Well let's hope that Becker's comments are a lot brighter than those of Posner! Where, even to begin?

"The addition of drug coverage to Medicare entrenches the worst feature of the Medicare program, which is the lack of a means test."

........ Well the number of patients being added to Medcare is NOT the worst problem, so creating another bureaucracy for a "means test" is not a high priority. What IS the Achilles Heel of Medicare is soaring health care costs.

...... Reading Posner, one would never know that the Bush Admin twisted arms and, perhaps illegally, kept the vote open longer than the time posted for more arm twisting to pass this seemingly drug company lobbyist written bill. There is NO reason that Medicare should be prevented (by law) from using its buying power to lower cost per unit as is common with the VA. The VA pays HALF what Medicare and "insurance" companies pay.

I suppose one could make the, limp, argument that were US consumers to bid down the price paid for drugs to that paid by the VA or the even lesser amounts paid by Cdns, and those in many other nations that our "poor" drug companies would be squeezed to tightly to provide research money. Curious, of course, as today, drug companies spend much more on advertising (you've noticed?) than on research.

But let's say that cost control by Medicare and others DID squeeze the juicy profits of the drug companies. Is it beyond imagination that they would then be less willing to sell to Canada and others for half or less what the US consumer pays, and thus, spread the research (and ad costs) over the rest of the developed nations, instead of heaping it all on the US consumer?

And Posner the old Republican? Can't help tossing into his treatise on Medicare:

"In addition of course the politicians want to extend health-insurance coverage to the 40 million plus uninsured Americans, and this will increase the demand for medical services."

......... and instead of considering the cost-cutting possibilities that are not only possible but must be made if we are to survive as a first world nation and even begin to "compete" in the global economy. He'd have been "right on!" to ding both Hillary and Barack's plans to herd us all into the open maws of greed-ridden "insurance" companies that can afford to "compensate" their CEO's at $20 million or more.

Instead, he should have focused on the fact of insurance company overhead and clerical work being almost enough to "cover" the health care of the, left-behind 40 plus millions, many of whom are getting "health care" by the most inefficient and costly means possibly; that of showing belatedly and half-dead at some busy ER. Is there NO imagination or "can do" spirit left? If less wealthy nations such as Canada, France, the UK and others totaling 30 nations CAN provide universal health care for 8% to 12% of their smaller per capita GDP's shouldn't the US now spending 18% of its stronger GDP be able to design a premium healthcare system for ALL?

Jumping for joy over this post J.P. ... we are studying this very topic in my U of Oklahoma MPA Public Policy problems class being held at Nellis AFB (Nevada) ... our professor (also a Yale and Stanford political science product, not law)would perhaps disagree about the marginal costs of drugs b/c he said today no one knows anything about drug companys' expenses/profits b/c they keep their books very secret. The issues of mental illness drugs is extensive ... now 'experts' are saying drugs for depression may not work, that they cause suicide and homicide...we already are warehousing our kids and putting them on drugs b/c as comedian Roseanne Barr says "we're having kids at 50 we can't keep up with." Too many doctors don't know what else to do with people so they just say "ok here is a pill." The US cannot be the big tit or nanny for the world ... if people would exercise 90 minutes each day, eat 5 fruits, 4 vegetables, not smoke anything, not use alcohol, not have unprotected sex (like former Governor Spitzer), give blood (when you do this you get a mini physical ... your blood pressure is checked, your iron count, your cholesterol and 15 tests are run on your blood if you pass the many screening questions)..plus when you give blood it actually makes you healthier b/c your body makes new blood and you get rid of old, tired blood (:-).... politicans don't want to tell people that not everyone can have chemotherapy, not everyone can have a finger (see Michael Moore's SICKO)...let's face it when kids can't read, can't write sentences, and the parents who are fat people who can barely zip their pants ... who want to know why they have diabetes and can't continue munching on Krispy Kreme Donuts... these parents want to know why their child didn't get an A --- the question should not be about the A or the donut it should be how can we get our child reading and how can I lose weight and become healthy. We are not all going to be Richard and Eric Posners, or Harvard educated anisthesiologists (spelling, yikes) ... but a good post. Too, just because government may offer this additional benefit it will not expand use b/c as Eliot Fishman said in his book RUNNING IN PLACE HOW THE MEDICAID MODEL FALLS SHORT...there are many problems to effective delivery of Medicaid services... PS Your political ideology came up ... my professor said you are a conservative appointed by a conservative president ... I say you are conservative about some things and very liberal about others and a one word answer would not describe you ... what is your response? (As in conservative, liberal, democrat, republican) Posner fans in Nevada

Mr. Posner wrote:

"Still another problem with Medicare drug coverage is that people have less aversion to popping a pill than to being operated on or otherwise confined in a hospital. The cost of surgery, as it appears to most people, includes a significant nonpecuniary element that of course is not reimbursed by public or private health insurance. Taking drugs does not impose such costs unless a drug has serious side effects. Hence the Medicare drug subsidy should cause a greater percentage increase in demand than the traditional Medicare subsidies did."

