent protection isn't that different around the world.

See post #312 about brand name and generic.

I see you're still not reacting to the main issue here.

The USA (and specifically Medicare) does not bargain on drug prices.

In the discussion about the banking bailout, someone made the remark that the USA uses capitalist principles when it comes to the common man, but when it's about (big) business, it suddenly goes socialist. Seems quite applicable here too.

So when you wrote,

A week later, the Czech guy emails them all: "I've found this really great bar called Generic. They sell a beer that tastes just like Pillsner Urquell, but it's half the price!"
So the Belgian and the German follow him, but the American not; he still goes to bar Pfizer."

You were just trying to infer something about negotiating prices and not anything about how Americans keep using pfizer when they could be using generics?

Pardon me if I call bull. You could at least have the testicular fortitude to admit you were wrong.

 

[Newtons Bit]

I see you're still not reacting to the main issue here.

The USA (and specifically Medicare) does not bargain on drug prices.

I originally wasn't going to dignify this was a response, but I think your assumption here is a major part of the problem.

I fully understand that the US health insurance (and government plans) do not force drug companies to lower their prices. Why? Because price controls do not work. If the USA forces price controls then the drug companies will just stop making new drugs because it will cease to be profitable to do so. I do not understand why this concept is so hard to understand. No profits, no incentives.

Medicare/Medicaid already forces price controls on hospitals and doctors. They fixed prices for specific services and haven't adjusted them in years. So what happens? Hospitals and doctors charge their patients with private insurance extra. It's a great system. Really. I just love paying more for my health insurance so the government can pretend like Medicare costs less than it actually does.