July 31, 2017
Greg Mankiw had a short NYT piece outlining the problems in providing health care. While some of what he said was reasonable, he ended with the tired cliche:
“The best way to navigate the problems of the health care marketplace is hotly debated. The political left wants a stronger government role, and the political right wants regulation to be less heavy-handed.”
This is not at all true. The right tends to want stronger and longer patent and related protections for prescription drugs and medical equipment. These government-granted monopolies can raise prices by several thousand percent above the free market price. As any economist would expect, these monopolies create enormous problems of enforcement and lead to a wide variety of rent-seeking behavior, such as drug companies lying about the safety and effectiveness of their drugs in order to sell more of them.
While longer and stronger patent protection does redistribute income upward, it can hardly be described as “less heavy-handed” in a world where the government pays for research upfront and then allows drugs and medical devices to be sold in a free market. (Discussion of alternatives are here and here.)
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