Does Mr. Posner suggest that we could improve the general welfare by either increasing the side effects associated with drugs, or perhaps by further increasing the nonpecuniary costs of hospital stays?

Or, is he just saying that both the costs and benefits of drug coverage are larger than we would otherwise anticipate?

Mr. Posner wrote:

"Drugs also provide an attractive but costly substitute for life-style changes designed to improve one's health. If the choice is between giving up rich food and taking a pill paid for by Medicare, the latter may be preferred though the social cost may be higher; the subsidy confronts the consumer with false alternatives from an overall social perspective, just like monopoly pricing."

- Many medical treatments operate this way, not just drugs. I think the main point of Becker's message was that a dollar of subsidy on a high fixed cost treatment is superior to a dollar of subsidy on a high variable cost treatment. I think the logic is that we should rather subsidize Lipitor than liposuction (or open-heart surgery), assuming all three result in people making less healthy lifestyle choices.

Assuming we all own a CD player, I'd rather subsidize CDs than live music.

Great topic and a great debate.

St Darwin......... I wish you luck in getting your Master's in public policy and hope you'll return to OK where the need for rational policy is both dire and immediate!

".let's face it when kids can't read, can't write sentences, and the parents who are fat people who can barely zip their pants ..."

I am, however, wondering if your trek toward a MPA included an English class or two? Anything on organizing an essay or the use of paragraphs? What do you "feel" the mention of Moore or Spitzer added to your message?

My guess is that if you were to return to OK and try to reform some of the long entrenched messes there you'd need the ability to write convincing, and readable, essays and perhaps even rig up a brief speech or contribution to a panel of elected officials from time to time.

BTW why is it important to you to slap a label of "conservative" or "liberal" on any professor and especially so when the recent administration has so muddied the definition of "conservatism" as to make the term either completely meaningless or that of favoring rampant spending, massive D E B T, and a disregard for the Constitution and laws of our nation that would make a decent Republican such as Ike spin at very high rpm in his grave?

I wonder if one should make some reference to the short story by Jonathan Swift, which represents rather the reverse of (positive) intelligence doping.

"The marginal cost of drugs tends to be very low" only if you are talking about existing drugs while (deliberately?) ignoring what Medicare and similar programs do to the incentives for creating new drugs and therapies.

Most of the world's medical research -- including quite a bit pertaining to therapies other than drugs -- is sponsored by the world's big drug and chemical companies, names such as Pfizer, Merck, and Bayer. Wherever these companies are located in the world, they have one thing in common: the funds for the research come almost entirely from American drug consumers, because non-Medicare-eligible Americans are the last people in the world still paying free market prices for their drugs. Like Medicare, all other countries impose price controls based on the notion that drug consumers should pay only the "marginal" price of producing their drugs -- a price which doesn't cover the decades of research and thousands of false starts that go into the creation of each new drug.

So if "HillaryCare" is enacted in the US, it will bring the world's medical progress to a standstill and keep it there. Even Medicare Part D is a big step in that bad direction.

What we're up against here is the public good problem. The consumers of any country that allows drugs to be sold at uncontrolled prices wind up subsidizing medical R&D for the rest of the world.

If HillaryCare has a silver lining, it is that we'll no longer be the only country providing that subsidy. There won't be any. But will any of the world's governments see that as a problem? Under the UN's Agenda 21, chances are they won't.

John Galt: (good handle-- revealing!)

But not to worry! The Admin and Republican majority took good care of their Big Pharma pals in that several hour long, arm twisting vote which began at 3 am one dark morn:

To your concern of profits being squeezed to the point that the most profitable (percentage margins) industry in our nation can not afford advertising or the lesser amounts they spend on research the bill contains this proviso:

......it prohibits the Federal government from negotiating discounts with drug companies;

....... It's the VA that "gets to shop" and pays but HALF the rack rate of Medicare.

..... Isn't that just ducky and a great contribution to the New World Order of "global competition? Perhaps the "competition" part is for those, losers, who've underfunded their lobbyists?

BTW I thought it noble of you to favor the status quo of American consumers paying the lion's share of the drug companies advertising and research costs, however as a practical matter were we to revolt, or our Congressmen to actually represent our personal concerns as well as those related to our US companies having a snowball's chance of "competing" in the aforementioned "global economy" wouldn't it seem to you that WERE we to ween them from gorging themselves on the fat of their countrymen, that they would no longer sell to the savvier nations at one third to half what Americans must pay?

In other words, wouldn't you predict that they would find means to retain their profitability by raising prices paid by other nations that they too might chip in for the glossy ads and research?

