I agree with 90% of this article. I continue to think calling the mechanism chosen to reduce prices on those 10 drugs a "negotiation" instead of "price controls" is obfuscation bordering on an outright lie.
As a business-friendly Democrat, an additional benefit to a single-payer system would be the savings that would accrue to businesses by not having to rely on teams of in-house HR people to analyze coverage levels, co-pays, contribution levels and negotiations with insurance companies. This is specialized knowledge that only the largest companies can afford to do well, and it is a productivity drain on the thousands of companies that do it poorly.
John, another way to eliminate the need for in house teams analyzing coverage levels etc. would be to sever the link between employment and health insurance. I don't get my homeowners insurance from my employer.
What is the mechanism for people with employer sponsored insurance caring what things cost leading to improvement overall? Remember, each payer-provider-service triple has a unique reimbursement rate.
The insurance companies do care, and the actual insurance reimbursement rates are often quite a bit lower than what is (at least initially) billed to uninsured patients.
Also, different insurers reimburse differently, and providers manage their patient panels to ensure the economics work (e.g. enough patients in the panel with relatively generous private insurance, to cover the Medicare patients whose reimbursements barely cover the cost of service delivery). If you get rid of the privately insured patients, then it is no longer sustainable to care for the Medicare patients.
I think we have this underlying and as-yet-unsolved problem that pharma companies are in two different lines of business--drug discovery on one side, manufacturing and distribution on the other--that interact in toxic ways in an unusual marketplace to produce a lot of bad incentives and outcomes.
I like the negotiation-price-control-whatever scheme better than the status quo ante, but I would like a reorganization of the marketplace to split apart the lines of business and rely on government support for the research piece even more. Admittedly I'm heavily influenced by Tyler Cowan's prize idea on this one.
"pharma companies are in two different lines of business--drug discovery on one side, manufacturing and distribution on the other"
This seems like an odd framing. Its common among most industries and in the major one that comes to mind where its not true (automobiles) we often decry the negatives to separating them.
I agree: it is an odd framing. But this is a very odd market; it just straight-up does not function in the same way as selling toasters or TVs or whatever on either the development or the distribution end for a list of reasons, many of which I bet you can name off the top of your head.
Being first an academic doing health care and now a nurse has strongly reinforced this reality to me. Health care is just a very odd beast that is poorly suited to market mechanisms in lots of interesting ways. It doesn't mean that there isn't value in those mechanisms; I still think they have a lot of utility. But you also get a lot of perverse incentives and outcomes, which is why it requires a lot of regulation and produces a lot of bitter political and economic battles. It's just poorly suited to how humans normally organize ourselves.
I agree that its an odd market, but not sure how splitting R&D/discovery from manufacturing and distribution will address the issues in this market. Would you elaborate on the positives you see coming from that and what issues you think it would address?
Well, there's a bunch, honestly, but here's just one (for the sake of brevity). This discussion thread exists because of the whole discussion of negotiations-versus-price-control issue that John raised, above. We are not having that discussion in the realm of computers, even though government buys a lot of computers, because voters and their elected reps view the price of pharmaceuticals differently than they view computers. But when we argue about pharmaceuticals, we mostly argue about the price of consumer treatments. That's a problem.
Policy wonk types understand that we are actually arguing about a basket of things reflected in the price, from R&D costs to pharma regs in other nations. But ordinary consumers mostly do not think that way, which is how you persistently end up with the idea that somehow we could just lower pharma prices in the United States by purchasing all of our drugs from Canada. Ozempic, eh?
Splitting apart the units would simplify and clarify the political debate; our current fight over the cost of Xarelto would be about the cost of producing an extra dose of Xarelto under current supply and demand conditions, rather than the cost of 1) developing Xarelto and 2) developing a whole bunch of other blood thinners that didn't actually pan out.
Obviously then we would have another, different fight about how much the FDA or whoever should have paid the company that developed Xarelto. But that would be an actual fight over the actual development cost, and it would allow us to have a much more straightforward discussion of the foreign policy piece (pay up, Canadians!) rather than a confused fight about the "price" that a majority of voters don't really know is actually about all that other stuff.
Not a panacea, obviously. But my general belief is that politics and policy tend to work better when you can simplify and clarify things and skip fighting over the parts that are working or that people are okay with.
In general, we apply a higher price to each pill than manufacturing cost+profit so that the cost of the R&D is amortized over each pill instead of requiring some type of lump sum payment. This is how almost every invention with high R&D costs works - computer chips, cars, aircraft, etc. Its generally much better than requiring all the R&D costs be recovered via the first sale. I don't understand how you can split apart the units you suggest without undoing that ability to amortize cost. Doing so seems like it would require using only a public funded research program where taxes pay for R&D up front.
Am I missing something here where you can describe a different way to do this?
I like the framing. It roughly corresponds to a more philosophical realization I had recently about science in general - it's motivated strictly by profitability, while ideally the methodologies of science and technology would begin and end with ethics. (See the New Yorker article on CRISPR The Transformative, Alarming Power of Gene Editinghttps://www.newyorker.com/magazine/2023/09/11/the-transformative-alarming-power-of-gene-editing)
The ideal will never be achieved but it's still useful to point out these contradictions and dilemmas.
Agreed. And it mostly works. Pharma is just a weird beast, in part because government has such an unusual role in this market relative to, say, TV manufacture. There's a reason why drug prices come up in presidential debates and lawnmower prices do not.
You do have to make sure that there’s enough prizes out there to incentivize everything - it would be a problem if there are prizes for breast cancer and heart disease, but none for diabetes and aids and malaria, or whatever.
Yeah. I don't actually totally love Cowan's "prize" framing for this reason. I would prefer to go with a more or less "straight" incentive structure that is something like "flat enormous payout + costs + right to demand (very small) percentage of sales from any distributor of this molecule," payable upon a predetermined goal, like FDA approval. Obviously that would need a lot of careful design and tweaking, and you would end up down in the weeds pretty quickly.
But the basic idea is that we want to incentive drug discovery as a society, and we want to incentivize it for everything, including diseases like malaria where the market logic just doesn't really make that much sense. And we need to recognize that pharm research is genuinely difficult with a lot of blind alleys. Subsidizing that genuinely difficult, hit-and-miss process with backend profits on sales is just a really suboptimal way to do things for reasons that are highly specific to the weird market that is health care.
I suppose I agree, but I think the dynamics of "price controls" are very different when the government is also enforcing patents. It's a reasonable place to be in favor of price controls even for econ 101 believers.
Maybe insulin is an exception, but I really don't understand what keeps prices so high for a drug like that that isn't supply restricted.
Compared to Republicans calling their growth-inhibiting deficit-creating tax cuts for the rich a "jobs" bill, this is the smallest of small potatoes. And certainly there is some back and forth in a way that rent control or minimum wages do not have.
I can't help but think that implementing single-payer would be economically distastrous for America and send us into a long, deep recession or even depression. Between the multiple industries the government would be forcing into bankruptcy (insurance, medical billing, probably some specialized medical device, pharmaceutical, and surgery companies), the massive, immediate deadweight loss from the new taxes (at least a 20-30 percentage point increase in income taxes on everyone, plus a 20-30% VAT), a massive drop in provider revenues (because they no longer would have private insurance to make up the difference) and large numbers of physicians and nurses leaving the profession because their salaries will be getting cut at the same time their taxes are going up a ton, leading to a supply crunch at the same time demand rapidly increases. Pharmaceutical company revenues would also massively drop, leading to large decrease in R&D and innovation. Additionally, the senators, representatives, and bureaucrats tasked with implementing all this would be the people filled with the most vengeance and rage toward the current system, and I would not trust them to limit the damage because for them cruelty toward the current system would be the point.
By all means, get rid of the employer mandate, support innovation, and cover more people. But there are good reasons why, as far I as understand, only 2.5 developed countries have adopted single-payer systems (UK and Taiwan, Canada's system is single-payer but not at the national level), and America is not somehow immune from those reasons.
As a true blue Biden supporter, I'm okay calling it "price controls." Although if some prefer to call it "Mafia-style negotiations," I'm okay with that too, showing that Democrats can play hardball.
Ehh, the devil will be in the details of how it's used. If used judiciously as the stick to a carrot of a reasonable offer, then there's no issue, and that's what I expect to happen. When we last discussed this you yourself agreed when I said that without the excise tax this would be a bog-standard negotiation tactic for bulk purchasing: use the vendor's footprint against them.
Given the rampant rent-seeking, patent law games, and corruption in the pharmaceutical sector, the filibuster insuring no additional cracks will be made at this for a decade, and the reality that the Supreme Court will likely want its pound of flesh before this goes into action, I don't blame them for going for the biggest stick they could write into it.
Breaking my SlowBoring comment cherry here ; P (this is a topic i like to wonk out about so).. I think the case also needs to be made to workers that for the vast majority of workers, employer-based coverage is a benefit that has been rapidly declining in value while not declining in cost. Starting with the fact that it seems a large number of workers have no clue how much that benefit actually costs, and that it's not a "benefit" so much as a portion of salary they don't see as W2 wages but is absolutely counted as "total salary" by the employer. I realized this during the old 2008 election and then the run up to the ACA legislation that many workers were under the false impression that their coverage cost was the amount that was deducted from their paycheck each cycle (in addition to the deductibles, co-pays, etc), which created a very low estimate of the cost of the actual plan. No wonder people were resistant to anything attempting to replace the employer-based coverage system, if the average beneficiary believes that a family plan for 4 only costs around $300/month! Of course, that's not the "real" cost of that plan per employee - depending on the employer, the "employee share" of the plan is anywhere from a 50/50, 60/40, 70/30, 80/20 employer/employee split. So the employee with this coverage is typically only exposed to anywhere from 20%-50% of the full cost of their plans. Others may have some realization that their contribution is not the full cost but have some odd notions that the remainder is some employer beneficence - but of course that's not true either. The employer portion is accounted for in the total salary of each worker. Every dollar the employer "contributes" towards the plan is one less dollar the employer will put into wage salary. And the only reason the employer is doing this at all is for the tax benefit to the employer, as well as the tax benefit to the employee who is getting a portion of their salary not subject to W2 taxes.
So, what's the problem - from a worker POV? That "benefit" has been a primary reason why wages have remained so stagnant for so long. The more the employer is paying a portion of salary towards the plan is less money that will go into real wages, for one. Meanwhile, there's the other costs to the employer in administrating the benefit that leaves less room for other job growth and wage increases. Secondly, as health care costs have increased over inflation, employers have been faced with a set of poor choices: keep/increase their contribution amounts, which again, holds down paycheck wages. Or, reduce the value of the benefit, keeping the premiums more or less stable, but pushing more and more "out of pocket costs" through the normalization of deductible plans that cover less and less health care, while the per-employee costs both in terms of the employer contribution as well as the employee contribution have continued to increase (on a smaller scale), but they have not been *reduced* to reflect that the fact that the average plans across the board (for high salary as well as lower waged workers) cover less and less actual health care, and much more of the coverage is being paid of out of pocket by the employee. This is pretty much a de-facto salary decrease: you're paying more but getting less each term - and reflects the reality of the majority of non-union based employer plans where the old HMO has gone the way of the dodo in favor of "choose your own deductible" from a set of increasingly higher deductible choices. And again, there's no great way for employers to solve this that doesn't result in diverting more salary money either across the premium or pushing more out of pocket spending onto the workers. But either way, it's the worker that is continuing to shoulder the burden of higher costs, while experiencing the same wage flattening effects, which is a lose-lose for workers.
Third - the other problems of employer-based coverage is the reduced control workers have over their choices of employment and employer, let alone of the actual plans they have access to. The quality and value of the employer plan is mostly based on the size and demographics and industry of the employer. Those with larger employers with a decent distribution of younger to older workers with an also decent distribution of higher wages to lower wages in the company can offer the best across the board plans. Smaller employers, regardless, will have less generous plans and the most volatility in year-to-year coverage, since if they are "self-paid" plans, a smaller group just means it takes fewer employees to experience high health care costs to raise the costs for everyone. That, and the terribly inefficient way that employer-based coverage plans segment the health care market into these small pools keeps overall bargaining power down across the board. And of course, many workers can relate to the bind they can get into when they experience some health care needs that tie them to that employer and their current coverage. As well as the distress that can happen when that employer changes providers or coverage. It's a disincentive to starting one's own business, as well as for working for small employers. And then there's the not-talked-about-enough issue of how this creates an incentive for age discrimination in the workplace by employers: older employees result in higher group plans based on demographics and insurance rating - self paid or not. This is an increasingly precarious situation for workers in the 50-65 age group, who are subjected to this type of "quiet discrimination", which may come in the form of just not getting an interview at a company, to being grouped into layoffs and "downsizing" efforts (often to find their jobs have been replaced by lower cost college hires). And of course, missing needed health care during this time of life just makes when they do qualify for Medicare a more expensive to cover individual at that point, who may have been forgoing care for treatable conditions that will now cost the system more as they advance.
If there could be some better education campaign to basically condense my last few paragraphs into some easy to message bullet points :), Democrats might have better movement in convincing a lot of the most resistant to change demographics - which are those with employer-based coverage that this is actually an all-around bad deal for workers. Who may not fully understand the costs they really are paying, directly or indirectly, and the ways that this system keeps costs higher than they should be because it diverts the largest demographic of actual citizens into these arbitrary and small pools of coverage that do little on their own to hold down costs beyond reducing employer costs and salaries as a result. And the ways that it messes around with their own employment viability and choices. Basically, we need to start ripping some band-aids off on the illusions that employer-based coverage has sustained around costs and benefits. Maybe start with requiring employers to disclose on the actual paychecks the *full* contribution and cost of the plans so that is no longer a hidden wage? If workers see the full cost of the plans, and how much of their salary is going towards it, that may start to wake some up and drive up more resistance to the ever cost shifting back to workers in favor of alternatives.
