Economic Effect of Repeal of Prescription Laws

I’ve been writing for some time upon how repeal of prescription laws will reduce the cost of health care and likely give patients the power to decide for themselves on what medications they wish to use. In this post I’m going to discuss the economic effect upon physician incomes from repeal and return to the pre-1938 status quo in access to medical drugs. And while as a libertarian I oppose all drug laws period, I will limit this to those medical drugs that are neither of the narcotic class or habit forming.

Primary care physicians are those who mainly diagnose and prescribe for their patients. Specialists do this to some degree, but the primary care physician is usually the one who either prescribes or sends the patient to see a specialist for more involved treatment. For chronic conditions the primary care doctor is generally the one you usually see for treatment of things such as high blood pressure, cholesterol, diabetes, arthritis. They are also usually the ones who order lab tests and so forth unless the condition is one where a specialist will be involved in the patient’s care for a condition such as ulcerative colitis.*

  • I’ve had this condition for about a decade now. It is increasingly commonplace today as it is a malfunction of the immune system that effects non-smokers.

So what would be the economic effect of repeal of prescription laws for most medicines? One aspect of this would be that the patient, not the doctor makes the decision as to what medicine to take. Most likely the decision would also be guided by the cost of the medication. Brand name drugs are considerably more expensive than generics. And for most people, generics will do just as good a job for them as the more expensive brand names do. The diabetic for example is much more likely to start with generic drugs such as Metformin. Then move on to the lowest cost insulins if this drug is not effective enough. The same thing would hold true for high blood pressure, cholesterol,  common arthritis medications. The three most popular generic medications for these are quite cheap. They don’t necessarily “work” on everyone, but they do work effectively upon most people. In general if people start at the lowest effective dosage, they are also relatively “safe” for most. However one should carefully check for side effects which are available on a number of “health care” websites. I can recommend “WebMD” as being quite useful this way. It is alway possible that you might experience adverse results from products that most people won’t have problems with. I speak here from experience. The fact 999 people may be able to use a medication might not apply to you as being the “one in a thousand” who can’t… This means that if you are able to treat yourself, you will still have to be responsible for seeing as to what the effect of a medication is upon you. So even if prescription laws are repealed, you will likely still have to see a doctor upon occasion to “check on things”.

Taking his into consideration, I believe an accurate estimate would be that about half of all visits to primary care physicians will come to an end. As many of these scheduled visits are made after lab tests are made, reducing the number of visits also eliminates the lab tests. We’re looking at a 50% reduction in medical office visits and lab tests by patients who are not suffering from a disease that needs immediate attention. Assume that 1/2 of all visits to physicians are for treatment of chronic conditions. These get cut in half. Visits for the treatment of a disease that needs immediate treatment wouldn’t be effected too much. The income of US primary care doctors is in the $150,000 range. Without prescription laws this would drop to $112,500. However “overhead costs” would still remain about the same. Most likely fewer doctors in training would go into primary care instead of a speciality. On the other hand the number of nurse practitioners, physician assistants might increase. The medical labs that do the testing would likely have less customers than before. So there would be an economic effect there. Fewer tests, fewer visits to physicians. This state of affairs however could be effected by the creation of powerful medical software programs, perhaps using artificial intelligence.

There is however another effect from repeal of prescription laws. Patients are more likely to choose “comfort” over “life span” while doctors generally operate today in the opposite direction. This might result in a slight (less than a few percent) in the length of life spans. As living past 80 seems to increase the likelihood of ending your life in a nursing home, it might not be that bad a “trade off” as people might first think… (it’s a lousy place to die)

 

 

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Does Government Make Us “Safer”?

Many people believe that government makes us “safer” by its laws and regulations. That we are protected by its police and military forces from criminals that wish us harm. The only problem with this is that government also creates situations that encourage people to become criminals. The trade in certain drugs the government doesn’t want us to use is a good example of this. Because such activities are illegal, but also extremely profitable, we have a situation where “turf wars” take place between groups involved in the sale of these drugs. Unfortunately innocent people often get caught in the crossfire as has happened here in Muskegon not that long ago. Also, the cost of being addicted to these drugs is so high that many turn to crime to support their addiction. Thus we have hold ups, houses broken into, and all sorts of violence that wouldn’t take place without our drug laws. We are also paying a high price (hundred billion dollar range) for our “War on Drugs” when all the costs of law enforcement, courts, prisons, guards, along with the high cost of keeping record numbers of people in prison, often for decades. It should also be noted that when a person is kept in prison, they are not contributing anything to society, nor do they pay any taxes. Additionally, often their families end up on public assistance with their children being more likely to turn to crime themselves, adding further costs to the taxpayers…

We have since the turn of the century also made enemies for ourselves in virtually all of the countries of the Middle East. Afghanistan, Iraq, Syria, Egypt, Algeria, all of these and more are of our doing. ISIS is a consequence of our actions. As are the individual terrorists who have carried out “actions” against Americans here inside America. We have also now managed to drag in Western Europe into the picture, and just recently also have created a couple of million or more of refugees who are fleeing the conflicts for which we were the “creators”.  This “Battle of Armageddon” we see there in Iraq and Syria is of our doing. If this is “keeping us safe”, well, “Uncle Sam” is doing a lousy job of it! Nor is it likely that Donald Trump or Hillary Clinton will be able to put a stop to it without further bloodshed. “We have sowed the wind” and we will indeed “Reap the Whirlwind” in return with time.

Nor is the government doing all that good dealing with domestic affairs. Our police forces are now “para-military” who behave more and more like an army of “occupation” than a civil police force. We are becoming “less safe” as time goes on. People with “nothing to lose” are dangerous, and we’re creating more and more of them as time passes now. This is a “powder keg” and the “fuse” has been lit. Plus the level of armament today is such that any actual conflict is going to be a lot worse than those we saw in the past.

All of this indicates that our increasingly militant government isn’t able to actually make us “safe” regardless of what it does. The “enemy” can come to our shores and already has. Our economy at the best is “limping” and unable to create sufficient employment for all those seeking work. That doesn’t help things either. The “gig” economy may allow one to survive, but that’s about all it can do. It doesn’t create the economic surplus necessary to grow the economy. That is one of the reasons we have such large deficits. Low income people don’t pay much in taxes, and more and more Americans are now “low income”… Then our increasingly expensive health care system adds its own burden to things. We could “fix” that, but it would require doing things that would reduce the incomes of those involved in health care. And that is going to be difficult to do. We could end The War on Drugs, but that too means some people will no longer enjoy the incomes they now have. We could eliminate much of the “waste” we see in duplication of government services between state governments and the federal government, but that too means some will lose their good paying, good benefits “government job”. And there are not too many who will volunteer for that. It’s a lot like dieting. Your “fat” doesn’t want to leave…

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The Troubles Here In Michigan

Most people reading this are doubtlessly aware that our governor “screwed the pooch” over the City of Flint and exposing its people to a level of lead in their drinking water well above the maximum allowed levels. From what has been published on the issue, it appears that a “money saving” switch was made by the “financial manager” selected by Gov. Rick Snyder to a “cheaper” water supply for the city. Flint had been buying its own water from Detroit, which in turn gets it from Lake Huron, one of the Great Lakes that surround the State of Michigan. Everything had been going fine except that Flint, a city “left behind”  by the American auto industry, was having serious economic problems. This was why the state government had placed Flint under the supervision of a state appointed “financial manager”. Since there was every incentive to reduce costs, it was determined that the city could draw water from the Flint River cheaper than it could buy water from Detroit where it had to piped in some distance with a resulting higher price than if Flint could use local resources for its drinking water.

It appears that no one really checked out the river water to see whether there would be any problems using it as a source of drinking water. Apparently it was felt that it could be used given proper filtration, although there are a lot of questions involved here about how the water would be treated to be “safe to drink”. I’m not an expert on water treatment, but it would seem that someone should have checked out the city’s water system to see what the condition of the water would be after passing through the pipes to the actual users of the water. Flint, like many older cities, uses plumbing that uses lead solder to join its pipes together. The Romans did this a couple thousand years ago because it is easy to melt lead and it makes a good seal. However, lead is effected by acid and leaches out if exposed to acidic liquids. The Romans drank a lot of wine, often mixed with water for taste. The acid in the wine however caused the lead in their drinking vessels to leach out. Lead is one of the “heavy metals” and there is really no “safe” level for it, especially when children are concerned. It is known that it can retardation in children, and makes learning in school more difficult. There is also the problem that even changing the water supply back to that provided by Detroit doesn’t solve the problem of the dissolved lead already in the city’s water system. It can be filtered out to a certain extent, but to really get rid of the lead will require replacement of the city’s water pipes which is going to be a “major expense”. A problem in where is the money going to come from to replace these water pipes? No doubt it will be done, but it is going to be a major expense and will also take considerable time.

It appears that there was knowledge of the problem prior to its hitting the newspapers. The administration there in Lansing (MI) appears to have tried to “cover things up” by various means, including providing state employees with bottled water (water coolers) so that they didn’t have to drink the city’s regular water. A real “black eye” for the Snyder administration and one that I’m sure hasn’t helped either the state Republicans or even the national party as Flint is a black majority city whose people are very angry at both the state government and their governor along with Republicans in general.

What this all means is that when your right to select who is to govern you is taken away, and this is the case in Michigan, the consequences can be that your health and welfare is at the mercy of people who perhaps have no reason to be concerned because you have no legal power over them. That you are legally at their mercy and powerless to change things. Further proof as I’ve been showing in this blog of what happens when government decides you are incompetent to manage your own affairs and an “expert” is appointed to do so! That Flint financial manager isn’t a lot different than that of some “professional” who has the legal power to decide what you are allowed to have and what you will not be allowed to have. Unfortunately this state of affairs hasn’t yet been challenged by any one but libertarians, our two major political parties apparently considering it a settled issue.

 

 

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A Libertarian “Wish List”

For the sake of discussion, I’m putting down a list of some of the things that libertarians could suggest to improve our society and also effectively increase our standard of living through an actual reduction of the cost of living for most of us. Of course this also means that those who are now exploiting the power of government through various forms of legal monopolies will likely suffer a decrease in their own incomes…

  1. Elimination of prescription laws. You decide, not your doctor, what medicines you wish to take, the amount, and rather you want a generic to save money or are willing to pay more for a “brand name”.
  2. Elimination of restrictions upon being able to purchase medicine from sources outside the US. If the medicine is cheaper in Canada, why can’t you buy it from there? Or from any other nation on the map? We are not restricted today to products only made in the USA. So why are we restricted as to the sources of our medicine.
  3. Freedom to consult with medical providers anywhere on Earth, including referring medical and lab tests to the provider of your choice.
  4. Elimination of the requirement to purchase health insurance. People should be free to make their own decisions about how to pay for health care. Obamacare’s “mandate” is likely actually in truth “unconstitutional” regardless of the politics involved in that it not only requires the purchase of health insurance, but also requires the purchase of specific coverages that many people would consider not worth the cost. Also Obamacare discourages people from seeking treatment at the earlier stages of disease due to its excessively high deductibles and co-pays. You will note that you can purchase auto insurance at different levels, but are not allowed to do the same with Obamacare…
  5. People should be allowed to set aside money for future health care needs in much the same way as they can now do so for retirement. If we are going to be burdened by an income tax, at least we should be able to set aside “pre-tax” money to pay for our future health care needs. All such costs should be fully tax deductible to the individual.
  6. Repeal of our drug laws. As long as people do not endanger others, it should not be the business of government to regulate what people do. The fact is that drug laws encourage criminal organization to provide a product that might not be so “attractive” if these laws did not exist. The role of the “drug pusher” and his economic interest in selling an illicit product for a far above market price is one of the major reasons we now have the problems with “illicit” drugs that we do! Plus these laws tend to encourage law enforcement to behave in a manner that often violates people’s civil and human rights.
  7. Repeal of civil forfeiture without any conviction of an actual crime. This law “encourages” law enforcement to behave like “criminals”! Taking money and goods from people and then requiring them to prove their innocence before they can get back what was taken from them. This is more the sort of thing that used to be done in countries ruled by tyrants, not the people. In a free country, this sort of thing is definitely not “American”!
  8. We should have a tax system that encourages work and productivity. What we have today certainly does not accomplish that goal. Nor should we be taxing productive businesses since the tax is only passed on to the consumer in the form of higher prices. Also such taxes causes businesses to seek means to lower their tax burden by various means, most of which reduce US employment and in the long run do more harm than good. Plus such business practices increase our trade deficits, a major cause of eventual financial problems of the sort we’ve seen in any number of Latin American countries. The same sort of problems we are going to be seeing here in the USA if we keep doing what we’re doing now…
  9. Instead of the multitude of tax systems we have now, perhaps we should have a simple financial transaction tax. Say 1% of every financial transaction. That would be adequate for the sort of limited government that we are “supposed” to have. Not the bloated monster that like a cancer continues to grow larger and larger…
  10. The role of the federal government should be national defense and peaceful relations with the rest of the world. Instead we’ve been behaving like a “world bully” and reaping the consequences in turn! Most of the domestic roles the federal government does today could be done better by state governments and private organizations. For example, we could replace the FDA with a private organization similar to “Consumers Union” (CONSUMER REPORTS) which would be more effective at lower cost. The same thing is likely true with the rest of what the federal government now does. All of the roles now performed by federal agencies used to be performed by state agencies, although even some state agencies could be replaced by private organizations that would do the same thing at yet lower cost.
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Why Maximization of Personal Freedom Is What Libertarianism Is All About!

