AUTHOR’S NOTE: Many positive things about Big Pharma and no negative things about government mal-regulation of Big Pharma (of which there is much of both) are discussed. Nothing in this post should be viewed as an endorsement of or excuse for the many negative aspects and consequences of Big Pharma or the federal government. Those are both big and important topics and many improvements could be made for both. Those matters, however, are not relevant to the points made in this post.
Similarly, this post focuses on many of America’s positive deeds that benefit all of mankind. Of course, over its history and recently, America has committed many detrimental deeds and will commit more. Those deeds, however, are likewise not relevant to the point being made.
“The Immorality of Medicare For Less Than All” explained how policies that are motivated primarily by empathy often create more miseries than they relieve and that supporting policies that create more net misery is immoral—regardless of how much misery would be relieved. Condemning people who oppose a net negative empathy-motivated policy is a sign of ignorance or evil motives rather than a sign of superior empathy. Consequently, to support policies without a good understanding of the policy’s negative consequences is irresponsible and immoral.
“Why Not Provide Medicare To Everyone In The World?” gave an example of a net negative policy—despite all of its extremely positive benefits to some. It explained how Medicare for Everyone in the world (“MFE”) could not possibly work and would cause everyone in the world, including Americans in every income bracket, to consume less healthcare than the poor in America do today. That case was made by focusing only on the stark and devastating math concerning MFE. As such, it only scratched the surface of the negative consequences of MFE.
The math of Medicare for Americans (“MFA”) is significant, but a case based solely on the math is less compelling than is the math-only case against MFE. One must do more than scratch the surface to sort out why supporting MFA is also immoral.
Nevertheless, noting the math of MFA give context and continuity to the discussion. About 330 million people live in America today.[i] America’s annual GDP[ii] is about $21.5 trillion.[iii] That means that Americans are producing about $65,000 per person/yr. ($180 /person/day) of goods and services. As is the case with world consumption discussed in a prior post, Americans cannot sustain consumption in excess of their production. America’s production is about six times more than the world’s average of $11,225/person/yr.[iv] Compare that to Europe’s 750 million[v] people producing $18.8 trillion[vi] ($25,000/person) and one might think that everything would be fine with the U.S. having less GDP/person.
THE ELEPHANT IN THE ROOM
As conceded in earlier posts, universal healthcare bestows great benefits on some people. For example, poor people receiving otherwise unavailable healthcare is large and an almost unalloyed benefit. While opponents to universal healthcare attack universal systems elsewhere as being inferior to the American healthcare systems (many of which attacks are quite persuasive), universal healthcare systems in other countries generally do deliver most of the benefits conceded above, people are not rebelling against their systems, and—so far—have been sustainable.[vii] (This post will overlook the fact that, by their constant need to tinker with their systems, those countries reveal that even people in those countries do not believe all is well with their healthcare systems.)
In light of the above, one might be tempted to conclude that those other countries’ experiences prove that America can afford to adopt a universal healthcare program and the benefits would be great. The elephant in the room (the thing about which nary a word is spoken) is that American plays a different role from all other countries in many important respects, including healthcare. In short, if America were to adopt a universal healthcare system, healthcare would not only be worse in America, healthcare everywhere would suffer and universal healthcare would become impractical essentially everywhere.
Let’s sort out why that is true.
THE INDISPENSABLE NATION-AMERICA’S ROLE IN THE WORLD TODAY
- Funding of World Initiatives. Making the world a better place is expensive. Many international organizations have been formed to achieve global goals. For example, in 2000, the U.N. established the Millennial Development Goals to improve standards of living of the poorest people on earth by 2015. The most urgent of those goals were achieved well before the deadline. “As a founding member of the United Nations and the host for its headquarters, the United States has been a chief guide and major funder of the organization for more than seventy years…The United States remains the largest donor to the United Nations, contributing more than $10 billion in 2017, roughly one-fifth of the body’s collective budget.” ”Similarly, America’s 4.3% of world population funds over 12% of the operations of the World Bank, “that helps the world’s poorest countries.” The U.S. is a disproportionate supplier of direct foreign aid and is often the only country to play a dominant role in assisting other countries when natural disasters strike. Individual Americans contribute heavily and disproportionately to other global initiatives [viii] (because in America more than any other large country, it is possible to become rich enough to afford to make significant contributions to the world by inventing, developing, manufacturing, marketing, and delivering goods and services that other people value more than the money it takes to buy them).