"Medicare will now negotiate drug prices". Uh, if by negotiate you mean "make them an offer they can't refuse".
In this "negotiation", the drug providers have the choice of accepting the government's price, withdrawing from the market, or being hit with a 95% tax. Would any of us consider that a negotiation if we were in the position of the drug providers? A better description than negotiating would be dictating.
Big Pharma has provided us with countless medicines that can improve and extend out healthy lives. I take some of them. Would you prefer a world without them?
This sounds remarkably like progressives talking about real estate developers. "Won't someone please think of big developers" and "I prefer a world where people can afford a home."
There's a clear recognition among neoliberals that creating a large and complex regulatory environment in home building means there is much less of it. Does that suddenly disappear when it comes to drug development?
Ignoring the fact that they cost obscene amounts of money to develop doesn't make that fact go away. It's got to be paid for somehow if you want them to exist at all. The reforms to trials Matt discussed might make some progress in that regard, but price controls will not.
But how do you square this circle with the fact that most of the drugs are sold at much lower costs in other companies. You cannot possibly arguing that Big Pharma is selling at a loss overseas, right?
Further, do you think that other large insurance carriers do NOT negotiate prices? What, exactly, makes it weird for Medicare to do this? The fact that it is the largest?
Price controls make it illegal to sell something at a certain cost. This is not even in the same universe as a law that says the buyers are allowed to refuse to buy at a certain price.
Earlier in college I worked doing marketing strategy for a drug discovery company. We calculated the expected demand in Europe, the US, and East Asia/Oceania- nowhere else buys enough cutting edge cancer drugs to even be worth penciling it out. The way it was explained to me was that the US pays for the cost of development and is the only market to look at in the beginning- Europe and Asia-Pacific are nice bonuses if you can get them, but there's no point in even trying to enter those markets unless you're going to be able to enter the US market, since in most cases you literally can't break even on a modern drug only selling to those places. A drug that Americans are unlikely to buy simply won't be made, or it'll be made on the much slower timelines of academic research rather than the time-optimized and costly methods used in pharma.
To me it always felt like a prisoner's dilemma where every country that's not either the US or Switzerland has pretty much hit "defect" knowing that the US will continue to subsidize drug discovery. It's not selling at a loss overseas, since the marginal cost is very low per dose, but it would have been selling at a loss if the US wasn't also involved in amortizing the research cost. It hurts US consumers, but also hurts those in other countries who suffer from diseases American drug companies can't profitably research.
Pharma companies are selling at loss overseas, especially in un- and underdeveloped countries. The low prices of pharmaceuticals (and R&D) in other developed countries are subsidized by the high prices we Americans pay. The rest of the developed world is having its cake and eating too because of our spending. Pharma execs have told congressional committees this.
Yes, and we'd all prefer a world where there was never any war, no poverty, no disease and so on. But we have to deal with the world as it is, not some make-believe world. And in the world that exists, Big Pharma develops medicine with the goal of making money. Lots of it. Sometimes they do make lots of it. Most times, the drugs they are trying to develop crash and burn. The profit incentive is very powerful and it has produced some wonderful things.
If you think they are making above market profits, why not buy stock in pharmaceuticals? Or, better, start one yourself it it's a sure thing. BTW, how are you going to pay for the many, many failed attempts to develop drugs?
As best I can tell, their profits aren't that high. Certainly lower than most tech companies. If we push them lower, it will likely lead to capital being allocated towards something else with higher profits. Matt talks about this with regards to environmentalists and oil production, they want to drag profits down, leading to lower production which will then increase costs. Do you think it will work differently here?
Mentioned in another thread but profits are the wrong view! Basically what happens is equity via VCs or other re-investment of profits goes into R&D and a lot of that leads to companies that crash and burn. Measuring profits of the existing large pharma companies which typically buy promising products off smaller companies is like only measuring the profits of winners in a high variable market
I think this implicit view that Big Pharma is in the way of affordability of drugs due to greed doesn't really pass the smell test (that is not to say that pharma doesn't engage in some rent-seeking behavior). A couple high-level points:
1. Return on equity of the biopharma industry is roughly in line with other average industries. I specifically use Return on Equity because the nature of drug discovery is that there are many losers but the winners have fat profits, so its more useful to think about the capital going into developing drugs rather than looking at only the profits of the winners (e.g Novo Nordisk or Eli Lilly).
2. Eroom's Law - The marginal additional drug is increasingly more and more expensive per unit $$. There's a few reasons but one of them is a low-hanging fruit argument. If drug discovery were mostly about rent-seeking you wouldn't see different R&D expenditure behavior. https://en.wikipedia.org/wiki/Eroom%27s_law
3. The benefit of a drug discovery is actually immense in a way that the patent system doesn't allow us to appreciate. Discovering a drug allows us to reduce future medical costs and improve patient lives roughly indefinitely (see: insulin)! Having a system where the early users pay higher costs is not ideal. You ideally want a financial vehicle(eg the government) that would allow us to smooth the $$ given to pay for the innovation over a much larger population rather than only making the high-income, early-users pay almost all the profit and price gouge.
Agree. So we send in a squad of neoliberal technicians to figure out how rejiggle the incentives (which might involve some monopsony on monopoly negotiations) to make the diagnosis-prescription-production-approval-purchase process more efficient.
Why is the pharma sector (or “big pharma” as you say) less deserving of profit than other sectors in the economy? Yes there is a deep and real human intuition that it’s wrong to profit from medicine. But isn’t it also wrong to profit from food (“big restaurant” “big farm(a)”) or other essentials, clothing, housing? And why are we selectively outraged by pharma making money (10% of medical expenditures; https://www.cbo.gov/publication/57772#:~:text=Since%201980%2C%20the%20share%20of,almost%2010%20percent%20in%202018.) but we’re ok with doctors making very high salaries and hospitals and insurers also enjoying profits?
I've invested in multiple bio-tech companies. Most of them haven't gone anywhere and I've lost considerable amounts of money on them. This is not uncommon. The one that works MUST work REALLY big to pay for all the ones that don't work.
The one drug that works must pay for all the many many others that don't work. Which not only includes all the R&D, but also all the testing, both on the drugs that work, and the ones that don't.
Less big profits will mean less drug development. Reforms to testing requirements will help, but that won't fix the problem that each successful drug must pay for all the ones that failed.
Side note, the profits from the US market fund most of the world's drug development.
I've seen this argument before, but I think it's going to depend on the particular incentives of the specific government decision makers. What is their mandate? Is it going to be like the DOE where if negotiations fail and nobody builds nuclear power plants (or in this case markets a drug) then everybody shrugs and the government guys don't suffer for it?
Or will there be BIG TROUBLE if a negotiation fails and the drug provider walks out on the sale?
The thing is, if the provider walks out on the sale, it gets heavily punished with taxes/fees on that product, or being unable to sell ANY of their products to medicare. So I don't expect them to walk out much.
However, your post does raise the point to me that I hadn't thought as much about how hard it is for Medicare to 'say no' to a price that is otherwise too high in a normal negotiation due to the politics of it.
So while I don't like the stick conceptually, it may be _partly_ needed to offset "death panels" / "drug restrictions" claims on negotiation.
EDIT: Maybe the fact that the drug company can walk without the tax by not selling ANY of their stuff to Medicare preserves just enough leverage for the companies to make this a bit of a negotiation again.
I think it's useful to think a bit about other countries here. "X company took its drugs and left" would be something politically devastating in Europe, and I suspect in the US as well. Usual caveat that I'm not American so maybe I'm way off on this!
The latter will lead to a large chunk of prescription medications being unavailable to Medicare recipients. There will be big trouble, I simply can't conceive of a situation where someone thinks it's politically viable to do that, it'd have to be Aduhelm all over again, or something similar.
Seems like an overstatement. They'll still be selling some of these drugs to non-Medicare customers. They'll probably be no worse off than they would be if Medicare didn't exist at all and the majority of senior citizens were uninsured, which is what hardcore conservatives' #1 preferred option would be.
If we're still really concerned that these companies aren't getting rewarded enough, we should just take care of it directly by appropriating direct cash payments to them as a reward for inventing these drugs. That would be a lot more sensible than the Rube Goldberg mechanism of creating a taxpayer-funded public insurance program and then tying that program's hands.
This is good and useful. Other important Biden admin healthcare initiatives and issues:
- 12 months of continuous coverage for children on Medicaid and CHIP. The Medicaid "unwinding" -- resumption of eligibility checks after a 3-year pandemic moratorium -- has opened a window into the administrative complexity, incompetence and cruelty that regularly separates Americans from their benefits. Reducing eligibility checks for children to once annually reduces this harmful churn.
- 12 months postpartum coverage for women enrolled in pregnancy Medicaid. A major measure to reduce postpartum mortality. ARPA enabled states to extend postpartum coverage to 12 months via a state plan amendment, an easier path than previously available. 38 states so far have done so.
- Improved ACA premium subsidies and *removal* of the income cap on subsidy eligibility: Since these ARPA improvements went into effect, marketplace enrollment has increased by 37%, from 12 million in 2021 to 16.4 million in 2023. These enhanced subsidies EXPIRE in 2026 unless Democrats find a way to extend them. Perhaps most important politically is removal of the income cap on subsidy eligibility. Matthew, if you're ineligible for subsidies, that means that the benchmark silver plan in DC costs less than 8.5% of your income. That's now true for only about 10% of enrollees. Before ARPA, Democrats were hammered politically for leaving modestly affluent people (those with income over 400% FPL) exposed to often huge premiums (that rise with age).
- State improvements to health insurance affordability: States that have added supplemental subsidies to ACA marketplace plans or offered lost-cost alternatives at low incomes include NY, MN, MA, NJ, CO, NM, CA (2024), MD, WA and VT.
- New minimum requirements for nursing home staffing. The pandemic highlighted how grossly inadequate nursing home care (much of it private equity-owned) often is. New staffing requirements ( a minimum of 0.55 hours of care from a registered nurse per resident per day, and 2.45 hours of care from a nurse aide per resident per day) are proposed, not yet finalized, and under industry attack.
- New constraints on misleading Medicare Advantage advertising. The morass of confusing and often low-quality choices facing seniors enrolling or already enrolled in Medicare is an under-recognized problem. CMS has taken modest steps to tame outright deceptive advertising in this "free market" gone wild.
What will this costs? Who's going to pay and how much. Real numbers, please. We're already running a nearly $2 trillion deficit and there are articles questioning how much of this the bond market can absorb. Even if it can absorb all of it, debt is an obligation that future generations will have to honor. If this is self-evidently worthwhile, shouldn't we, the living, pay for it?
Agree. (Can we get you in some kind of health care policy making role?) Also, there is a weird gap for kids joining CHIP. My employer provides individual but not family insurance. When my colleague was pregnant, she spent hours and hours trying to figure out how much it would cost to have her kid and whether care for the baby in the hospital would be covered under her individual insurance since the baby wouldn't yet be covered by CHIP. Of course, not having insurance tied to employment would be fantastic, but I don't see that happening any time soon.
2. If the employer does not offer family coverage, the baby is eligible for subsidized marketplace coverage, which would be effective when the baby is born. Not clear whether you can pre-enroll a baby or whether the coverage would be retroactive. As to CHIP, I would think it also would be retroactive -- perhaps your colleague discovered whether that was the case.
A hard and fast rule of American politics these days is that Democrats don't have a coherent position on immigration and Republicans don't have a coherent position on healthcare.
Like, most conservative attacks on the ACA come from the left on things like how deductibles are too high and whatnot.
I’d actually argue that Democrats have a more coherent position on immigration than Republicans do. The difference is immigration is an issue that Democrats don’t want to talk about at all as raising its salience is to benefit of GOP. The difference (as usual) is GOP has a much bigger media apparatus whose goal is to elect GOP officials so the issue gets in the news more than health care.
As far as I can tell, the GOP position on immigration is to make sure our system is as bad as possible so it remains a “winning” issue; be as cruel as possible to people crossing the border AND make no effort to crack down on employers who use illegal immigrant Labor thereby insuring the issue remains a worse problem then it needs to be.
To put it uncharitably, the Dems' position on immigration seems to be that they're not for open borders but they're not for any kind of enforcement, and while they give lip service to immigrants helping the country, most of the emphasis is on helping the least skilled be able to come here.
I should add that being more coherent than GOP is a low bar. I do think you're being uncharitable, but also think you're not totally wrong about Democrats position if that makes sense. My position is probably pretty close to Matt's "One Billion Americans" position (hence why I subscribe to this Substack), but also know that is probably losing me a lot of votes including a lot of Democratic votes in the current climate.
It is instructive to me that neither GOP or Democrats make E-verify or going after employers who hire illegal immigrants front and center of any immigration plan. I know it's sort of put out there by both parties, but I think I'm right in saying it's not the centerpiece of either party's plans for dealing with immigration. It's honestly weird to me that Biden/Democrats don't make this a bigger part of their messaging. It avoids going after immigrants themselves which means it avoids offending a lot left aligning voters like me. It also involves going after big corporations hitting a decent economic populist message. I mean honestly, outside of the meatpacking industry itself, which voters are turning away from a candidate who's bashing Meatpacking industry for illegal hiring practices?