The “freer” we are, the better off we are. The less free we are, the worse off we are. Let me explain just “how” this works. And “why” government laws, regulations, rules make us worse off. There can little doubt that today we are worse off than we were a couple of generations ago. Our “cost of living” is higher, and unlike it was when I started working in 1959, the minimum wage is no longer sufficient for even a minimum standard of living. The major reason isn’t the minimum wage itself, but all the governmental activities on the local, state, and federal level that have increased the US cost of living so much over what it once was 56 years ago. Why what a dime bought back then takes an entire dollar today…

For various reasons, US health care costs have risen much faster than wages over the past 56 years. The same is true when it comes to other “professional services” such as dentistry. The other licensed professions and occupations have also increased the cost of their own services in the same way. Mainly because because of government enforced monopoly, they are free to do so. Lower cost “competition” is not allowed to exist today. In the past doctors could write “as needed” prescriptions that didn’t expire after a year. These are apparently illegal today. My stepfather (a dentist) was pulling teeth for $6.50. It costs quite a bit more today assuming you can even find a dentist willing to do it. Modern dentists don’t like the idea of pulling teeth because a pulled tooth is a “one time deal”, while a “saved tooth” is a tooth that will need further attention over the years at a good profit every time. The same thing applies to doctors. Doctors could (under a different political system) write “take as needed” prescriptions, but that’s only a “one time” profit.  But under our present system a doctor can have you make quarterly (4 times a year) office visits along with lab tests which also put money in someone’s pocket. The principle is similar to that of illicit drug dealers creating addicts through giving out “free samples”. The addicts will return upon a regular basis for their “fix”. This is why the illicit drug trade is so profitable for all concerned. Why it is impossible to stop the flow of such drugs into the country. Basic principle of supply and demand. If “demand” is there, “supply” will soon appear. We have plenty of historical examples of this. Prohibition was one. Organized crime became a serious problem. One that government couldn’t resolve until Prohibition itself was repealed. So if we were to repeal our drug laws, our prescription laws, the would no longer be the problems we see today. We would have a far smaller prison population. Health care costs would be a lot less than they are now, especially with computer software that would greatly reduce the need to visit doctors in search of a solution to their health problems. The possible reduction in health care costs might well be as high as $500 billion dollars a year. Plus without these laws, doctors would have far more time to serve those patients who actually need them. Plus we would have lower cost hospital services based upon using the level of technology appropriate to the condition being treated. There’s about another $500 billion we could save right there. So US health care costs drop by a trillion dollars a year. Nor do we need something like Obamacare either. There are better methods of financing what we need. Something like the principle behind credit unions might be better than “insurance” here.