- Defense. The countries that have universal healthcare systems that Americans are urged to emulate are mostly NATO members. America’s population is only 35%[ix] of NATO’s, but its defense spending is 63% [x] of NATO’s total. When other wars come, as they inevitably will, the U.S. will likely pay a disproportionate share of the war’s costs (in both blood and treasure) as it has ever since most of her allies have become more collectivist, thereby leaving them with insufficient ability to afford to do their fair share.
- America Keeps Sea Lanes Open. International trade has been crucial in enabling wealthy countries to thrive and impoverished countries to rise out of abject poverty. As discussed in “Exploitation—Part IV (c), Exploiting Exploitation−The Path To Prosperity,” what impoverished countries need most is a functional political/economic system. Such systems, however, are less likely to succeed without an ability to create wealth by trading what they produce with willing cash buyers outside their borders.[xi] The more markets they can reach, the greater and faster their rise out of poverty. The more pirates or blockades keep products from reaching markets, the less and slower they can take advantage of free trade.[xii] America has been the overwhelming leader[xiii] in enabling billions of people to rise from poverty by keeping trade routes open.
- The World’s Customer. As mentioned above, to create wealth of their own, people in other lands need customers. In 2017, America imported $2.4 trillion of goods and services from abroad, which amount is about 1/3 of the top 20 importers total and twice the next two largest importers, China and Germany, respectively?[xiv] (2019 U.S. imports are projected to have grown to $2.9 trillion, while predictions for China show a slowing of imports.) Without American purchasers, wealth creation and standards of living of everyone in the world would be much lower.
- Research and Development. With less than 4.3% of the world’s population, the approximate $510 Billion[xv] spent annually on R&D by Americans is 25% of all investments in R&D in the world, which is exceeded only by China at 27%, which is likely falling due to China’s financial woes.
Since this post is about healthcare, it is worth noting that “In 2004, U.S. medical R&D spending represented 57 percent of the global total. By 2014, the U.S. share had fallen to 44 percent with Asia [despite it having only 4.3% of the world’s population]… Once the undisputed center of global innovation in medicine, the U.S. is steadily losing ground to Asia and Europe [but is still the leader].”[xvi] Confirmation of the greatness of America’s contributions advancements in medical science is that the first many pages of a Google search yield no relevant data. Using Bing, I found a website that presented statistics concerning the quantity of “cited” American medical research on a “per person” basis.[xvii] Presented in that fashion, America’s efforts appear flaccid. For example, “Citable documents per million population” for Switzerland were over 70,000 compared to America’s 31,000. Doing the math, however, reveals that Americans produced 10 million cited medical papers while Switzerland produced 0.6 million. With less than half the population of Europe, America produced only slightly fewer “citable” medical science documents as Europe did, i.e., America’s citable medical science per person is twice that of Europe’s.
- Drug Prices. Everyone who debates the merits/demerits of universal healthcare knows that Americans pay more for prescription drugs than other people. The difference is massive, e.g., three times what the Brits pay and 16 times the Brazilians.[xviii] Few, however, appear to know neither why that is true or what to make of that fact. Let’s sort out why drug prices are so high in America and its effects everyone in the world and their progeny.
Why not have the federal government negotiate with Big Pharma?