I imagine the business lobby probably applies intense pressure to keep any serious proposals to implement e-Verify off the table. But I agree that eVerify (especially if combined with rewards from the money seized from companies found guilty, as well as expedited immigrant visas for illegal immigrants who turn in their employers) would do far more than any wall to reduce illegal economic migration.
Having done a decent amount of manual labor when I was young, my guess would be that backbreaking farm work in the hot sun is just not a viable job for non-immigrants at any pay rate. Lots of countries import guest workers and I think that's an OK thing for us to accept
I agree that it's hard to imagine what wage it would take for Americans to work the fields again, but I think the answer for a lot of crops (and maybe slaughterhouses too) is automation, which seems both more humane and more sustainable over the long term...
I once got into a discussion with a more conservative fellow than myself about immigration, and I told him, "We live in Pennsylvania. Not a lot of immigrants from south america and mexico coming here. So why should you and I care all that much about it?"
He looked at me like I was crazy, but I still think I had a good point.
Well, been to Philadelphia's old Italian Market area lately? It's transforming itself into a Latin-American Market. Nothing wrong with that - everything changes over time - but we are seeing a lot of immigration from Latin America.
My mom's hometown of 750 people in Central PA has at least a dozen or two Hispanic households of which my grandparents are aware, including the folks right across the street, and they represent easily a third of the children in that town now, maybe more.
That's far from universal but it's also far from rare.
It's both true and untrue. The GOP has a more explicitly partisan media apparatus, while the Dems enjoy a much, much larger implicitly partisan media apparatus.
That's a gross oversimplification. If the mainstream media were implicitly partisan they'd be much more disciplined, akin to Fox, rather than being pathologically aligned with the interests of the wealthy, overly cosmopolitan, mobile, socially extremely permissive professional classes.
They're not the same thing, the media often says shit which they know will harm Democrats, and continuously expresses left-leaning views they think are good but harm Democrats even more.
I don't think being partisan implies being strategically competent. Both parties appear to be ready to nominate the only presidential candidate who could possibly lose to the other.
If I know my fellow American voters, I know that they crave those subtle, nuanced messages from the media that by tiny, near-invisible increments gently push them to vote a certain way.
I think Matt overindexes healthcare from the 2018 midterm, though. 2018 was as much a backlash to Trump as it was about healthcare, if not more.
Celebrating our recent successes and promising incremental improvements is a smart strategy, but we need to bear in mind that healthcare only ever works for us as a defensive or incremental issue in tight elections, not an offensive one.
Indeed, David. Yes, we know that Democrat candidates talked a lot about healthcare during the campaign. But the ACA repeal had already been defeated and the Republicans had shut up on the issue. And, the critical thing for me, the turnout for the 2018 was historically high, almost without precedent. People didn't come out in such vast numbers to vote because of the live wire healthcare debate which didn't happen; it was all Trump, Trump, Trump.
Not sure about that - I mean yes Democratic 2018 turnout was a *lot* of Trump, of course. But I wouldn't discount the role the attempted repeal of the ACA played. For one, there was a lot of public energy against the attempted repeal and the terrible "replacements" being bandied about before the vote that energized a lot of Democratic campaigns to "repeal and replace Republicans", a lot of viral town halls that focused heavily on Republicans running in "blue-ish" districts facing loud and angry backlash from voters (echoing the Tea Party anti-ACA town halls from 2010, but probably a lot more actual grassroots), and it was those Republicans primarily who lost in 2018 and were replaced by Dems (from NJ, PA and other purple/blue states) that gave the Dems their House majority.
Finally, the electorate got a good hard look at what the Republican "repeal and replace" would actually look like after hearing nothing but vagary for the past 6 years, and it managed to make the ACA more popular in the comparison. And Trump, of course, was no help at all - the Republicans really just wanted "repeal" but Trump talked about the "best health care plan ever" throughout his campaign that he would produce "in two weeks" constantly, and when push came to shove he stuck Paul Ryan and Mitch McConnell with having to cobble together that "terrific health care plan" that there was no actual real Republican plan for, that wouldn't just be a skimpier version of the ACA, and that leaned into all of the least popular features of the ACA (high deductibles and inadequate subsidies) while removing the most popular parts (eradicating pre-existing coverage and policy recission practices), and Republicans could not message it away from anything other than it was - taking good things away and replacing them with worse. And especially since the bill failed on the margin of only 3 GOP Senate votes (one of whom died not long after), there was a real sense of jeopardy that a stronger GOP majority in 2018 under Trump was going to gun for it again - not unreasonable since there were the lawsuits filed by Republican AG's and groups to try to repeal the law and its provisions happening in parallel (backed by the Trump Administration), which at least some were still pending by 2018 midterms, and Trump wouldn't shut up about being "betrayed" by McCain in particular which definitely kept the precarity of the law in the forefront and the still extant Trump and Republican led attempts against it.
Again, the Republican repeal attempt *failed* so it wasn't really an issue anymore.
And look at these House turnout numbers for non-Presidential years:
2002: 71.1M
2006: 78.2M
2010: 82.8M
2014: 75.7M
2018: 111.5M
One of these is simply not like the others. And because the Republicans tried and failed to overturn the ACA (which in Oct. 2018 had a 49% approval rating)? I'm not buying it.
Agreed. It seems like this is a case of Matt succumbing to Dem tunnel vision - believing our own spin and messaging on macro events like elections, rather than understanding what actually happened.
No one seems to remember that deductibles and premiums were lower under the old system because it barely covered anything by the time the insurers were through interpreting their various escape hatches.
It seems such an obvious policy and political win that I wonder if there is some technical problem with just ramping up hearing all those asylum claims. Even if the effort was not "enough" at least the Administration "gets caught trying." At least is reduces the number of people for DeSantis and Abbot to demagogue about.
I think the culture war position is pretty strong, although definitely leads to MANY cases of hypocrisy -- i.e., freedom of speech for me but not for tree (Don't Say Gay etc)
I think they've been reasonably consistent on "tax cuts good", though they haven't had a chance to test that lately. (Pace the recent suggestions in some realms for tariffs or something similar, which most people don't read as a tax increase since they don't pay it directly.)
Both have (or could very easily roll out) coherent positions on these two topics. They just don't dare share them with the electorate or media. The GOP plan is "repeal the ACA, voucherize Medicare with COLA that rises more slowly than inflation, and block-grant Medicaid with an eye toward phasing out federal support." The Democratic plan is: "Give green cards to undocumented folks here more than two years, plus substantially increase immigration quotas moving forward + E Verify + increase fines."
This is one in a series of posts MattY has made about "democrats should be talking about this" or "democrats should be talking about that". Sometimes it's the Biden White House rather than "democrats", but the exact path to "talking about" has always been diffuse.
MattY, if you're looking for ideas for future posts or even a series, I'd like to see a nuts and bolts examination of political communication strategies. Who among a political party should be/is deciding their message, how much authority should the party grant them to do so, and what is the path to getting the message out?
Besides just talking about the message, is there a way for Democrats to better improve the medium? Can they build a smarter, more focused strategy for getting out their message (whatever that message might be)?
I second this idea! I would be very interesting to read Matt Y’s thoughts on this.
See also “message discipline “ and to what extent the party should be blamed/held responsible for the utterances of its most extreme wingnutty members.
"But I think one thing we learned from Operation Warp Speed is that there are many avoidable impediments to innovation. A system in which you make it cripplingly expensive to research new treatments and then create giant windfalls is convenient for incumbent pharmaceutical companies, but it’s dumb."
How is that at all convenient for incumbent pharmaceutical companies? Going into a clinical trial with a ~10% success rate knowing that you're probably going to spend in the neighborhood of several hundred million dollars to see if a drug works is not a preferred business model. The reason it's the system we have in place is because *that's what you need to do to test both the efficacy and safety of a new drug.* Any proposal to reduce costs needs to account for both of those facets.
You say it took 270 days to test the first COVID vaccines... which is three years faster than the fastest vaccine had ever been tested! If anything, the increased anti-vaxx noise from the past three years increases the salience of running a proper safety arm in a clinical trial, which is precisely the counterargument to challenge trials.
It benefits incumbent companies RELATIVE TO a start up.
Alex Tabarrok has lots of ideas about how to reduce the costs of approving drugs, like cross approval with EU/UK/Canada/ANZ, and use of data if not total cross approval. (Remember, UK approved one of the vaccines before we did.)
Maybe allow Medicare to use only safety-approved compounds, in effect allow Medicare to decide the cost effectiveness the same way we allow big investors to forgo some of the protection that smaller investors have.
And what about the Medicare (?) limit on the number of residencies which is (?) the main thing limiting the practice of more immigrant physicians? [A back door to merit based immigration]
Are we still doing the annual sign-up for ACA? Why And shouldn't unemployment be an "automatic" sign up for a zero-out of pocket tier of ACA? [A back door to reform of unemployment insurance.]
Ways to quasi-universalize SNAP? [A back door to a renewed effort on RCTC]
Allow employees to opt out of employer plans into improved ACA [Back door to undermining the employment-health insurance link]
Allow Medicare to cover drugs/treatment abroad. [I was out ~$1000 in hospitalization after a fall in Colombia, which I didn't even mind but I'll bet that would have been 5 digits for Medicare.]
Ah, it's the "incumbent" part that's the issue relative to startups. True, but hardly "convenient."
The UK's approval of the AstraZeneca vaccine was, at the time, highly controversial. AZ screwed up their clinical trial design (to the point where most of us in pharma were smacking our heads over it, since we knew the anti-vaxxers were waiting to jump at the chance for any sign of malfeasance). The sentiment was that the UK government may have green lit it since AZ was a UK company... which is a questionable assertion but not an unreasonable one. In any case, there would have to be a lot more harmonization across these countries before any sort of cross-approval happens.
Medicare generally will pay for drugs approved by the FDA, since they trust the FDA to make those decisions based both on safety and efficacy. Lately this has also proved controversial with the approval of lecanemab for Alzheimer's, since the efficacy data on that is suspect to say the least.
In general, there’s a dynamic where big incumbent businesses don’t do much to try to remove the annoying government regulation they’re wasting most of their time on, because although this regulation is extremely inconvenient for them, they know it will strangle any new competition before it gets started. You see this dynamic in real estate, pharmaceuticals, licensing laws, and many other things.
Is this true for pharma? From what I can tell most pharma companies mostly act as effectively VCs on promising drug candidates from biotech companies (they do have some in-house R&D efforts). They buy a candidate and push it through clinical trial OR they push it through the regulatory + marketing + manufacturing aspect. I could be wrong though.
Coincidentally, I was on a phone conference recently with a division head at AZ. Although not the reason we were talking to him in the first place, he nonetheless spent the majority of the call complaining about the very high failure rates in clinical trials.
Your point about the high failure rate of clinical trials is important. Clinical trials are expensive. I think they're the most expensive part of the R&D process.
I think it probably made sense to do some sort of human challenge trials for the Covid vaccines in healthy young people, but we hadn't really planned on that and so there wasn't much of a regulatory infrastructure to set them up. That's something that needs to change because there will be more emergencies.
Again though, challenge trials for the COVID vaccines wouldn't have gotten them to the broader population any faster (see this from Derek Lowe in June 2020 for a snapshot of the situation at the time: https://www.science.org/content/blog-post/challenge-testing). You still needed a safety arm, and by the time they were approved (in November 2020, which again was blazingly fast), the manufacturing capacity hadn't even had time to scale up.
That point needs to be emphasized a lot more: pharma timescales are such that the clinical trials are usually slow enough for them to build in plenty of time to figure out how to scale up manufacturing. I can think of a case where my own company is in a Phase II/III trial and the process chemists are testing a streamlined route before they have to get to production scale. All of that got truncated with the COVID vaccines (which was a good thing!). It's definitely not as simple as, we should build the excess manufacturing capacity ahead of time and let it sit idle; the mRNA technology was such that there were only a few people in the world with the expertise to oversee certain steps of the process.
Running more safety trials isn't going decrease anti-vax sentiment. It is not a rational a belief, and reason and evidence are not useful in getting people to abandon that belief. Best to get the vaccines out as quickly as possible.
I don't agree with this. There's a substantial % of the population that's clearly vaccine-hesitant, or at least open to hearing anti-vaxx positions. All it takes is 1 vaccine being approved and then safety issues being found out about later, and you've turned tens of millions of people away from *any* vaccines for at least a generation. It would be an absolute media firestorm and discussed nonstop. I would be very, very careful here
It's not for the true believers, but it's a lot easier to dismiss them as cranks if you have mountains of evidence in the other direction. When you see Guillain-Barre Syndrome in 1 in 1,000,000 people taking a vaccine, that's considered an acceptable risk. If you see if in 1 in 1,000, your safety trial damn well better have picked that up.
I think there were a some good things passed, but want to push back on two of the things that Matt highlights as good:
1) As mentioned elsewhere, we're not negotiating over drug prices, we're setting a number and then telling drug companies they have to accept it or deal with an excise tax of 95%. In any other circumstance we would recognize this is not negotiation. It would have been perfectly fine to set a price limit the government finds reasonable and not be willing to pay more. But the excise tax and including all drugs by that manufacturer in the deal makes this a price control. So at least call it that. And also recognize that the reason its there is that Democrats didn't want to have to deal with the potential blow back of a drug company not accepting the price and choosing not to sell to the government.
2) The limit on drug prices increasing more than inflation - If you know going in that if your costs suddenly increase by 20% (fire the a factory, worker shortage, etc) but you can't ever raise your prices more than CPI (target 2%), then won't you just set the initial price much higher so as to build in a larger cushion?
More broadly, its fascinating to compare Matt the deregulator when it comes to land use and Matt the regulator when it comes to healthcare. It makes so much more sense to build a basic single player plan that allows for real negotiation on prices, then allow the public to purchase additional care on top of that. Instead we're slowly building an ever increasing thicket of rules and regulations that will make it harder and harder to navigate...just like developers trying to build in NYC.
Just the drug in question (I posted wrong elsewhere, will correct)
====
An excise tax will be levied on drug companies that do not comply with the negotiation process. The excise tax starts at 65% of a product’s sales in the U.S. and increases by 10% every quarter to a maximum of 95%. As an alternative to paying the tax, manufacturers can choose to withdraw all of their drugs from coverage under Medicare and Medicaid. In addition, manufacturers that refuse to offer an agreed-upon negotiated price for a selected drug to “a maximum fair price eligible individual” (i.e., Medicare beneficiaries enrolled in Part B and/or Part D) or to a provider of services to maximum fair price eligible individuals (such as a physician or hospital) will pay a civil monetary penalty equal to 10 times the difference between the price charged and the maximum fair price.
=====
And maybe that ability to "walk" on selling any other drugs to medicare/medicaid keeps this as a negotiation? Because at least Medicare risks losing something if the company walks? (in terms of the public screaming at them for not having these drugs because they tried to charge too much)
1) As an alternative to paying the tax, manufacturers can choose to withdraw all of their drugs from coverage under Medicare and Medicaid
2) In addition, manufacturers that refuse to offer an agreed-upon negotiated price...will pay a civil monetary penalty equal to 10 times the difference between the price charged and the maximum fair price.
They can say no, but the penalties for doing so are severe.
I think #2 only applies to a price already agreed to, that they have to make sure to not overcharge medicare-eligible individuals even if medicare doesn't _directly_ buy it.
I think it's not "in addition to the tax/choise in #1" but an additional piece of info
The way I read that is even if you decide to pull out of Medicare, you can't offer it to individuals covered by Medicare through private hospitals or doctors without the civil monetary penalty.
"Another very important provision taking effect this year is one that imposes a fee on companies that raise the price of prescription drugs faster than the overall rate of inflation."
How can we save people money? I know, tax things they buy more! That'll certainly bring down cost.
There are so many obvious ways for this to have unintended consequences I'm surprised Matt even brought it up as a potential positive. First, the obvious one: taxing things make them more expensive. This doesn't require any explanation. Second, of course companies are going to game the system. That means, for example, increasing prices by inflation, even when prices would naturally go down, to hedge against future cost increases. Third, this incentives companies to introduce new medicine or new formulations of old medicine at higher prices to get around these taxes. Think of how butchers in the UK during WWII invented new cuts of meat to get around price caps for previous cuts of meat. And that's just off the top of my head. People with billions of dollars of incentives to avoid this tax will find market-distorting ways of doing so to the detriment of everyone.
Maybe to better game the system, the pharma companies should hire some marketing people from the packaged snack food industry. You know, keep the price the same (or even lower it!) but make the pills slightly smaller or surreptitiously reduce the number of pills in the container.
One example would be when there's competition between two drugs in the same class, even if they're both covered by patents. One manufacturer might drop the price to undercut the other. They might be more reluctant to do so if they're prevented from increasing the price later.
One thing I don't understand on the "Democrats should message differently/more on XYZ" pleas is what it really means to message. How does "messaging" actually work? It's certainly impossible to get anything through to political opponents that isn't demagogued through partisan news first. I consume a lot of news and not sure I really get anything from the Biden administration other than really simple and big stuff filtered through the NYT - "Biden signed something that forgave 10B of student loans", or whatever.
We got a lot of messaging from Trump because he got through to everyone on Twitter.
Why isn't there a 30 second daily update from Biden/Harris/Buttegieg/etc. when I open Netflix? Why isn't there a 2 minute daily Biden podcast?
This sounds like a revival of the old Saturday radio broadcasts that previous presidents would deliver. I believe the practice started with Carter; they certainly ran through Clinton, but I don’t know when they stopped.
This is the upteenth example where GOP having an entire media apparatus helping their cause warps the political landscape.
I’m thinking specifically about your note about operation warp speed. I feel like this might be easiest campaign message for Biden. “American spirit and smarts solved the worst pandemic of our lifetimes. Why can’t it solve the other diseases of our lifetimes?” I think the combo of Fox News (and other right wing rhetoric) and GOP victories in VA and FL in 2021 and 2022 has convinced a lot of people that Americans are broadly anti vaccine when the latter was almost certainly about schools still having way too restrictive covid policies in fall 2021. But the vaccines are popular. I’m aware booster take up is depressingly low (getting mine next week btw), but that has to do with a lot of factors unrelated to whether people think the vaccines are good. And yet reading the news you’d think the hardcore GOP vaccine position is somehow majority position*. Being pro “cures” and more vaccines I really think is a winning issue.
* this phenomenon is taking its weirdest turn in regards to Ukraine funding. I know support for Ukraine has fallen among GOP base but you’d think it’s on par with raising taxes given behavior of GOP elected officials. Large segments of GOP voters are clearly still quite pro giving financial support to Ukraine and yet the way GOP officials talk and act (as well as pundits) you’d think majority of public is anti-Ukraine.
No but it drives narratives. However “biased” New York Times may be the political reporters at least are desperate beyond words to not seem biased. So if entire right wing media apparatus thinks John Fetterman’s clothes are a “scandal” it gets MSM attention and treated as a “stories”. It’s a how you get that famous world cloud from 2016 where “email” was larger by far than any other word despite the fact any sane person would say trumps scandals were infinitely more consequential. “Both sides” and all that. But the key, will emphasize this point to the cows come home; however biased New York Times coverage can be they 100% do NOT consider their roles as boosting Dem candidates outside of the editorial page. This a decidedly different dynamic at Fox.
You know Matt wrote a whole post like just a week ago laying out he himself believes media has a bias in getting Trump re elected as he drives clicks/ratings? Media “bias” does not have to come in pure “left/right” variety in order to have pretty big second order biased effects.
Matt tied it to corporate profits. Wrong lens. The mainstream media doesn't really have a "left/right" bias. It has a "boring/interesting" bias. Biden is boring; Trump is interesting.
Sort of agree. I actually think Matt is at least somewhat right in the "Econ 101" sense. Meaning all of us respond to incentives at least to a certain extent. Even if we don't realize it. Ask someone if they have driven less due to higher gas prices and you'll likely hear that no they haven't driven less. But actually look at how much that same person drove one month vs. previous month and there's a decent chance miles driven is a little bit less than previous month.
Same thing with reporting. Wouldn't shock me at all to find there is at least an unconscious bias affecting which stories get covered. Especially in light of the fact that outside the truly top of the pyramid reporters (you're Andrea Mitchell, you're David Brooks, you're George Stephanopolos), news media is very obviously precarious job right now. Makes sense there's even more pressure today to frame stories or cover stories that generate clicks than even 20 years ago.
My issue is Matt overemphasized this incentive too much. I think you hit on one "bias" influencing reporting. I've emphasized continually how much "both sides" reporting is still a big factor. I also noted the perverse long term influence of Watergate. Namely there is a bias to not cover a scandal as a "SCANDAL" unless there is a cover up. The fact that Trump is so brazen in his corruption bizarrely works to his advantage.
I cringe at how often my comments end up with poor spelling and grammatical mistakes. I'm glad that most commentators can figure out what point I'm trying to make.
I think there is something to both what you are Marc said in that there are multiple things pulling journalists and media more generally.
I would add that I think the pull is noticeably different on different topics. Media tends to be much more "Republican" friendly on economics than you might otherwise expect, but much more "Democratic" friendly on social issues. Thus Republicans get a bit of a pass on the sheer amount of focus they put on cutting taxes in the MSM, while there is much more acceptance of pretty far left wing social views relative to the general public.
True, but it's also worth noting that it's not only a function of disorganization. There are lots of left-of-center voices who affirmatively argue that its bad politics to focus on health care or other pocketbook issues rather than culture war issues. Take Matt's sometime-bete noire Will Stancil:
Hot take: Democrats should talk as much as possible about their successes and their popular ideas. Definitely agree here. Are they failing to do so? Maybe; I don't have enough information.
But between the bright pundit's ideas and reality always falls the shadow. Matt writes, "I would compare the minimal volume of attention it’s gotten to the widespread discussion of Biden’s student loan activities." Do you know why that is? It's because the latter is *controversial.* You know, the kind of thing that excites the media and gets that earned attention. The governor of Kentucky talking about healthcare issues or the usual Democrat talking head doing so on Meet the Press will disappear into the void unless something happens that causes it, as they say, to become viral.
Now if you can show me that Biden talks five times as much about student loans as about bringing pharmaceutical costs down, I'd say we have a problem. I don't think that's the case, though.
My advice to the Democrats, which is worth what they pay for it, is: wait for the Republicans to slip up on some healthcare point in the public sphere and then jump on it like crazy showing their mendacity and highlighting the Democrats' great results and future plans.. Preferably a lot closer to the election than now. Otherwise, spend your time preparing for the big push next year and worry less about winning debating points right now.
Excellent piece, as usual. One thing in particular got my attention because I know nothing about it: "the White House political operation doesn’t have a good working relationship with the Department of Health and Human Services". Well, that's a bummer. Can anyone fill me in on this
"one that imposes a fee on companies that raise the price of prescription drugs faster than the overall rate of inflation ... creates an economy-wide disincentive to raise prices."
That's a great idea if you believe that only evil, greedy drug companies would raise prices faster than the rate of inflation.
Now, I have no love of drug companies, and I loathe prescription drug ads (no, I will NOT ask my doctor if Xyzumab is right for me, go away!). But I can easily imagine a scenario where, say, ingredient X is necessary for making an insulin drug, and the supply of X cratered during the pandemic and still hasn't recovered. So now, shortage of X --> X is expensive --> the only way to make the drug is to raise prices or else sell at a loss. A consumer may say, "Oranges are too expensive, I'll buy apples instead," but a drug manufacturer can't very well say, "X is too expensive, no problem, we'll swap in ingredient Y instead," not unless they want to have an awkward conversation with the FDA. Is it fair to punish the drug company with a fee in this case? I would argue not.
I agree with 90% of this article. I continue to think calling the mechanism chosen to reduce prices on those 10 drugs a "negotiation" instead of "price controls" is obfuscation bordering on an outright lie.
As a business-friendly Democrat, an additional benefit to a single-payer system would be the savings that would accrue to businesses by not having to rely on teams of in-house HR people to analyze coverage levels, co-pays, contribution levels and negotiations with insurance companies. This is specialized knowledge that only the largest companies can afford to do well, and it is a productivity drain on the thousands of companies that do it poorly.
John, another way to eliminate the need for in house teams analyzing coverage levels etc. would be to sever the link between employment and health insurance. I don't get my homeowners insurance from my employer.
That doesn’t eliminate the need it just shifts the burden to employees.
You didn’t address my concern. The burden would be highest on those least able to wade through various healthcare options.
You even said “don’t care what it costs” as if people have infinite additional bandwidth to price out cardiac rehab or a mastectomy.
Minimum level you say? Have fun defining what exactly that includes.
What is the mechanism for people with employer sponsored insurance caring what things cost leading to improvement overall? Remember, each payer-provider-service triple has a unique reimbursement rate.
The insurance companies do care, and the actual insurance reimbursement rates are often quite a bit lower than what is (at least initially) billed to uninsured patients.
Also, different insurers reimburse differently, and providers manage their patient panels to ensure the economics work (e.g. enough patients in the panel with relatively generous private insurance, to cover the Medicare patients whose reimbursements barely cover the cost of service delivery). If you get rid of the privately insured patients, then it is no longer sustainable to care for the Medicare patients.
I think we have this underlying and as-yet-unsolved problem that pharma companies are in two different lines of business--drug discovery on one side, manufacturing and distribution on the other--that interact in toxic ways in an unusual marketplace to produce a lot of bad incentives and outcomes.
I like the negotiation-price-control-whatever scheme better than the status quo ante, but I would like a reorganization of the marketplace to split apart the lines of business and rely on government support for the research piece even more. Admittedly I'm heavily influenced by Tyler Cowan's prize idea on this one.
"pharma companies are in two different lines of business--drug discovery on one side, manufacturing and distribution on the other"
This seems like an odd framing. Its common among most industries and in the major one that comes to mind where its not true (automobiles) we often decry the negatives to separating them.
I agree: it is an odd framing. But this is a very odd market; it just straight-up does not function in the same way as selling toasters or TVs or whatever on either the development or the distribution end for a list of reasons, many of which I bet you can name off the top of your head.
Being first an academic doing health care and now a nurse has strongly reinforced this reality to me. Health care is just a very odd beast that is poorly suited to market mechanisms in lots of interesting ways. It doesn't mean that there isn't value in those mechanisms; I still think they have a lot of utility. But you also get a lot of perverse incentives and outcomes, which is why it requires a lot of regulation and produces a lot of bitter political and economic battles. It's just poorly suited to how humans normally organize ourselves.
I agree that its an odd market, but not sure how splitting R&D/discovery from manufacturing and distribution will address the issues in this market. Would you elaborate on the positives you see coming from that and what issues you think it would address?
Well, there's a bunch, honestly, but here's just one (for the sake of brevity). This discussion thread exists because of the whole discussion of negotiations-versus-price-control issue that John raised, above. We are not having that discussion in the realm of computers, even though government buys a lot of computers, because voters and their elected reps view the price of pharmaceuticals differently than they view computers. But when we argue about pharmaceuticals, we mostly argue about the price of consumer treatments. That's a problem.
Policy wonk types understand that we are actually arguing about a basket of things reflected in the price, from R&D costs to pharma regs in other nations. But ordinary consumers mostly do not think that way, which is how you persistently end up with the idea that somehow we could just lower pharma prices in the United States by purchasing all of our drugs from Canada. Ozempic, eh?
Splitting apart the units would simplify and clarify the political debate; our current fight over the cost of Xarelto would be about the cost of producing an extra dose of Xarelto under current supply and demand conditions, rather than the cost of 1) developing Xarelto and 2) developing a whole bunch of other blood thinners that didn't actually pan out.
Obviously then we would have another, different fight about how much the FDA or whoever should have paid the company that developed Xarelto. But that would be an actual fight over the actual development cost, and it would allow us to have a much more straightforward discussion of the foreign policy piece (pay up, Canadians!) rather than a confused fight about the "price" that a majority of voters don't really know is actually about all that other stuff.
Not a panacea, obviously. But my general belief is that politics and policy tend to work better when you can simplify and clarify things and skip fighting over the parts that are working or that people are okay with.
In general, we apply a higher price to each pill than manufacturing cost+profit so that the cost of the R&D is amortized over each pill instead of requiring some type of lump sum payment. This is how almost every invention with high R&D costs works - computer chips, cars, aircraft, etc. Its generally much better than requiring all the R&D costs be recovered via the first sale. I don't understand how you can split apart the units you suggest without undoing that ability to amortize cost. Doing so seems like it would require using only a public funded research program where taxes pay for R&D up front.
Am I missing something here where you can describe a different way to do this?
That's assuming the government would know the R&D costs of indivdual pharmaceuticals before any R&D actually occurs. That's impossible.
I like the framing. It roughly corresponds to a more philosophical realization I had recently about science in general - it's motivated strictly by profitability, while ideally the methodologies of science and technology would begin and end with ethics. (See the New Yorker article on CRISPR The Transformative, Alarming Power of Gene Editinghttps://www.newyorker.com/magazine/2023/09/11/the-transformative-alarming-power-of-gene-editing)
The ideal will never be achieved but it's still useful to point out these contradictions and dilemmas.
Yeah, most businesses that make something new do both of these things. It's very standard.
Agreed. And it mostly works. Pharma is just a weird beast, in part because government has such an unusual role in this market relative to, say, TV manufacture. There's a reason why drug prices come up in presidential debates and lawnmower prices do not.
You do have to make sure that there’s enough prizes out there to incentivize everything - it would be a problem if there are prizes for breast cancer and heart disease, but none for diabetes and aids and malaria, or whatever.
Yeah. I don't actually totally love Cowan's "prize" framing for this reason. I would prefer to go with a more or less "straight" incentive structure that is something like "flat enormous payout + costs + right to demand (very small) percentage of sales from any distributor of this molecule," payable upon a predetermined goal, like FDA approval. Obviously that would need a lot of careful design and tweaking, and you would end up down in the weeds pretty quickly.
But the basic idea is that we want to incentive drug discovery as a society, and we want to incentivize it for everything, including diseases like malaria where the market logic just doesn't really make that much sense. And we need to recognize that pharm research is genuinely difficult with a lot of blind alleys. Subsidizing that genuinely difficult, hit-and-miss process with backend profits on sales is just a really suboptimal way to do things for reasons that are highly specific to the weird market that is health care.
Yeah. You and I must have been typing at the exact same moment.
I suppose I agree, but I think the dynamics of "price controls" are very different when the government is also enforcing patents. It's a reasonable place to be in favor of price controls even for econ 101 believers.
Maybe insulin is an exception, but I really don't understand what keeps prices so high for a drug like that that isn't supply restricted.
Compared to Republicans calling their growth-inhibiting deficit-creating tax cuts for the rich a "jobs" bill, this is the smallest of small potatoes. And certainly there is some back and forth in a way that rent control or minimum wages do not have.
Thank you for reminding me that other bad things also exist.
I can't help but think that implementing single-payer would be economically distastrous for America and send us into a long, deep recession or even depression. Between the multiple industries the government would be forcing into bankruptcy (insurance, medical billing, probably some specialized medical device, pharmaceutical, and surgery companies), the massive, immediate deadweight loss from the new taxes (at least a 20-30 percentage point increase in income taxes on everyone, plus a 20-30% VAT), a massive drop in provider revenues (because they no longer would have private insurance to make up the difference) and large numbers of physicians and nurses leaving the profession because their salaries will be getting cut at the same time their taxes are going up a ton, leading to a supply crunch at the same time demand rapidly increases. Pharmaceutical company revenues would also massively drop, leading to large decrease in R&D and innovation. Additionally, the senators, representatives, and bureaucrats tasked with implementing all this would be the people filled with the most vengeance and rage toward the current system, and I would not trust them to limit the damage because for them cruelty toward the current system would be the point.
By all means, get rid of the employer mandate, support innovation, and cover more people. But there are good reasons why, as far I as understand, only 2.5 developed countries have adopted single-payer systems (UK and Taiwan, Canada's system is single-payer but not at the national level), and America is not somehow immune from those reasons.
As a true blue Biden supporter, I'm okay calling it "price controls." Although if some prefer to call it "Mafia-style negotiations," I'm okay with that too, showing that Democrats can play hardball.
Ehh, the devil will be in the details of how it's used. If used judiciously as the stick to a carrot of a reasonable offer, then there's no issue, and that's what I expect to happen. When we last discussed this you yourself agreed when I said that without the excise tax this would be a bog-standard negotiation tactic for bulk purchasing: use the vendor's footprint against them.
Given the rampant rent-seeking, patent law games, and corruption in the pharmaceutical sector, the filibuster insuring no additional cracks will be made at this for a decade, and the reality that the Supreme Court will likely want its pound of flesh before this goes into action, I don't blame them for going for the biggest stick they could write into it.
Outright lie is an accurate description.
Yeah, this deception has always bothered me. It’s important to be honest about what is actually happening.
Breaking my SlowBoring comment cherry here ; P (this is a topic i like to wonk out about so).. I think the case also needs to be made to workers that for the vast majority of workers, employer-based coverage is a benefit that has been rapidly declining in value while not declining in cost. Starting with the fact that it seems a large number of workers have no clue how much that benefit actually costs, and that it's not a "benefit" so much as a portion of salary they don't see as W2 wages but is absolutely counted as "total salary" by the employer. I realized this during the old 2008 election and then the run up to the ACA legislation that many workers were under the false impression that their coverage cost was the amount that was deducted from their paycheck each cycle (in addition to the deductibles, co-pays, etc), which created a very low estimate of the cost of the actual plan. No wonder people were resistant to anything attempting to replace the employer-based coverage system, if the average beneficiary believes that a family plan for 4 only costs around $300/month! Of course, that's not the "real" cost of that plan per employee - depending on the employer, the "employee share" of the plan is anywhere from a 50/50, 60/40, 70/30, 80/20 employer/employee split. So the employee with this coverage is typically only exposed to anywhere from 20%-50% of the full cost of their plans. Others may have some realization that their contribution is not the full cost but have some odd notions that the remainder is some employer beneficence - but of course that's not true either. The employer portion is accounted for in the total salary of each worker. Every dollar the employer "contributes" towards the plan is one less dollar the employer will put into wage salary. And the only reason the employer is doing this at all is for the tax benefit to the employer, as well as the tax benefit to the employee who is getting a portion of their salary not subject to W2 taxes.
So, what's the problem - from a worker POV? That "benefit" has been a primary reason why wages have remained so stagnant for so long. The more the employer is paying a portion of salary towards the plan is less money that will go into real wages, for one. Meanwhile, there's the other costs to the employer in administrating the benefit that leaves less room for other job growth and wage increases. Secondly, as health care costs have increased over inflation, employers have been faced with a set of poor choices: keep/increase their contribution amounts, which again, holds down paycheck wages. Or, reduce the value of the benefit, keeping the premiums more or less stable, but pushing more and more "out of pocket costs" through the normalization of deductible plans that cover less and less health care, while the per-employee costs both in terms of the employer contribution as well as the employee contribution have continued to increase (on a smaller scale), but they have not been *reduced* to reflect that the fact that the average plans across the board (for high salary as well as lower waged workers) cover less and less actual health care, and much more of the coverage is being paid of out of pocket by the employee. This is pretty much a de-facto salary decrease: you're paying more but getting less each term - and reflects the reality of the majority of non-union based employer plans where the old HMO has gone the way of the dodo in favor of "choose your own deductible" from a set of increasingly higher deductible choices. And again, there's no great way for employers to solve this that doesn't result in diverting more salary money either across the premium or pushing more out of pocket spending onto the workers. But either way, it's the worker that is continuing to shoulder the burden of higher costs, while experiencing the same wage flattening effects, which is a lose-lose for workers.
Third - the other problems of employer-based coverage is the reduced control workers have over their choices of employment and employer, let alone of the actual plans they have access to. The quality and value of the employer plan is mostly based on the size and demographics and industry of the employer. Those with larger employers with a decent distribution of younger to older workers with an also decent distribution of higher wages to lower wages in the company can offer the best across the board plans. Smaller employers, regardless, will have less generous plans and the most volatility in year-to-year coverage, since if they are "self-paid" plans, a smaller group just means it takes fewer employees to experience high health care costs to raise the costs for everyone. That, and the terribly inefficient way that employer-based coverage plans segment the health care market into these small pools keeps overall bargaining power down across the board. And of course, many workers can relate to the bind they can get into when they experience some health care needs that tie them to that employer and their current coverage. As well as the distress that can happen when that employer changes providers or coverage. It's a disincentive to starting one's own business, as well as for working for small employers. And then there's the not-talked-about-enough issue of how this creates an incentive for age discrimination in the workplace by employers: older employees result in higher group plans based on demographics and insurance rating - self paid or not. This is an increasingly precarious situation for workers in the 50-65 age group, who are subjected to this type of "quiet discrimination", which may come in the form of just not getting an interview at a company, to being grouped into layoffs and "downsizing" efforts (often to find their jobs have been replaced by lower cost college hires). And of course, missing needed health care during this time of life just makes when they do qualify for Medicare a more expensive to cover individual at that point, who may have been forgoing care for treatable conditions that will now cost the system more as they advance.
If there could be some better education campaign to basically condense my last few paragraphs into some easy to message bullet points :), Democrats might have better movement in convincing a lot of the most resistant to change demographics - which are those with employer-based coverage that this is actually an all-around bad deal for workers. Who may not fully understand the costs they really are paying, directly or indirectly, and the ways that this system keeps costs higher than they should be because it diverts the largest demographic of actual citizens into these arbitrary and small pools of coverage that do little on their own to hold down costs beyond reducing employer costs and salaries as a result. And the ways that it messes around with their own employment viability and choices. Basically, we need to start ripping some band-aids off on the illusions that employer-based coverage has sustained around costs and benefits. Maybe start with requiring employers to disclose on the actual paychecks the *full* contribution and cost of the plans so that is no longer a hidden wage? If workers see the full cost of the plans, and how much of their salary is going towards it, that may start to wake some up and drive up more resistance to the ever cost shifting back to workers in favor of alternatives.
They say Yglesias is a regular read in the Biden White House. Never have I more more fervently hoped this is true.
Healthcare is far from the only issue where the electorate rewards incrementalism and practical policy making over major reforms and ideology.
It’s among the ones most likely to make highly ideological voters lose sight of that reality, though.
Fortunately the GOP’s instincts are poor on the issue, it has no real reforms and is seen now on the wrong side of the negotiations issue.
Make more hay of this.
"Medicare will now negotiate drug prices". Uh, if by negotiate you mean "make them an offer they can't refuse".
In this "negotiation", the drug providers have the choice of accepting the government's price, withdrawing from the market, or being hit with a 95% tax. Would any of us consider that a negotiation if we were in the position of the drug providers? A better description than negotiating would be dictating.
Won’t someone please think of Big Pharma!
Big Pharma has provided us with countless medicines that can improve and extend out healthy lives. I take some of them. Would you prefer a world without them?
I would prefer a world where people can actually afford them.
This sounds remarkably like progressives talking about real estate developers. "Won't someone please think of big developers" and "I prefer a world where people can afford a home."
There's a clear recognition among neoliberals that creating a large and complex regulatory environment in home building means there is much less of it. Does that suddenly disappear when it comes to drug development?
Shaky framing. You're claiming we need "a large and complex regulatory environment" to reduce drug prices. That doesn't seem to be obvious.
That is not what I am claiming, and I'm not sure how you got that from what I wrote.
Ignoring the fact that they cost obscene amounts of money to develop doesn't make that fact go away. It's got to be paid for somehow if you want them to exist at all. The reforms to trials Matt discussed might make some progress in that regard, but price controls will not.
But how do you square this circle with the fact that most of the drugs are sold at much lower costs in other companies. You cannot possibly arguing that Big Pharma is selling at a loss overseas, right?
Further, do you think that other large insurance carriers do NOT negotiate prices? What, exactly, makes it weird for Medicare to do this? The fact that it is the largest?
Price controls make it illegal to sell something at a certain cost. This is not even in the same universe as a law that says the buyers are allowed to refuse to buy at a certain price.
Earlier in college I worked doing marketing strategy for a drug discovery company. We calculated the expected demand in Europe, the US, and East Asia/Oceania- nowhere else buys enough cutting edge cancer drugs to even be worth penciling it out. The way it was explained to me was that the US pays for the cost of development and is the only market to look at in the beginning- Europe and Asia-Pacific are nice bonuses if you can get them, but there's no point in even trying to enter those markets unless you're going to be able to enter the US market, since in most cases you literally can't break even on a modern drug only selling to those places. A drug that Americans are unlikely to buy simply won't be made, or it'll be made on the much slower timelines of academic research rather than the time-optimized and costly methods used in pharma.