Local governments in response to demands to see that the value of housing continues to increase pass laws that restrict new construction and require inefficient building methods. This is of course of benefit to those who can afford to buy such housing as effectively their home increases in value year after year at a rate at least equal to that of inflation. Whereas virtually everything else you buy becomes worth “less” year after year. We could of course create lots of low income housing if we wanted to do it. But doing so effects the value of all existing housing. So government (which is almost always corrupt) benefits the few at the expense of the many. This is a characteristic of all elected governments by the way. When you have elections, you are going to find that those who win elections are those who can convince the most rich people to support their political campaigns. Political corruption is built into the system. Every “democratic” government is corrupt to a more or lesser extent. This seems to also apply to most dictatorships since the dictator still has to have “support” from enough people to keep him or her in power. The only possible non corrupt form of government is one where representatives are selected by a lottery. Even then measures will have to be taken to prevent any possible forms of bribery from influencing its decisions. In any case, we probably could reduce our cost of living by a trillion dollars or more a year…

These two issues alone would raise our average living standards by $6,000 a year per capita. Elimination of all the restrictions we place on people starting their own businesses along with those on existing businesses would boost our standard of living even more. The more people we have who can apply their own talents to serving others, the better off we are! Then we have a great deal of “government overhead” that could be eliminated. We could for example change the FDA to a “certification” agency. We could have both drugs that are “certified” and those that are not because they are new and still experimental. Giving people the freedom to “choose” makes things better for nearly all of us. We could actually have a “smaller” federal government that supports research on issues that private enterprise doesn’t want to handle because of “risk”. Cutting the “Defense” budget in half would yield sufficient money to pay for all the R&D that is needed to resolve the diseases of today. It would probably be best if the pharmaceutical concentrated on production and left “R&D” to non-profit agencies. As it is, our drug companies concentrate far too much on what will be the most “profitable” instead of what would be of the most value to people. There are far too many federal agencies whose tasks could be better done by the states… And perhaps at lower cost, saving us even more money over what we’re spending now.

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How Government Makes US Poorer…

Many people believe (mistakenly) that “government” makes us better off…

The unfortunate truth is the opposite. The more that government interferes in the economy, the worse off we get. Increasing government regulation of more and more activities raises costs and reduces, not increases, the general welfare. Since World War 2, the role of “government” (federal, state, and local) has greatly increased from what it used to be. Our opportunity to “better ourselves” through providing goods and services has been reduced. More and more those who provide any “service” have to be “licensed” by government (federal, state, local). Services that used to be provided by anyone willing to do the work often now require a “license” from “government”. Usually the claim is made that this is done for “the protection of the public”. The truth of the matter is that the “public” is forced to pay higher and higher prices for services that used to be provided by those ambitious to work. To provide valued services at a price that people could “afford”.

This is an entirely different matter from government providing protection against “fraud”. As a general rule, most of these type of services are simple enough that anyone who has any understanding of the principles involved can determine for themselves whether or not the work is done correctly. And in any case a “government license” does not insure that the work will be done correctly or safely. In most of these cases we are not dealing here with something that is incredibly complicated or complex. Things like putting shingles on a roof does not require a great deal of education or skill. It is something that people have been able to do for themselves for centuries before government ever got involved in the issue. The only thing that “government” has been able to do is to increase costs to the consumer.

Government regulation also decreases employment by raising costs. It is illegal to hire someone and pay them less than the minimum wage, even if they are being taught how to do a job. My grandfather got his start in life back in the last years of the 19th Century by starting work as a “trainee” in a foundry. Through learning the foundry business he was able to increase his value to his employer until he ended up as “foreman” over the entire enterprise. He started BTW at the age of 13. His formal education ended with the 5th grade. Today of course no boy at the age of 13 would be allowed to drop out of school, certainly not to go to work in a foundry. And while the “minimum wage” did not exist at the time, the training wage he was paid would probably have been below “minimum”…

A young person today starting out faces “handicaps” that my grandfather never knew. He could work for any employer willing to take “a chance” with a youngster willing to learn a trade. Government at that point in time interfered very little in most people’s lives. If you had a useful skill, you could put it to use for your own benefit without any “licenses” or “permits” from government. You could go door to door seeking work. Today, where I live, you have to obtain a “permit” from my local city government to do such. This of course has “consequences”. Not only is it more difficult for anyone seeking work, it is also more difficult to find someone to do the work without having to search through a list of contractors to find someone willing to do the work. (at much higher cost)

When I was but a boy, we had a farmer who came around with a horse drawn wagon who sold fresh produce from his wagon. This was as I recall while WW2 was still going on and gasoline was rationed. We also had milk delivered to the door (by a milkman driving a truck). You could also call and have groceries delivered. All of these things no longer exist today. Yes, you can buy some food stuffs from Amazon, but there are practical limits on what you can buy this way. Plus there is a shipping cost (concealed in the price of the goods) so the cost is higher in most cases than buying from your local supermarket.

