By Dr. Merrill Matthews Institute for Policy Innovation
California has an idea and you know what THAT means: Youd better hold on to your wallet--and your liberty. And in this case your health.
Golden Staters will vote in November on a ballot initiative that requires the state to pay no more for prescription drugs than what the Veterans Administration pays. There are only two outcomes if the initiative succeeds:
- Either lower-income veterans will pay a lot more for prescription drugs or
- They wont get them at all.
Heres why. The VA does get prescription drugs at discounted rates though what those rates are is not publicly known. However the
Congressional Budget Office has said of VA spending on drugs Prescription drugs would have cost about 70 percent more using a combination of Medicaids and Medicares payment methods.
But the VA is a relatively small part of the prescription drug pie and drug manufacturers cannot give everyone the same price.
Look at it this way. Suppose you have a job that pays your bills and you use your spare time volunteering for charitable work. Your employer finds out that you are donating your time for a charity and claims you have been robbing the company because you charge it more. Your employer demands the company pay you the same amount as the charity which at this point is zero.
Of course the ONLY reason you can volunteer your time for the charity is because you charge your employer the full cost of your labor. If your employer demands price parity you will have to give up the charity.
Or you could level out the costs by having the charity pay you something--if it could--while your employer pays you less.
The loser in both cases is the charity. It will either lose the free labor it was enjoying or it will have to pay something when it had to pay nothing.
That is exactly what will happen if the California prescription drug price control initiative is successful. Either the drug companies will have to charge the VA more for the drugs so that Californians are paying the same price or veterans wont get them.
So I go back to my initial question: What does California have against our veterans?
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Todays PolicyByte was written by Dr. Merrill Matthews resident scholar with the Institute for Policy Innovation.