To me it always felt like a prisoner's dilemma where every country that's not either the US or Switzerland has pretty much hit "defect" knowing that the US will continue to subsidize drug discovery. It's not selling at a loss overseas, since the marginal cost is very low per dose, but it would have been selling at a loss if the US wasn't also involved in amortizing the research cost. It hurts US consumers, but also hurts those in other countries who suffer from diseases American drug companies can't profitably research.
Here's an interesting piece out of USC from 2018 discussing cost burdens in the US vs. Europe that I enjoyed, it's a cool article and gets into the weeds a little more. https://healthpolicy.usc.edu/wp-content/uploads/2018/01/01.2018_Global20Burden20of20Medical20Innovation.pdf
Pharma companies are selling at loss overseas, especially in un- and underdeveloped countries. The low prices of pharmaceuticals (and R&D) in other developed countries are subsidized by the high prices we Americans pay. The rest of the developed world is having its cake and eating too because of our spending. Pharma execs have told congressional committees this.
Yes, and we'd all prefer a world where there was never any war, no poverty, no disease and so on. But we have to deal with the world as it is, not some make-believe world. And in the world that exists, Big Pharma develops medicine with the goal of making money. Lots of it. Sometimes they do make lots of it. Most times, the drugs they are trying to develop crash and burn. The profit incentive is very powerful and it has produced some wonderful things.
I think if their pretty nice profits go down a bit, they'll be just fine. Could we go too far? Sure. I think that's pretty far away, though.
If you think they are making above market profits, why not buy stock in pharmaceuticals? Or, better, start one yourself it it's a sure thing. BTW, how are you going to pay for the many, many failed attempts to develop drugs?
As best I can tell, their profits aren't that high. Certainly lower than most tech companies. If we push them lower, it will likely lead to capital being allocated towards something else with higher profits. Matt talks about this with regards to environmentalists and oil production, they want to drag profits down, leading to lower production which will then increase costs. Do you think it will work differently here?
Mentioned in another thread but profits are the wrong view! Basically what happens is equity via VCs or other re-investment of profits goes into R&D and a lot of that leads to companies that crash and burn. Measuring profits of the existing large pharma companies which typically buy promising products off smaller companies is like only measuring the profits of winners in a high variable market
Abolish the FDA.
I think this implicit view that Big Pharma is in the way of affordability of drugs due to greed doesn't really pass the smell test (that is not to say that pharma doesn't engage in some rent-seeking behavior). A couple high-level points:
1. Return on equity of the biopharma industry is roughly in line with other average industries. I specifically use Return on Equity because the nature of drug discovery is that there are many losers but the winners have fat profits, so its more useful to think about the capital going into developing drugs rather than looking at only the profits of the winners (e.g Novo Nordisk or Eli Lilly).
2. Eroom's Law - The marginal additional drug is increasingly more and more expensive per unit $$. There's a few reasons but one of them is a low-hanging fruit argument. If drug discovery were mostly about rent-seeking you wouldn't see different R&D expenditure behavior. https://en.wikipedia.org/wiki/Eroom%27s_law
3. The benefit of a drug discovery is actually immense in a way that the patent system doesn't allow us to appreciate. Discovering a drug allows us to reduce future medical costs and improve patient lives roughly indefinitely (see: insulin)! Having a system where the early users pay higher costs is not ideal. You ideally want a financial vehicle(eg the government) that would allow us to smooth the $$ given to pay for the innovation over a much larger population rather than only making the high-income, early-users pay almost all the profit and price gouge.
Agree. So we send in a squad of neoliberal technicians to figure out how rejiggle the incentives (which might involve some monopsony on monopoly negotiations) to make the diagnosis-prescription-production-approval-purchase process more efficient.
This isn't either-or and making it seem otherwise isn't honest.
If you want to screw big pharma, fine, but at least be honest about it.
Why is the pharma sector (or “big pharma” as you say) less deserving of profit than other sectors in the economy? Yes there is a deep and real human intuition that it’s wrong to profit from medicine. But isn’t it also wrong to profit from food (“big restaurant” “big farm(a)”) or other essentials, clothing, housing? And why are we selectively outraged by pharma making money (10% of medical expenditures; https://www.cbo.gov/publication/57772#:~:text=Since%201980%2C%20the%20share%20of,almost%2010%20percent%20in%202018.) but we’re ok with doctors making very high salaries and hospitals and insurers also enjoying profits?
I've invested in multiple bio-tech companies. Most of them haven't gone anywhere and I've lost considerable amounts of money on them. This is not uncommon. The one that works MUST work REALLY big to pay for all the ones that don't work.
The one drug that works must pay for all the many many others that don't work. Which not only includes all the R&D, but also all the testing, both on the drugs that work, and the ones that don't.
Less big profits will mean less drug development. Reforms to testing requirements will help, but that won't fix the problem that each successful drug must pay for all the ones that failed.
Side note, the profits from the US market fund most of the world's drug development.
I've seen this argument before, but I think it's going to depend on the particular incentives of the specific government decision makers. What is their mandate? Is it going to be like the DOE where if negotiations fail and nobody builds nuclear power plants (or in this case markets a drug) then everybody shrugs and the government guys don't suffer for it?
Or will there be BIG TROUBLE if a negotiation fails and the drug provider walks out on the sale?
The thing is, if the provider walks out on the sale, it gets heavily punished with taxes/fees on that product, or being unable to sell ANY of their products to medicare. So I don't expect them to walk out much.
However, your post does raise the point to me that I hadn't thought as much about how hard it is for Medicare to 'say no' to a price that is otherwise too high in a normal negotiation due to the politics of it.
So while I don't like the stick conceptually, it may be _partly_ needed to offset "death panels" / "drug restrictions" claims on negotiation.
EDIT: Maybe the fact that the drug company can walk without the tax by not selling ANY of their stuff to Medicare preserves just enough leverage for the companies to make this a bit of a negotiation again.
I think it's useful to think a bit about other countries here. "X company took its drugs and left" would be something politically devastating in Europe, and I suspect in the US as well. Usual caveat that I'm not American so maybe I'm way off on this!
The latter will lead to a large chunk of prescription medications being unavailable to Medicare recipients. There will be big trouble, I simply can't conceive of a situation where someone thinks it's politically viable to do that, it'd have to be Aduhelm all over again, or something similar.
Why can't they withdraw from the market?
They can, but it means they don't make any money and we consumers don't get the benefit of their drugs. Not an optimal outcome.
Seems like an overstatement. They'll still be selling some of these drugs to non-Medicare customers. They'll probably be no worse off than they would be if Medicare didn't exist at all and the majority of senior citizens were uninsured, which is what hardcore conservatives' #1 preferred option would be.
If we're still really concerned that these companies aren't getting rewarded enough, we should just take care of it directly by appropriating direct cash payments to them as a reward for inventing these drugs. That would be a lot more sensible than the Rube Goldberg mechanism of creating a taxpayer-funded public insurance program and then tying that program's hands.
This is good and useful. Other important Biden admin healthcare initiatives and issues:
- 12 months of continuous coverage for children on Medicaid and CHIP. The Medicaid "unwinding" -- resumption of eligibility checks after a 3-year pandemic moratorium -- has opened a window into the administrative complexity, incompetence and cruelty that regularly separates Americans from their benefits. Reducing eligibility checks for children to once annually reduces this harmful churn.
- 12 months postpartum coverage for women enrolled in pregnancy Medicaid. A major measure to reduce postpartum mortality. ARPA enabled states to extend postpartum coverage to 12 months via a state plan amendment, an easier path than previously available. 38 states so far have done so.
- Improved ACA premium subsidies and *removal* of the income cap on subsidy eligibility: Since these ARPA improvements went into effect, marketplace enrollment has increased by 37%, from 12 million in 2021 to 16.4 million in 2023. These enhanced subsidies EXPIRE in 2026 unless Democrats find a way to extend them. Perhaps most important politically is removal of the income cap on subsidy eligibility. Matthew, if you're ineligible for subsidies, that means that the benchmark silver plan in DC costs less than 8.5% of your income. That's now true for only about 10% of enrollees. Before ARPA, Democrats were hammered politically for leaving modestly affluent people (those with income over 400% FPL) exposed to often huge premiums (that rise with age).
- State improvements to health insurance affordability: States that have added supplemental subsidies to ACA marketplace plans or offered lost-cost alternatives at low incomes include NY, MN, MA, NJ, CO, NM, CA (2024), MD, WA and VT.
- New minimum requirements for nursing home staffing. The pandemic highlighted how grossly inadequate nursing home care (much of it private equity-owned) often is. New staffing requirements ( a minimum of 0.55 hours of care from a registered nurse per resident per day, and 2.45 hours of care from a nurse aide per resident per day) are proposed, not yet finalized, and under industry attack.
- New constraints on misleading Medicare Advantage advertising. The morass of confusing and often low-quality choices facing seniors enrolling or already enrolled in Medicare is an under-recognized problem. CMS has taken modest steps to tame outright deceptive advertising in this "free market" gone wild.
Links:
12-month Medicaid/CHIP coverage
https://www.hhs.gov/about/news/2023/09/29/hhs-takes-action-provide-12-months-mandatory-continuous-coverage-children-medicaid-chip.html#:~:text=%22Children%20should%20always%20have%20access,said%20HHS%20Secretary%20Xavier%20Becerra.
12-month postpartum coverage
https://www.kff.org/medicaid/issue-brief/medicaid-postpartum-coverage-extension-tracker/
nursing home minimum staffing standards (proposed)
https://www.hhs.gov/about/news/2023/09/01/hhs-proposes-minimum-staffing-standards-enhance-safety-quality-in-nursing-homes.html#:~:text=Nursing%20homes%20would%20need%20to,standards%20in%20nearly%20all%20states.
ARPA ACA improvements
https://www.healthinsurance.org/blog/the-arp-puts-more-affordable-in-the-affordable-care-act/
State ACA enhancements
https://www.healthinsurance.org/faqs/which-states-offer-their-own-health-insurance-subsidies/#nine
Great rundown! Thanks!
What will this costs? Who's going to pay and how much. Real numbers, please. We're already running a nearly $2 trillion deficit and there are articles questioning how much of this the bond market can absorb. Even if it can absorb all of it, debt is an obligation that future generations will have to honor. If this is self-evidently worthwhile, shouldn't we, the living, pay for it?
Agree. (Can we get you in some kind of health care policy making role?) Also, there is a weird gap for kids joining CHIP. My employer provides individual but not family insurance. When my colleague was pregnant, she spent hours and hours trying to figure out how much it would cost to have her kid and whether care for the baby in the hospital would be covered under her individual insurance since the baby wouldn't yet be covered by CHIP. Of course, not having insurance tied to employment would be fantastic, but I don't see that happening any time soon.
Thanks, SD. Re the newborn when the wife has solo employer-sponsored coverage, I see two partial answers:
1. The newborn is covered under the solo plan for at least a 48-hour stay. https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/publications/protections-for-newborns
2. If the employer does not offer family coverage, the baby is eligible for subsidized marketplace coverage, which would be effective when the baby is born. Not clear whether you can pre-enroll a baby or whether the coverage would be retroactive. As to CHIP, I would think it also would be retroactive -- perhaps your colleague discovered whether that was the case.
https://www.healthcare.gov/what-if-im-pregnant-or-plan-to-get-pregnant/#:~:text=Your%20plan%20can%20cover%20you,for%20a%20Special%20Enrollment%20Period.
Yup, the baby is now 4, so that is what happened. Good to know that has been looked at.
These are very good ideas.
A hard and fast rule of American politics these days is that Democrats don't have a coherent position on immigration and Republicans don't have a coherent position on healthcare.
Like, most conservative attacks on the ACA come from the left on things like how deductibles are too high and whatnot.
I’d actually argue that Democrats have a more coherent position on immigration than Republicans do. The difference is immigration is an issue that Democrats don’t want to talk about at all as raising its salience is to benefit of GOP. The difference (as usual) is GOP has a much bigger media apparatus whose goal is to elect GOP officials so the issue gets in the news more than health care.
As far as I can tell, the GOP position on immigration is to make sure our system is as bad as possible so it remains a “winning” issue; be as cruel as possible to people crossing the border AND make no effort to crack down on employers who use illegal immigrant Labor thereby insuring the issue remains a worse problem then it needs to be.
To put it uncharitably, the Dems' position on immigration seems to be that they're not for open borders but they're not for any kind of enforcement, and while they give lip service to immigrants helping the country, most of the emphasis is on helping the least skilled be able to come here.
I should add that being more coherent than GOP is a low bar. I do think you're being uncharitable, but also think you're not totally wrong about Democrats position if that makes sense. My position is probably pretty close to Matt's "One Billion Americans" position (hence why I subscribe to this Substack), but also know that is probably losing me a lot of votes including a lot of Democratic votes in the current climate.
It is instructive to me that neither GOP or Democrats make E-verify or going after employers who hire illegal immigrants front and center of any immigration plan. I know it's sort of put out there by both parties, but I think I'm right in saying it's not the centerpiece of either party's plans for dealing with immigration. It's honestly weird to me that Biden/Democrats don't make this a bigger part of their messaging. It avoids going after immigrants themselves which means it avoids offending a lot left aligning voters like me. It also involves going after big corporations hitting a decent economic populist message. I mean honestly, outside of the meatpacking industry itself, which voters are turning away from a candidate who's bashing Meatpacking industry for illegal hiring practices?
