Government Encourages Third-Party Payment, Which Drives Health Care Prices Higher

Cato adjunct scholarsCharlie Silver andDavid Hyman have an important oped in today ’s Houston  Chronicle  explaining how third-party payment increases prices for drugs and other medical goods and services. An excerpt:If you ’re like us, your health insurance coverage includes a prescription drug benefit. The benefit isn’t free, but you’re willing to pay for it because it saves you money every time you have a prescription filled. You are responsible for your co-pay, and your insurer pays the rest.At least, that ’s how it is supposed to work. But the truth is that your insurer often pays nothing. Your co-pay is all the pharmacy receives. Not only that, but your co-pay often exceeds the amount that someone without insurance would have paid for the drug. That’s right: People who don’t have insurance are paying less than you are for the same drug…The scam works by taking advantage of consumers ’ naive belief that their insurers are watching out for them. Suppose you have high blood pressure and your doctor prescribes amlodipine, a medication used by millions. If you have insurance, you probably think your insurer negotiated a great deal because a month’s supply at the pharmacy costs y ou only $10. But if you paid cash for the same drug at Costco, you’d have to pay only $1.85…The real problem is that insurance is a terrible way of paying for things that we can and should pay for directly. Price-gouging does not happen with drugs that are sold over-the-cou...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs