Clinging to Central Planning In Healthcare

The Washington Post continues its support of the central planning that is engulfing one-sixth of the world’s largest economy, also known as “Obamacare.” The latest efforts include an editorial extolling the virtues of a thing called the Patient-Centered Outcomes Research Institute (PCORI) (see here) and an article attacking a drug firm in the private sector (see here).

The government has begun throwing taxpayer dollars at PCORI, to the tune of $3 billion by the end of the decade. According to the Post, these grants will allow PCORI to set up a “research network” to pull in data on “patient experiences” throughout the country. The Post’s editors are almost giddy about the use of digital records to get “thousands of data points.” The idea is that the central planners will use this data to determine “what works and what doesn’t” among treatments.

Sounds sort of reasonable:  basing decisions on data and evidence gathered from many sources. Knowledge in society is fragmented and widely dispersed, so it seems that PCORI will serve the central planners well. Except that central planning, unfortunately, destroys markets and competition, which is the very process through which dispersed knowledge is most effectively mobilized and coordinated (through prices) in the first place. Oops.

PCORI may gather information that initially might be useful to central planning. But once treatments based upon that evidence are mandated and become standard, there will be less to learn from the data (due to less experimentation), and the possibility of further evolution will be greatly diminished. In the absence of markets, the development of alternative treatments will depend solely upon the limited knowledge and intellectual capacity of the central planners. Not good.

Not content to simply admire and cling to their central planning, liberals at the Post also attacked the private sector, by criticizing a drug company called Genentech and two of its products. You see, Genentech somehow managed to develop not one but two drugs that treat macular degeneration, one of which costs significantly more than the other.

The cheaper drug, however, is approved only for cancer treatment and because of safety questions, Genentech discourages doctors from prescribing it “off-label” for use in the eyes. Choosing the more expensive drug costs Medicare an “extra $1 billion or more annually.” And the Centers for Medicare and Medicaid Services can do nothing about this because it has no authority under current law to “dictate treatment based on cost” or to negotiate drug prices with companies.

So the liberals at the Post play up the Genentech story as an example of a greedy drug industry seeking to profit from the more costly treatments and use it to justify placing healthcare under the central planners. Of course, history proves that competitive economies are superior to centrally-directed ones, but never mind that. Just say hello to stagnation and decline.

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