I imagine the business lobby probably applies intense pressure to keep any serious proposals to implement e-Verify off the table. But I agree that eVerify (especially if combined with rewards from the money seized from companies found guilty, as well as expedited immigrant visas for illegal immigrants who turn in their employers) would do far more than any wall to reduce illegal economic migration.
It's politically impossible to implement, it's been tried in red states and agribusiness revolts. It's just not a realistic solution anywhere.
https://www.bloomberg.com/news/articles/2018-08-23/e-verify-laws-across-southern-red-states-are-barely-enforced
Having done a decent amount of manual labor when I was young, my guess would be that backbreaking farm work in the hot sun is just not a viable job for non-immigrants at any pay rate. Lots of countries import guest workers and I think that's an OK thing for us to accept
I agree that it's hard to imagine what wage it would take for Americans to work the fields again, but I think the answer for a lot of crops (and maybe slaughterhouses too) is automation, which seems both more humane and more sustainable over the long term...
> Lots of countries import guest workers and I think that's an OK thing for us to accept
And we do! States like Arizona and Georgia do take advantage of H-2A agricultural visas.
I once got into a discussion with a more conservative fellow than myself about immigration, and I told him, "We live in Pennsylvania. Not a lot of immigrants from south america and mexico coming here. So why should you and I care all that much about it?"
He looked at me like I was crazy, but I still think I had a good point.
Well, been to Philadelphia's old Italian Market area lately? It's transforming itself into a Latin-American Market. Nothing wrong with that - everything changes over time - but we are seeing a lot of immigration from Latin America.
Presumably saying “we live in Pennsylvania” rather than mentioning the city implies that they’re in a place far from Philadelphia or Pittsburgh.
My mom's hometown of 750 people in Central PA has at least a dozen or two Hispanic households of which my grandparents are aware, including the folks right across the street, and they represent easily a third of the children in that town now, maybe more.
That's far from universal but it's also far from rare.
I’m curious if he feels the same way about Texan abortion policy.
"GOP has a much bigger media apparatus"? In what universe?
https://slatestarcodex.com/2017/05/01/neutral-vs-conservative-the-eternal-struggle/
It's both true and untrue. The GOP has a more explicitly partisan media apparatus, while the Dems enjoy a much, much larger implicitly partisan media apparatus.
That's a gross oversimplification. If the mainstream media were implicitly partisan they'd be much more disciplined, akin to Fox, rather than being pathologically aligned with the interests of the wealthy, overly cosmopolitan, mobile, socially extremely permissive professional classes.
They're not the same thing, the media often says shit which they know will harm Democrats, and continuously expresses left-leaning views they think are good but harm Democrats even more.
I don't think being partisan implies being strategically competent. Both parties appear to be ready to nominate the only presidential candidate who could possibly lose to the other.
"Implicity."
If I know my fellow American voters, I know that they crave those subtle, nuanced messages from the media that by tiny, near-invisible increments gently push them to vote a certain way.
I assume he is one of the folks that likes to call NPR 'nice polite republicans'.
If something like that is your benchmark, then republicans absolutely dominate the media environment.
There’s a difference between ideological media and partisan media
Yes, agreed. But im not sure the distinction matters here.
Ideologically left wing media is going to try to get democrats elected when it comes down to it.
The distinction absolutely matters; and ideologically left-wing media often does the opposite of trying to elect Democrats.
Maybe, but they're:
A. Bad at it.
B. Driven against it by profit motives.
All-in-all, mass media outlets are much less favorable to Democrats than Fox et. al are to Republicans.
Their biases are invidious because of the effects on the quality of reporting, not because of partisanship.
I think Matt overindexes healthcare from the 2018 midterm, though. 2018 was as much a backlash to Trump as it was about healthcare, if not more.
Celebrating our recent successes and promising incremental improvements is a smart strategy, but we need to bear in mind that healthcare only ever works for us as a defensive or incremental issue in tight elections, not an offensive one.
Indeed, David. Yes, we know that Democrat candidates talked a lot about healthcare during the campaign. But the ACA repeal had already been defeated and the Republicans had shut up on the issue. And, the critical thing for me, the turnout for the 2018 was historically high, almost without precedent. People didn't come out in such vast numbers to vote because of the live wire healthcare debate which didn't happen; it was all Trump, Trump, Trump.
Not sure about that - I mean yes Democratic 2018 turnout was a *lot* of Trump, of course. But I wouldn't discount the role the attempted repeal of the ACA played. For one, there was a lot of public energy against the attempted repeal and the terrible "replacements" being bandied about before the vote that energized a lot of Democratic campaigns to "repeal and replace Republicans", a lot of viral town halls that focused heavily on Republicans running in "blue-ish" districts facing loud and angry backlash from voters (echoing the Tea Party anti-ACA town halls from 2010, but probably a lot more actual grassroots), and it was those Republicans primarily who lost in 2018 and were replaced by Dems (from NJ, PA and other purple/blue states) that gave the Dems their House majority.
Finally, the electorate got a good hard look at what the Republican "repeal and replace" would actually look like after hearing nothing but vagary for the past 6 years, and it managed to make the ACA more popular in the comparison. And Trump, of course, was no help at all - the Republicans really just wanted "repeal" but Trump talked about the "best health care plan ever" throughout his campaign that he would produce "in two weeks" constantly, and when push came to shove he stuck Paul Ryan and Mitch McConnell with having to cobble together that "terrific health care plan" that there was no actual real Republican plan for, that wouldn't just be a skimpier version of the ACA, and that leaned into all of the least popular features of the ACA (high deductibles and inadequate subsidies) while removing the most popular parts (eradicating pre-existing coverage and policy recission practices), and Republicans could not message it away from anything other than it was - taking good things away and replacing them with worse. And especially since the bill failed on the margin of only 3 GOP Senate votes (one of whom died not long after), there was a real sense of jeopardy that a stronger GOP majority in 2018 under Trump was going to gun for it again - not unreasonable since there were the lawsuits filed by Republican AG's and groups to try to repeal the law and its provisions happening in parallel (backed by the Trump Administration), which at least some were still pending by 2018 midterms, and Trump wouldn't shut up about being "betrayed" by McCain in particular which definitely kept the precarity of the law in the forefront and the still extant Trump and Republican led attempts against it.
Again, the Republican repeal attempt *failed* so it wasn't really an issue anymore.
And look at these House turnout numbers for non-Presidential years:
2002: 71.1M
2006: 78.2M
2010: 82.8M
2014: 75.7M
2018: 111.5M
One of these is simply not like the others. And because the Republicans tried and failed to overturn the ACA (which in Oct. 2018 had a 49% approval rating)? I'm not buying it.
Agreed. It seems like this is a case of Matt succumbing to Dem tunnel vision - believing our own spin and messaging on macro events like elections, rather than understanding what actually happened.
GOP just doesn’t have coherence in general.
This is largely true these days yes.
I just wonder when the GOP will get tired of it. How do they feel ok with themselves never achieving anything?
there is some inherent and reasonable asymmetry though. "Conserving" the status quo is more of an achievement for conservatives
No one seems to remember that deductibles and premiums were lower under the old system because it barely covered anything by the time the insurers were through interpreting their various escape hatches.
It seems such an obvious policy and political win that I wonder if there is some technical problem with just ramping up hearing all those asylum claims. Even if the effort was not "enough" at least the Administration "gets caught trying." At least is reduces the number of people for DeSantis and Abbot to demagogue about.
What *do* Republicans have a coherent position on, other than "libruls bad"?
I think the culture war position is pretty strong, although definitely leads to MANY cases of hypocrisy -- i.e., freedom of speech for me but not for tree (Don't Say Gay etc)
True, but in fairness trees aren't even mentioned in the Constitution. 😀
I think they've been reasonably consistent on "tax cuts good", though they haven't had a chance to test that lately. (Pace the recent suggestions in some realms for tariffs or something similar, which most people don't read as a tax increase since they don't pay it directly.)
OK, fair point.
Both have (or could very easily roll out) coherent positions on these two topics. They just don't dare share them with the electorate or media. The GOP plan is "repeal the ACA, voucherize Medicare with COLA that rises more slowly than inflation, and block-grant Medicaid with an eye toward phasing out federal support." The Democratic plan is: "Give green cards to undocumented folks here more than two years, plus substantially increase immigration quotas moving forward + E Verify + increase fines."
Couldn't SB get a press pass and ask these questions in a press conference/briefing?
That would be so fun
This is one in a series of posts MattY has made about "democrats should be talking about this" or "democrats should be talking about that". Sometimes it's the Biden White House rather than "democrats", but the exact path to "talking about" has always been diffuse.
MattY, if you're looking for ideas for future posts or even a series, I'd like to see a nuts and bolts examination of political communication strategies. Who among a political party should be/is deciding their message, how much authority should the party grant them to do so, and what is the path to getting the message out?
Besides just talking about the message, is there a way for Democrats to better improve the medium? Can they build a smarter, more focused strategy for getting out their message (whatever that message might be)?
I second this idea! I would be very interesting to read Matt Y’s thoughts on this.
See also “message discipline “ and to what extent the party should be blamed/held responsible for the utterances of its most extreme wingnutty members.
"But I think one thing we learned from Operation Warp Speed is that there are many avoidable impediments to innovation. A system in which you make it cripplingly expensive to research new treatments and then create giant windfalls is convenient for incumbent pharmaceutical companies, but it’s dumb."
How is that at all convenient for incumbent pharmaceutical companies? Going into a clinical trial with a ~10% success rate knowing that you're probably going to spend in the neighborhood of several hundred million dollars to see if a drug works is not a preferred business model. The reason it's the system we have in place is because *that's what you need to do to test both the efficacy and safety of a new drug.* Any proposal to reduce costs needs to account for both of those facets.
You say it took 270 days to test the first COVID vaccines... which is three years faster than the fastest vaccine had ever been tested! If anything, the increased anti-vaxx noise from the past three years increases the salience of running a proper safety arm in a clinical trial, which is precisely the counterargument to challenge trials.
It benefits incumbent companies RELATIVE TO a start up.
Alex Tabarrok has lots of ideas about how to reduce the costs of approving drugs, like cross approval with EU/UK/Canada/ANZ, and use of data if not total cross approval. (Remember, UK approved one of the vaccines before we did.)
Maybe allow Medicare to use only safety-approved compounds, in effect allow Medicare to decide the cost effectiveness the same way we allow big investors to forgo some of the protection that smaller investors have.
And what about the Medicare (?) limit on the number of residencies which is (?) the main thing limiting the practice of more immigrant physicians? [A back door to merit based immigration]
Are we still doing the annual sign-up for ACA? Why And shouldn't unemployment be an "automatic" sign up for a zero-out of pocket tier of ACA? [A back door to reform of unemployment insurance.]
Ways to quasi-universalize SNAP? [A back door to a renewed effort on RCTC]
Allow employees to opt out of employer plans into improved ACA [Back door to undermining the employment-health insurance link]
Allow Medicare to cover drugs/treatment abroad. [I was out ~$1000 in hospitalization after a fall in Colombia, which I didn't even mind but I'll bet that would have been 5 digits for Medicare.]
Ah, it's the "incumbent" part that's the issue relative to startups. True, but hardly "convenient."
The UK's approval of the AstraZeneca vaccine was, at the time, highly controversial. AZ screwed up their clinical trial design (to the point where most of us in pharma were smacking our heads over it, since we knew the anti-vaxxers were waiting to jump at the chance for any sign of malfeasance). The sentiment was that the UK government may have green lit it since AZ was a UK company... which is a questionable assertion but not an unreasonable one. In any case, there would have to be a lot more harmonization across these countries before any sort of cross-approval happens.
Medicare generally will pay for drugs approved by the FDA, since they trust the FDA to make those decisions based both on safety and efficacy. Lately this has also proved controversial with the approval of lecanemab for Alzheimer's, since the efficacy data on that is suspect to say the least.
In general, there’s a dynamic where big incumbent businesses don’t do much to try to remove the annoying government regulation they’re wasting most of their time on, because although this regulation is extremely inconvenient for them, they know it will strangle any new competition before it gets started. You see this dynamic in real estate, pharmaceuticals, licensing laws, and many other things.
Is this true for pharma? From what I can tell most pharma companies mostly act as effectively VCs on promising drug candidates from biotech companies (they do have some in-house R&D efforts). They buy a candidate and push it through clinical trial OR they push it through the regulatory + marketing + manufacturing aspect. I could be wrong though.
True to some extent, but I'm pretty confident that pharma is spending a good amount of money trying to remove or reduce certain regulations.
Coincidentally, I was on a phone conference recently with a division head at AZ. Although not the reason we were talking to him in the first place, he nonetheless spent the majority of the call complaining about the very high failure rates in clinical trials.
Your point about the high failure rate of clinical trials is important. Clinical trials are expensive. I think they're the most expensive part of the R&D process.
I think it probably made sense to do some sort of human challenge trials for the Covid vaccines in healthy young people, but we hadn't really planned on that and so there wasn't much of a regulatory infrastructure to set them up. That's something that needs to change because there will be more emergencies.
Again though, challenge trials for the COVID vaccines wouldn't have gotten them to the broader population any faster (see this from Derek Lowe in June 2020 for a snapshot of the situation at the time: https://www.science.org/content/blog-post/challenge-testing). You still needed a safety arm, and by the time they were approved (in November 2020, which again was blazingly fast), the manufacturing capacity hadn't even had time to scale up.
