Outlawing light bulbs

The manufacture of traditional incandescent light bulbs will be illegal, as of January 1.   Compact flourescent bulbs (those with the corkscrew shape) and Light Emitting Diodes, which look something like the old bulbs invented by Thomas Edison, will have to replace them.  You can still buy the old bulbs and stores can still sell them until they run out of stock, but it will be against the law to manufacture or import them.  The new bulbs use less energy and last longer, but they are more expensive.

If the new lighting technology saves so much money in the long run, shouldn’t the free market take care of this?  As opposed to a legal prohibition?  Or is this a case in which the free market doesn’t meet a social good, in this case, saving energy? [Read more...]

Is libertarian economics what’s killing the GOP?

Most diagnoses of what ails the Republican party have been focusing on social conservatism, saying that Republicans need to stop opposing gay marriage and abortion if they want to start winning national elections.  But now some are arguing that the Republican commitment to libertarian economic policies–that is, a commitment to an untrammeled free market–that’s really to blame. [Read more...]

Shakespeare the capitalist

One of the many unfortunate legacies of Romanticism (there were some fortunate ones as well) is the mystification of the artist, as if, say, a literary genius were some ethereal sensitive soul far above the crass material realm of everyday life.  Whereas in reality, actual literary geniuses–like Chaucer, Jane Austen, Dickens–tend to be of solid, down-to-earth middle class stock.  That certainly was true of William Shakespeare.  Recent research into the abundant records of his business dealings show him to have been a rather ruthless capitalist. [Read more...]

Morality and economics

Economist Steven Pearlstein has published an article in the Washington Post entitled “Is capitalism moral?”  It’s balanced and nuanced, giving the views of both conservative apologists for capitalism and its liberal critics.  I’ll give you a sampling after the jump and then raise some additional issues of my own. [Read more...]

From risk-taking to risk-averse

Economics columnist Robert J. Samuelson says that the reason economic recovery is so slow in coming and the unemployment rate so high is a shift in the national psychology:

We have gone from being an expansive, risk-taking society to a skittish, risk-averse one. [Read more...]

Medicare, the free market, and a drug that doesn’t work

This story will make you discouraged about BOTH the government AND the free market when it comes to healthcare.  Peter Whoriskey reports:

The U.S. health-care system is vastly overspending for a single anemia drug because Medicare overestimates its use by hundreds of millions of dollars a year, according to an analysis of federal data. The overpayment to hospitals and clinics arises because Medicare reimburses them based on estimates rather than the actual use of the drug.

The government for years has tried to rein in spending on the prescription drug, Epogen, which had ranked some years as the most expensive drug to taxpayers through the Medicare system.

Medicare’s current estimates are based on Epogen usage in 2007 for dialysis treatments. But since then, use of the drug has fallen 25 percent or more, partly because of Food and Drug Administration warnings about its perils and partly because Congress removed the financial incentives for clinics and hospitals to prescribe the drug. Because Medicare continues to reimburse health-care providers as if the dosing levels haven’t changed, the significant savings in doses has not translated into savings for the U.S. Treasury.

The amount of the overspending is more than $400 million annually, according to calculations done separately by The Washington Post and experts.

“I think we probably left money on the table,” said Rep. Pete Stark (D-Calif.), a critic of the way the drug had been used who helped shepherd through legislation that removed the financial incentives for bigger doses beginning in 2011.

The overpayment for Epogen reflects both the promise and difficulty of large-scale government reform of health-care spending.

For years, Epogen was one of a trio of anemia drugs — all manufactured by Amgen, a California biotech firm — that cost Medicare as much as $3 billion annually. Overall U.S. sales of the drugs exceeded $8 billion.

Nearly two decades after the drugs were first approved in 1989, their purported benefits were found to be overstated, and the FDA issued a series of stern warnings about their potentially deadly side effects, such as cancer and heart attacks.

At least some of their popularity stemmed from the fact that hospitals and clinics made lots of money using them: The spread between what they paid for a dose and what Medicare paid them to administer one reached as high as 30 percent, according to the Medicare Payment Advisory Commission.

The incentives drove up usage. By 2007, about 80 percent of dialysis patients were getting the drugs at levels beyond what the FDA now targets as safe.

Congress pushed Medicare to revise its payment system to remove the incentives for larger doses. Under the new system for dialysis patients, Medicare pays a set fee for a bundle of dialysis services and drugs.

via Medicare overspending on anemia drug – The Washington Post.

So Medicare reimbursed based on ESTIMATES rather than actual usage?  And hospitals and doctors prescribed the drugs so much in part because “they could make so much money using them”?

Of course, the reason the drugs were so lucrative is because Medicare paid so much for them, so it’s the unholy alliance between the government and the private sector–which is at the heart of Obamacare– that is to blame.  Still, this dashes further the assumption that our medical treatment is always based on objective considerations of patient care.

Are business practices that work in other profit-making enterprises fitting for health care?  For example, why are all of these prescription drugs being advertised on television?  Are patients now “consumers” who are expected to demand certain medicines from their physicians, in which case, what happens to objective determinations in the practice of medicine?  Or are the physicians the target of these marketing campaigns, in which case, again, what happens to objective determinations in the practice of medicine?


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