Critics sneer at Wal-Mart's $4 generic drugs

Wal Mart is offering 124 generic drugs (covered drugs available here) at $4 for a month's supply. Today's news features people tripping over themselves describing how this really isn't that big of a deal. Criticisms range from the fact that it will 'only' help the uninsured (because people with insurance already have low copays) to this quote, taken from the article linked above, "I think people are going to be disappointed when they go into the stores and find out their drug isn't there."

Well, hopefully, people who go to the store and find out their drug isn't there will ask their doctors to prescribe something else. Or, even better, doctors who treat uninsured patients will take price into consideration and prescribe an equivalent generic that is covered by the plan. But that would be bad.

Why? Because the real argument has nothing to do with cheaper drugs and more to do with the fact that some people hate Wal Mart just for being Wal Mart. In this story about providing $4 generics to everyone, Wal Mart's employee benefit package is called into question: "critics argue that Wal-Mart's coverage calls for a deductible that requires workers to pick up the first $1,000 in medical expenses, and the deductible rises to a maximum of $3,000 for families." What isn't mentioned is that this plan is one of several options being offered to Wal Mart employees. High deductibles mean that a single person working for Wal Mart can purchase this insurance for under $25 per month. It also doesn't mention that people covered by this plan get 3 trips to the doctor for $25 each, and includes matching employer contributions to a Health Savings Account. (source: NYT) How this detracts from the value provided to consumers from $4 generics is beyond me.

To me, cheaper drugs seem like a good thing, and chopping the price in half seems, well... really good. Even though I have health insurance, when I buy my drugs at Wal Mart my insurance company pays less for them which keeps premiums down for everyone. Even though some consumers who are fortunate enough to have a generic copay of less than $4 don't pay any more out of pocket (the national average of generic drug co pay is $10), fewer dollars are being spent on healthcare. So when someone says 'consumers won't benefit that much', they're ignoring the effect that cheaper drugs will have on the premiums consumers will have to pay in the future.

Unfortunately, a significant portion of America believes that individuals should not be responsible for their own health care. I'm not sure why employers are on the hook for my doctor visits but not groceries or car payments, but there it is. In this world view it is the obligation of every employer to insulate their employees from prices associated with different treatment options. The ultimate goal is to completely remove prices from the market for medicine, so that no individual is constrained by income when seeking medical treatment. Perhaps more importantly, nobody should receive a better standard of care simply because they can pay for it.

The strategy for advocates of government rationed healthcare is to demand that employers provide benefit packages that eliminate the incentive for healthcare consumers to spend wisely. Higher consumption leads to increases in cost, but low co-pays and deductibles insulate consumers from the effect that increased consumption has on the cost of medical care. Costs will continue to increase until firms are unable to cover them or individuals without insurance are no longer able to afford adequate health services, at which point political pressure will induce a fundamental restructuring of the health services market in the United States (see Medicare Part D and http://www.hlth.gov.bc.ca/waitlist/cardiac.html).

So, Wal Mart is bad because it encourages individuals to choose where to get their prescriptions filled on the basis of price resulting in competition (Target plans on matching the price) and lower total healthcare costs. Furthermore, Wal Mart offers its employees benefit plans that provide incentives for consumers to manage their costs through high-deductible plans for unforeseen medical problems paired with Health Savings Accounts for routine care. Its biggest sin is that these efforts put downward pressure on health care costs, frustrating the policy goal of moving the United States towards socialized medicine.

Comments

[canabisseed]

this problem of drugs it can make life be shorted coz drugs content of many substances that can body hang....

[Lily]

Three cheers for Wal-Mart. And now they've started selling 3 months of those generics for $10. Wow! For my other meds that aren't generic I use the prescription discount card that I found at www.rxdrugcard.com. Low membership fee. Drug prices posted to check before you join.