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The costs of health care
Bandow points out that federal and state governments are desperate to reign in spiraling health care costs. “As America’s population ages, outlays will only increase. The Office of the Centers for Medicare and Medicaid Services (CMS) recently projected that health care spending could double by 2013, accounting for 18.4 percent of GDP.” However, drug spending has attracted more than its fair share of attention given its overall share of health care costs relative to, say, spending on hospitalizations.
“[T]he CMS reports that of the $1.6 trillion spent in 2003 on health care services and supplies, only $179 billion, or about 11 percent, went for drugs. And that figure includes payments for generic products and to pharmacies.”
Bandow also notes that economists widely praise the cost-effectiveness of prescription drug spending versus other forms of health care. “The added costs associated with breakthrough drugs represent a major structural shift from the provision of traditional medical services to the consumption of medical products, a systemic rotation from labor to capital.” Costs aren’t unimportant - but when it comes to pharmaceutical spending and patient health we really are getting more bang for our buck.
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