BTW as perhaps something of a "conservative" (the Ayn handle?) what is your take on NIH using US taxpayer's money to do a LOT of beneficial research and then turning it over to those companies you mention to be heavily marked UP for the very same taxpayer while the new drugs are sold for one third as much to other nations? Maddening? Does it seem, these days, that we can afford it?

I just "luv" this line of Posner's:

"In addition of course the politicians want to extend health-insurance coverage to the 40 million plus uninsured Americans, and this will increase the demand for medical services."

It "says so much! Supposedly, one reason we spend nearly twice what other nations spend on HC is that we don't "ration", but if expanding health -insurance coverage" will increase the demand for "medical services" what were these patients doing before? Being rationed perhaps? Or, as we know or at least suspect being treated sporadically in emergency rooms at very high costs?

"of course POLITICIANS want to extend??? Do they? Then why did Truman-Nixon and Clinton fail to expand health care coverage to all?

Congress is moving to require health insurance companies to cover mental illnesses, despite uncertainties about the efficacy of treatments for mental illness and the "cosmetic" element in the treatment of such illness because of the lack of a clear distinction between being mentally ill and simply being less happy, focused, energetic, outgoing, and, in short, successful than one would like to be.

I'm a psychiatrist and love to hear you say that. Please say it again. I hate the righeous whining we put up about equal coverage (and then we quit taking inusrances altogether so we can charge more when we get in an advantageous market). To tell you the truth though, if you will just do it, I will, with a little luck, be able to join the new American Psychiatric and Iowa Corn Growing Energy Independence Asssociation and have my own orchhestra play Dvorcak as I haughtily overlook my growing corn and pigs.

Yo Jack...where you be brother? English has changed since you went to school ... no more periods, commas, paragraphs ... just running streams of consciousness ...but thanks for the best wishes ... maybe next it will be McGill in Montreal with national health insurance :-) ...don't ya jus love this blog duuuuuuude? Do you think Timothy Leary of Harvard thought about paragraphs when he was dropping LSD ... he would be one person national health insurance would not have to pay for ... or Jerry Garcia .... if he ran out of money would taxpayers have had to pay for his healthcare?

Dear Dr. Michael...I am confused. Do you disagree with Judge Posner's comment about psychiatric drugs? Or are you on drugs dreaming for psychiatric drug free Iowa energy independence?

Saint et al., Judge Posner was talking about the problem of Congress 'imagining,' to paraphrase John Lennon, what would be good public policy based on pressure from idealistic sounding interest groups. I think the Judge's idea was that, as my chief used to say, 'The road to hell is paved with good intentions;' in other words, don't just look at your intentions. My last sentnce (in the post above) was meant to be a humorous riff on my taking the oher side of the argument about entitlements since, in part, they would apply to me and joking of a new group which in its narcissism was just thinking of itself really but of course was covering that over with the current idealisms. If Iowans were really interested in our not paying some fraction of our expenditures for energy on jihadists they would see that America could, without tariff or other administrative impediment, import sugar cane based ethanol from Brazil.

There is probably no subject that Prof. Becker and Judge Posner are less able to relate to most people about than healthcare. Both men have made important contributions to classic economics and its application. While classic economics largely empowers and makes prosperous individuals who practice its tenets, most people reject its application to healthcare. Fundamentally, that is because classic economics requires optimizing decisions--a producer should make more widgets until his marginal cost equals his price. In decisionmaking about health, regardless of the third party payer effect, most people want to maximize, not optimize, health. Indeed third party payer effects magnify maximizing decisions, but few people believe that fixing their particular health problem should be cost-constrained. Further, few people will invest in wellness decisions early enough for them to have a reasonable impact--primarily because they want to maximize, the enjoyment of the vices inconsistent with wellness. It may be true that some economic decisionmaking occurs in healthcare. The best evidence is the unwillingmess of young people to subsidize the higher usage of the middle-aged by purchasing health insurance. Nevertheless, the most frightening--in terms of cost--potential trend is that if Becker and Posner are truly correct about the economic and psychological incentives for pill-popping, liver disease will probably escalate in coming years. It is after all the liver that generally consumes the pharmaceutical chemicals with consequent damage.

A large graying U.S. population coupled with oncoming generations that take a great deal more for granted than we seniors and near-seniors (or those who went before us) ever dreamed of will force means testing for all public welfare benefits - Social Security too - sooner than we care to suspect. Taxes on earned incomes as well as accumulated wealth will also increase, but not enough to finance on-budget domestic appropriations, off-budget (supplemental and emergency) spending, and a military rebuild. The elected bodies won't commit political suicide. Medicare, Medicaid, and Social Security will take crippling spending cuts, but don't look for offsetting tax cuts. They'll choose a date and after that date the deal as we know it will wind down for all but the most destitute. The U.S. is disgustingly busted. Both major parties are to blame. We can't pay our bills and we can't compete against near-slave labor across the globe. The contest just ahead in the U.S. will be over who takes the whacking and how much.