Sam Uretsky

Discounting Health Care

California, the most populous state in the nation, is also the one that has been trying to revive the New England town meeting. Some concepts can't be exported. When a New Yorker finds something objectionable, she writes a letter to the New York Times. When a Californian sees a social problem, she puts a proposition on the state ballot. This, perhaps more than anything, justifies the concept of representative democracy.

Faced with the challenge of unaffordable drug costs, there are two propositions on the current California ballot. Proposition 78 was written by the pharmaceutical industry and is backed by an $80 million budget. According to this proposition, drug companies may, if they so choose, offer discounts on their products to low-income, uninsured Californians. If they don't want to participate, they don't have to. It's not clear why they need a law to give them permission, but most likely they're trying to use Proposition 78 to keep the public eye away from Proposition 79, which is backed by labor and consumer groups.

Proposition 79 would also have the drug manufacturers offer discounts to low-income uninsured Californians, but there would be nothing voluntary about it. If any company declines to participate, then all its products could be removed from Medi-Cal, the state's Medicaid formulary. Prop 79 also allows attorneys to sue any drug company that's charging "unconscionable" prices without having to produce a client who has been harmed.

 The Los Angeles Times estimates that Prop 78 would provide discounts in the range of 40%, while Proposition 79 would aim for about 60%. Proposition 79 would also cover a larger number of people. While the newspaper finds fault with both plans, the key point seems to be overlooked by both the drug companies and the consumer groups: The minimum wage in California is $6.75 an hour ($8.50 in San Francisco). Drugs are expensive. When you're bleeding to death, does it really matter whether you're bleeding from the carotid artery or the jugular vein? There are a few drugs that are reasonably affordable -- but for a lot of people, anything, even pocket change, is too much.

The March 1999 issue of Health Affairs published a study of the effects of Medicaid co-payments on the rates of prescriptions filled. These co-payments range from a low of 50¢ to a high of $3. The researchers found that the rate of drug use declined substantially in states that enacted a co-payment requirement.

While the study only had 1,302 respondents, not, perhaps, enough to reach definitive conclusions, it appears that even this modest price is enough to keep people from filling their prescriptions. Even then, in 30% of cases, pharmacists didn't collect the co-payment, although in many cases this represented the total margin over the cost of the drug.

There don't appear to be any more recent studies, but it seems reasonable to think that conditions are worse now than they were in 1999. Inflation, although moderate, has continued, and wages have not kept pace. The uninsured poor may be barely better off in terms of income than those who qualify for Medicaid, yet for the uninsured, the prices of drugs, even at a deep discount, are dramatically higher. Many of these people may actually be Medicaid eligible, but haven't worked their way through the system yet. The California propositions, even if they offer 60% discounts, are still for the benefit of the relatively well-to-do.

Since Hillary Clinton's universal health insurance plan got knocked down, nobody has brought up the subject seriously. It's possible that things have gotten bad enough for people to recognize the severity of the health care problem and actually go beyond paper clips and string. The Medicare prescription drug benefit plan, due to begin next year, is a cruel hoax that will just make conditions worse. The most recent United Nations report on healthy life spans no longer has the US in a dead heat with Slovenia -- we've fallen behind.

Discounts are nice, no question. But at current prices for prescription drugs, even deep discounts aren't nearly enough. For people on Medicaid, those living at or just above the poverty level, sometimes $1 is too much. It's time to stop looking for patch jobs, discount plans and Canadian drug stores, and start looking at a health program that would assure everyone adequate care at a price that everyone can afford. If that seems too expensive, take the money out of the transportation bill and the energy bill, and (unlike the Medicare drug benefit absurdity) ask the drug manufacturers to give discounts.


From The Progressive Populist, Dec. 1, 2005

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