Hopefully, the answer is evident by now, but let’s leave no doubt about it. “One perennial proposal to reduce health care costs has been to have the federal government negotiate drug prices with pharmaceutical manufacturers.”[xix] This quote is from a persuasive article that argues that such negotiations would likely cause drug prices to fall, and “Artificially depressing prices is a sure way to depress future research and the stream of new treatments. Depressing future research would, of course, would enable drug prices in America to be lower but at the cost of human lives and suffering that could have been avoided. Because America is less collectivist than other wealthy nations, Americans are the only people left in the world wealthy enough to fund (via high prices) fulsome medical R&D, certification, and administrative costs for drug improvements. (BTW: I’ve seen no research or articles that give America credit for funding R&D and regulatory certification conducted by foreign companies that cash in on the inflated drug prices paid overwhelmingly by Americans.)
The international cost of Medicare for All in America.
The stark reality is that either America, the wealthiest and most prosperous nation on earth, funds robust medical R&D and drug certifications, and the overhead associated therewith, or R&D funding will be anemic. Slashing the prices drug companies can receive for drugs would not only slow to a crawl the pace of medical improvements, it would (1) put many highly trained and skilled researchers and other Big Pharma employees (of which there are currently about one million) on the streets looking for jobs—which will drive down salaries, and bump lower-skilled workers out of jobs, (2) slash Big Pharma’s market value, thereby hurting people’s investments and destroying wealth that could have been used for investment in all industries—which slows job growth, (3) cause people buy less of everything due to lower pay—which produces job losses, (4) increase the need for unemployment compensation and welfare payments, (5) reduce the amount of taxes paid, and on and on—with each problem making the other problems worse. The ripple effects through the economies around the world would be huge. The cost of lost opportunities to cure medical conditions is inestimable.
Significant shocks to America’s economy (which MFA would necessarily inflict) would reduce America’s ability to do all the positive things it does for the world. With the destabilization of the Western World and its allies that MFA would inflict, the relative strength of its enemies will increase.
The above discussion of the compounding problems that MFA would unleash at home and abroad are only snippets of the disaster that would unfold, but hopefully, the above is sufficient to make the case. MFA in America is a really bad idea.
Fairness. That America carries so much of the world’s burdens on her shoulders is patently unfair. However, complaints by U.S. politicians about other countries’ freeloading will do virtually nothing to enable those countries to reduce their wealth redistribution sufficiently to become wealthy enough to carry a fair share of the burden. Similarly, it isn’t fair that inventors earn nothing on their failed attempts to invent and, usually, only a small single-digit percentage of the value of successful inventions. Neither is it fair that honest people/companies that produce things of great benefit to consumers are penalized with high tax rates, while those who produce little or nothing are rewarded with the fruits of the labor of others. That, however, is how the world works and will likely change for the better very little absent considerable changes to the cultures. However, the fact that “the system” is unfair is not a reason to make the world a worse place for ourselves and our progeny.
The Big Pharma/Government Axis can and should be reformed. And we should get on with reforming it. On the other hand, because taking the profit out of Big Pharma would make matters worse, the key will be reducing Big Pharma’s costs, e.g., reductions in regulatory compliance costs and the “lobbying” cost of obtaining reasonable regulations.
[ii] “[GDP] represents the total dollar value of all goods and services produced over a specific time period, often referred to as the size of the economy.
[iii] See, “FRED Gross Domestic Product.“ An interesting fact: With 4.3% of the globe’s people, America produces 25% of Global GDP. See “Global GDP (gross domestic product) at current prices from 2014 to 2024 (in billion U.S. dollars).”
[iv] See “Why Not Provide Medicare To Everyone In The World?”
[v] See “World Population Review.”
[vi] See “European Union GDP.
[vii] See “Is Canada’s healthcare system as bad as Donald Trump says?”
[viii] See “Should the Federal Government Negotiate Drug Prices?”
[ix] See “NATO Countries | North Atlantic Treaty Organization Members 2019.”
[x] See “List of countries by military expenditures.”
[xi] See “Exploitation—Part IV (a), Exploiting Exploitation−The Cause.” ,” especially “Two Cheers for Sweatshops.
[xii] See “Trump’s Tariffs—A Sad Realization.”