That point needs to be emphasized a lot more: pharma timescales are such that the clinical trials are usually slow enough for them to build in plenty of time to figure out how to scale up manufacturing. I can think of a case where my own company is in a Phase II/III trial and the process chemists are testing a streamlined route before they have to get to production scale. All of that got truncated with the COVID vaccines (which was a good thing!). It's definitely not as simple as, we should build the excess manufacturing capacity ahead of time and let it sit idle; the mRNA technology was such that there were only a few people in the world with the expertise to oversee certain steps of the process.
Running more safety trials isn't going decrease anti-vax sentiment. It is not a rational a belief, and reason and evidence are not useful in getting people to abandon that belief. Best to get the vaccines out as quickly as possible.
I don't agree with this. There's a substantial % of the population that's clearly vaccine-hesitant, or at least open to hearing anti-vaxx positions. All it takes is 1 vaccine being approved and then safety issues being found out about later, and you've turned tens of millions of people away from *any* vaccines for at least a generation. It would be an absolute media firestorm and discussed nonstop. I would be very, very careful here
It's not for the true believers, but it's a lot easier to dismiss them as cranks if you have mountains of evidence in the other direction. When you see Guillain-Barre Syndrome in 1 in 1,000,000 people taking a vaccine, that's considered an acceptable risk. If you see if in 1 in 1,000, your safety trial damn well better have picked that up.
I think there were a some good things passed, but want to push back on two of the things that Matt highlights as good:
1) As mentioned elsewhere, we're not negotiating over drug prices, we're setting a number and then telling drug companies they have to accept it or deal with an excise tax of 95%. In any other circumstance we would recognize this is not negotiation. It would have been perfectly fine to set a price limit the government finds reasonable and not be willing to pay more. But the excise tax and including all drugs by that manufacturer in the deal makes this a price control. So at least call it that. And also recognize that the reason its there is that Democrats didn't want to have to deal with the potential blow back of a drug company not accepting the price and choosing not to sell to the government.
2) The limit on drug prices increasing more than inflation - If you know going in that if your costs suddenly increase by 20% (fire the a factory, worker shortage, etc) but you can't ever raise your prices more than CPI (target 2%), then won't you just set the initial price much higher so as to build in a larger cushion?
More broadly, its fascinating to compare Matt the deregulator when it comes to land use and Matt the regulator when it comes to healthcare. It makes so much more sense to build a basic single player plan that allows for real negotiation on prices, then allow the public to purchase additional care on top of that. Instead we're slowly building an ever increasing thicket of rules and regulations that will make it harder and harder to navigate...just like developers trying to build in NYC.
95% excise tax on everything? Or just the drug in question?
Just the drug in question (I posted wrong elsewhere, will correct)
====
An excise tax will be levied on drug companies that do not comply with the negotiation process. The excise tax starts at 65% of a product’s sales in the U.S. and increases by 10% every quarter to a maximum of 95%. As an alternative to paying the tax, manufacturers can choose to withdraw all of their drugs from coverage under Medicare and Medicaid. In addition, manufacturers that refuse to offer an agreed-upon negotiated price for a selected drug to “a maximum fair price eligible individual” (i.e., Medicare beneficiaries enrolled in Part B and/or Part D) or to a provider of services to maximum fair price eligible individuals (such as a physician or hospital) will pay a civil monetary penalty equal to 10 times the difference between the price charged and the maximum fair price.
=====
And maybe that ability to "walk" on selling any other drugs to medicare/medicaid keeps this as a negotiation? Because at least Medicare risks losing something if the company walks? (in terms of the public screaming at them for not having these drugs because they tried to charge too much)
So they are free to say no and just rely on selling to privately insured Americans.? That seems fair.
1) As an alternative to paying the tax, manufacturers can choose to withdraw all of their drugs from coverage under Medicare and Medicaid
2) In addition, manufacturers that refuse to offer an agreed-upon negotiated price...will pay a civil monetary penalty equal to 10 times the difference between the price charged and the maximum fair price.
They can say no, but the penalties for doing so are severe.
I think #2 only applies to a price already agreed to, that they have to make sure to not overcharge medicare-eligible individuals even if medicare doesn't _directly_ buy it.
I think it's not "in addition to the tax/choise in #1" but an additional piece of info
The way I read that is even if you decide to pull out of Medicare, you can't offer it to individuals covered by Medicare through private hospitals or doctors without the civil monetary penalty.
Am I misreading that?
Where are you getting that verbiage?
A.D.'s post above....
"Another very important provision taking effect this year is one that imposes a fee on companies that raise the price of prescription drugs faster than the overall rate of inflation."
How can we save people money? I know, tax things they buy more! That'll certainly bring down cost.
There are so many obvious ways for this to have unintended consequences I'm surprised Matt even brought it up as a potential positive. First, the obvious one: taxing things make them more expensive. This doesn't require any explanation. Second, of course companies are going to game the system. That means, for example, increasing prices by inflation, even when prices would naturally go down, to hedge against future cost increases. Third, this incentives companies to introduce new medicine or new formulations of old medicine at higher prices to get around these taxes. Think of how butchers in the UK during WWII invented new cuts of meat to get around price caps for previous cuts of meat. And that's just off the top of my head. People with billions of dollars of incentives to avoid this tax will find market-distorting ways of doing so to the detriment of everyone.
Good comment.
Maybe to better game the system, the pharma companies should hire some marketing people from the packaged snack food industry. You know, keep the price the same (or even lower it!) but make the pills slightly smaller or surreptitiously reduce the number of pills in the container.
/s
If drug makers have the ability to raise prices, in what way would prices "naturally" go down?
One example would be when there's competition between two drugs in the same class, even if they're both covered by patents. One manufacturer might drop the price to undercut the other. They might be more reluctant to do so if they're prevented from increasing the price later.
One thing I don't understand on the "Democrats should message differently/more on XYZ" pleas is what it really means to message. How does "messaging" actually work? It's certainly impossible to get anything through to political opponents that isn't demagogued through partisan news first. I consume a lot of news and not sure I really get anything from the Biden administration other than really simple and big stuff filtered through the NYT - "Biden signed something that forgave 10B of student loans", or whatever.
We got a lot of messaging from Trump because he got through to everyone on Twitter.
Why isn't there a 30 second daily update from Biden/Harris/Buttegieg/etc. when I open Netflix? Why isn't there a 2 minute daily Biden podcast?
This sounds like a revival of the old Saturday radio broadcasts that previous presidents would deliver. I believe the practice started with Carter; they certainly ran through Clinton, but I don’t know when they stopped.
Great idea. Buttigieg would be awesome at giving 30-second daily (or longer weekly) updates. Do it, Mr. Secretary!
This is the upteenth example where GOP having an entire media apparatus helping their cause warps the political landscape.
I’m thinking specifically about your note about operation warp speed. I feel like this might be easiest campaign message for Biden. “American spirit and smarts solved the worst pandemic of our lifetimes. Why can’t it solve the other diseases of our lifetimes?” I think the combo of Fox News (and other right wing rhetoric) and GOP victories in VA and FL in 2021 and 2022 has convinced a lot of people that Americans are broadly anti vaccine when the latter was almost certainly about schools still having way too restrictive covid policies in fall 2021. But the vaccines are popular. I’m aware booster take up is depressingly low (getting mine next week btw), but that has to do with a lot of factors unrelated to whether people think the vaccines are good. And yet reading the news you’d think the hardcore GOP vaccine position is somehow majority position*. Being pro “cures” and more vaccines I really think is a winning issue.
* this phenomenon is taking its weirdest turn in regards to Ukraine funding. I know support for Ukraine has fallen among GOP base but you’d think it’s on par with raising taxes given behavior of GOP elected officials. Large segments of GOP voters are clearly still quite pro giving financial support to Ukraine and yet the way GOP officials talk and act (as well as pundits) you’d think majority of public is anti-Ukraine.
“American spirit and smarts solved the worst pandemic of our lifetimes."
not to be trite but much of the media wouldn't want to give America that kind of credit
Because the media is so pro GOP?
No but it drives narratives. However “biased” New York Times may be the political reporters at least are desperate beyond words to not seem biased. So if entire right wing media apparatus thinks John Fetterman’s clothes are a “scandal” it gets MSM attention and treated as a “stories”. It’s a how you get that famous world cloud from 2016 where “email” was larger by far than any other word despite the fact any sane person would say trumps scandals were infinitely more consequential. “Both sides” and all that. But the key, will emphasize this point to the cows come home; however biased New York Times coverage can be they 100% do NOT consider their roles as boosting Dem candidates outside of the editorial page. This a decidedly different dynamic at Fox.
You know Matt wrote a whole post like just a week ago laying out he himself believes media has a bias in getting Trump re elected as he drives clicks/ratings? Media “bias” does not have to come in pure “left/right” variety in order to have pretty big second order biased effects.
Matt tied it to corporate profits. Wrong lens. The mainstream media doesn't really have a "left/right" bias. It has a "boring/interesting" bias. Biden is boring; Trump is interesting.
Sort of agree. I actually think Matt is at least somewhat right in the "Econ 101" sense. Meaning all of us respond to incentives at least to a certain extent. Even if we don't realize it. Ask someone if they have driven less due to higher gas prices and you'll likely hear that no they haven't driven less. But actually look at how much that same person drove one month vs. previous month and there's a decent chance miles driven is a little bit less than previous month.
Same thing with reporting. Wouldn't shock me at all to find there is at least an unconscious bias affecting which stories get covered. Especially in light of the fact that outside the truly top of the pyramid reporters (you're Andrea Mitchell, you're David Brooks, you're George Stephanopolos), news media is very obviously precarious job right now. Makes sense there's even more pressure today to frame stories or cover stories that generate clicks than even 20 years ago.
My issue is Matt overemphasized this incentive too much. I think you hit on one "bias" influencing reporting. I've emphasized continually how much "both sides" reporting is still a big factor. I also noted the perverse long term influence of Watergate. Namely there is a bias to not cover a scandal as a "SCANDAL" unless there is a cover up. The fact that Trump is so brazen in his corruption bizarrely works to his advantage.
Good comment, but I have to definitively state that I am not now nor have I ever been Andrea Mitchell, David Brooks or George Stephanopolous.
:-)
Ugh. Typos and poor grammar strikes again. LOL
I cringe at how often my comments end up with poor spelling and grammatical mistakes. I'm glad that most commentators can figure out what point I'm trying to make.
I think there is something to both what you are Marc said in that there are multiple things pulling journalists and media more generally.
I would add that I think the pull is noticeably different on different topics. Media tends to be much more "Republican" friendly on economics than you might otherwise expect, but much more "Democratic" friendly on social issues. Thus Republicans get a bit of a pass on the sheer amount of focus they put on cutting taxes in the MSM, while there is much more acceptance of pretty far left wing social views relative to the general public.
True, but it's also worth noting that it's not only a function of disorganization. There are lots of left-of-center voices who affirmatively argue that its bad politics to focus on health care or other pocketbook issues rather than culture war issues. Take Matt's sometime-bete noire Will Stancil:
https://twitter.com/whstancil/status/1707439211580653786
https://twitter.com/whstancil/status/1554125295220842496
https://twitter.com/whstancil/status/1618637205639159808
https://twitter.com/whstancil/status/1326885700071927809
https://twitter.com/whstancil/status/1523304185621782529
https://twitter.com/whstancil/status/1133863206873698305
https://twitter.com/whstancil/status/1547686562581729281
https://twitter.com/whstancil/status/1547341434130468868
Hot take: Democrats should talk as much as possible about their successes and their popular ideas. Definitely agree here. Are they failing to do so? Maybe; I don't have enough information.
But between the bright pundit's ideas and reality always falls the shadow. Matt writes, "I would compare the minimal volume of attention it’s gotten to the widespread discussion of Biden’s student loan activities." Do you know why that is? It's because the latter is *controversial.* You know, the kind of thing that excites the media and gets that earned attention. The governor of Kentucky talking about healthcare issues or the usual Democrat talking head doing so on Meet the Press will disappear into the void unless something happens that causes it, as they say, to become viral.
Now if you can show me that Biden talks five times as much about student loans as about bringing pharmaceutical costs down, I'd say we have a problem. I don't think that's the case, though.
My advice to the Democrats, which is worth what they pay for it, is: wait for the Republicans to slip up on some healthcare point in the public sphere and then jump on it like crazy showing their mendacity and highlighting the Democrats' great results and future plans.. Preferably a lot closer to the election than now. Otherwise, spend your time preparing for the big push next year and worry less about winning debating points right now.
Excellent piece, as usual. One thing in particular got my attention because I know nothing about it: "the White House political operation doesn’t have a good working relationship with the Department of Health and Human Services". Well, that's a bummer. Can anyone fill me in on this
"one that imposes a fee on companies that raise the price of prescription drugs faster than the overall rate of inflation ... creates an economy-wide disincentive to raise prices."
That's a great idea if you believe that only evil, greedy drug companies would raise prices faster than the rate of inflation.
Now, I have no love of drug companies, and I loathe prescription drug ads (no, I will NOT ask my doctor if Xyzumab is right for me, go away!). But I can easily imagine a scenario where, say, ingredient X is necessary for making an insulin drug, and the supply of X cratered during the pandemic and still hasn't recovered. So now, shortage of X --> X is expensive --> the only way to make the drug is to raise prices or else sell at a loss. A consumer may say, "Oranges are too expensive, I'll buy apples instead," but a drug manufacturer can't very well say, "X is too expensive, no problem, we'll swap in ingredient Y instead," not unless they want to have an awkward conversation with the FDA. Is it fair to punish the drug company with a fee in this case? I would argue not.