All of this leave little doubt that “government” does increase both our cost of living and the ability of those with lesser educations from using what knowledge they have for their own benefit. In effect government regulation has greatly narrowed what people are allowed to in the form of services to others without first obtaining a government license or permit. It is thus not surprising that we have so many unemployed or underemployed considering the obstacles that people today face in finding a means of supporting themselves! Naturally too this increases everyone’s own “cost of living” well beyond what it would be if government behaved the way that it used to behave back before it became the intrusive “Big Brother” that it has become today…

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Fixing Michigan’s Roads?

Here in Michigan we badly need road maintenance and repairs. Perhaps as much as a billion dollars a year worth! The problem is: Where do we get the money to do it? When Governor Snyder cut taxes on business (under the previous governor, business here in Michigan was heavily taxed), he had to raise taxes on the people of Michigan to balance the budget. Even so, cuts had to be made. Schools had to “make do” with less. The state “Earned Income Tax Credit” was cut, and senior’s pensions were now “taxable”. The gasoline tax was raised, but the sales tax portion didn’t go to the roads, but to schools.

This was the great failure of Proposal 1. In exchange for raising the state sales tax from 6% to 7%, the state would be able to start fixing the roads, give the schools more money, and restore the state Earned Income Tax Credit. The problem was that there was a lack of trust as to “where” the money would go once collected. Sufficient that Proposal 1 went down to defeat by a margin of 80% against to only 20% for. Michigan’s Republican administration doesn’t want to have to raise taxes, but there is little choice but to either raise taxes or start cutting funding for existing programs to find the necessary funds. There are three possible places where this could be done. State support of the tourist industry, state support of economic development of businesses, and the state support of movie makers. The last really doesn’t amount to much, and cutting the others would likely do more harm than good.  There also doesn’t seem to be much interest in raising the gasoline and diesel fuel taxes further, although this to me seems to be a better choice it is “road users” who are paying the tax that goes to support maintenance and repair of the roads on which they drive. And “user fees” (which fuel taxes are) puts the tax directly upon the “users” instead of taxing everyone else as raising the state sales tax would do. Especially now with the much lower prices being charged today for gasoline and diesel fuel. The objections appear to be upon the basis that the working poor would have to pay higher taxes to drive to work.

There is also the problem that Michigan allows trucks weighing up to 82 tons on its major roads. That is a “lot” of weight! And one of the reasons our roads are breaking up. Massive weight causes a road to develop hairline cracks. In the winter, these cracks fill up with water which freezes. When water freezes, it creates irresistible force that widens cracks. The wider crack fills with water, freezes, crack grows larger. The process continues until a chunk of pavement is forced up, knocked out by passing vehicles, and then we have a pot hole that will continue to grow larger and larger with time. It is noteworthy where there are no heavy trucks using the road, there are usually very few pot holes. Proof if any is needed where the damage is being done and “who” is doing it! It makes a lot of sense to tax those who are the major creators of the problem, which can be best done by a “user fee” system that is based upon both mileage and vehicle weight. Or in “ton/miles” here. Taxes would be accessed based upon odometer readings and vehicle weight. Fuel taxes would be eliminated, so the cost gasoline and diesel fuel would be lower than it is now. Collections would be perhaps on a monthly or quarterly basis. Since the weight of all makes of cars is well known, it is only necessary to read odometer mileage every so often. There are various means of doing this, but it is relatively simple and could do done at say a car dealer’s. The “details” of all this would have to be worked out by the state government.

A “user fee” using “ton/miles” would be based upon a fraction of a cent per ton/mile. Todays cars range in weight from about 2500 lbs to about 4500 lbs. Or 1.25 ton/miles to 2.25/ton/miles. A maximum weight truck would be 82 ton/miles. Effectively everyone pays according weight and miles traveled. The roads are financed, taxes are “pay as you go” and only road users end up paying.

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