[xiii] See “Securing the World’s Commercial Sea Lanes” and “At the most basic level, the mission of our Navy is to defend our homeland while keeping global sea lanes open and free. In fact, the latter actually helps us do the former, since so much of our nation’s prosperity and security comes for the free flow of maritime commerce.”
[xiv] See ““Leading import countries worldwide in 2017.”
[xv] See “List of countries by research and development spending”
[xvi] See “U.S. Slipping as Global Leader in Medical Research.”
[xvii] See “What countries have lead the world in medical research and innovation during the time period between 1995 and 2014?” (This is a bit dated, but is likely because Big Tech’s algorithms do not want this data to be found.)”
[xviii] See “From Scientific American, “How the U.S. Pays 3 Times More for Drugs,” “Researchers from Britain’s University of Liverpool also found U.S. prices were consistently higher than in other European markets. Elsewhere, U.S. prices were six times higher than in Brazil and 16 times higher than the average in the lowest-price country, which was usually India.”
[xix] See “Should the Federal Government Negotiate Drug Prices?.”
4 thoughts on “Medicare For All? At What Cost To Us and The Rest Of The World?”
Thanks Harvey. A couple of thoughts on drug prices. Isn’t it true that the US is only one of 2 countries that allow TV advertising for new drugs? If so, to me that advertising is a huge cost that could be avoided to reduce drug costs. I am all for drug companies being able to recoup their R&D costs and make a profit but the TV advertising seems like an unnecessary expense. Plus I don’t think it drives much desire for the new drugs. I think we should educate the doctors about the new drugs and let them make recommendations to their patients instead of educating the patients about the new drugs and then have them ask their doctor to prescribe. This might reduce the need for the government to negotiate with big pharma?
Randy, Thanks for posting your comment.
I don’t know about other countries’ drug advertising customs or laws. I suspect that many doctors are annoyed by patients asking questions that imply that the doctor has not considered every potentially beneficial treatment option and many intellectuals see it as their gift to mankind that they can make better decisions for others than others can. Much of the public is repulsed by being constantly reminded of medical problems that they might contract, and the potential side effects of trying to treat the malady. Consequently, some people would benefit from banning drug ads.
Of course, countries with universal healthcare systems need to ban drug advertising because they could not fade the heat of the system’s patients if they were aware of all the latest wonder-drugs that are not being made available to them. A significant reason people in universal healthcare countries are either happy with or complacent about their systems is they do not know what they are missing (the fact that they are getting such a great deal on drugs due to the subsidization of drug costs by Americans helps too).
The advantages of banning drug advertisements, however, are less compelling than the advantages described in the opening paragraph. Note that if advertising did not result in enough additional sales to justify the costs of advertising (i.e., make a profit for the drug companies), then they would not advertise. That they do advertise suggests that a sufficient percentage of doctors are not as vigilant at keeping up with the latest drug innovations as patients might hope. To that extent, advertising is a public service. If anything, the profit from advertising should enable drug companies to do more R&D.
You are correct that in setting drug prices manufacturers must include is a cost component to recover the cost of advertising and that drug would not need to advertise prescription drugs if doctors were as vigilant about staying up to date. Eliminating the time wasted explaining to patients why the drug they asked about is not “right for you” would also lower the cost of medical treatment.
I’m in favor of doctors knowing about new drugs and advising their patients according to their findings. As to “we should educate doctors,” I’m not sure who the “we” you mentioned would be. Too often “we” means the government. Having bureaucrats involved in the process is not likely to add anything but costs and hassles to medical advice, i.e., make things worse.
Additionally, what you suggest could not be fully achieved without a ban on drug advertising. “Solving” problems with laws that infringe on people’s rights to speak (e.g., to advertise) create more problems than they solve. That would be a pill too hard for me to swallow.
[…] children and grandchildren will have a much worse life than we have had. Worse, as discussed in “Medicare For All? At What Cost To Us and The Rest Of The World?,” if America, fails, so goes the […]
[…] [i] “Medicare For All? At What Cost To Us and The Rest Of The World?” […]