I find it refreshing when a government agency says no to spending more money.
Last month, in an editorial titled “Sandbagging an Alzheimer’s Treatment,” the Wall Street Journal editors criticized the Centers for Medicare and Medicaid Services for refusing to pay for Biogen’s new Alzheimer’s drug, Aduhelm.
In their editorial, the WSJ editors rightly criticize various scientists who had insisted on further trials before the drug was approved. As readers of this blog know, I favor the lightest regulation we can get from the FDA. Let the drug companies try their drugs and let us learn what works and what doesn’t.
But approving a drug is different from having a government agency spend tax money on providing that drug. The Journal editors do state one major argument against having taxpayers pay:
Their [the progressives] biggest beef seems to be that Aduhelm costs too much ($28,200 per year) and could balloon Medicare spending.
They seem to think it’s a bad argument but they don’t really say why.
For some years, the Journal editors have had a contradictory view on Medicare spending. They want to rein in entitlement spending generally but they want to have the CMS pay for pretty much any drug for the elderly on Medicare if the FDA approves it. They have never, as far as I know, resolved this tension.
I think the Journal‘s view comes from their late, and brilliant, health care editorial writer Joe Rago. When he visited Hoover some years ago, I tried to get him to see the problem. His argument was that now that the government has Medicare, people on Medicare should be able to get whatever drug might help them, independent of cost. My argument was that Medicare is not all or nothing. I would like to see it ended. That’s extremely unlikely, as the most powerful voting group in the country is not about to give it up. But at least, we should applaud the CMS when it’s even somewhat careful with tax money.
A letter writer to the Journal, S. Paul Posner, put it well in an April 20 (electronic version) letter. Addressing the point that progressives had pushed for the CMS to say no, Posner stated that the CMS:
should spend money where it will do the most good. That means cost-benefit analysis, which progressives are not known to embrace. They shouldn’t be criticized for doing so now.
READER COMMENTS
Scott Sumner
May 15 2022 at 2:04am
It’s really sad to see the WSJ take that position. I can’t even imagine what their rationale is.
Matthias
May 15 2022 at 4:56am
Social desirability bias probably?
Ever tried suggesting that teachers could ever be paid enough? Or that (in the UK) the optimal level of NHS is some finite number?
Or that it might make sense to pay members of Congress more in line with what Singapore does?
Thomas Lee Hutcheson
May 15 2022 at 7:21am
Maybe WSJ have no problem with passing up cost benefit analysis if the result is upward distribution of income. They seem OK with tax cuts that mainly benefit higher income people even when they create deficits.
Although maybe it is Medicare rather than FDA that should do the cost benefit analysis.
David Henderson
May 15 2022 at 11:30am
You write:
That’s unfair and inaccurate. Tax cuts are not “upward distribution of income.” The only way that word usage makes sense is if the government owns income and is distributing it. Moreover, the Journal editors, for at least 47 years, have advocating cutting taxes on capital, arguing, correctly, that those tax cuts would help workers by increasing the incentive to invest in capital. And they have been right.
You write:
You’re agreeing with Posner. CMS is Medicare. And the FDA should never do cost/benefit analysis.
Thomas Lee Hutcheson
May 17 2022 at 8:25am
Yes, I misses that it was CMS rather than FDA. Both CMS and private insurers and to the extent possible health providers should do C-B analysis.
There was not reason that the 2017 reduction in taxes on corporations could not have been a) larger and b) offset with raising revenue from personal income taxes — or even better personal consumption taxes (higher rates with higher deductions for saving) or shifting from wage taxation to a VAT for safety net expenditure funding. But the Republicans at the time were just not very much concerned about the increased deficit.
Deficits are not good for growth whatever party is in power.
Pierre Lemieux
May 15 2022 at 10:48am
Thomas: You write:
As you imply, it depends on what result you want or which one is in Leviathan’s interests. Recall de Jasay:
nobody.really
May 16 2022 at 10:11am
Typo: The WSJ editorial is
“Sandbagging an Alzheimer’s Treatment” rather than
“Sandbagging a Alzheimer’s Treatment.”
Feel free to delete this comment.
David Henderson
May 16 2022 at 11:42pm
Thanks. Change made.
Joy Schwabach
May 17 2022 at 10:16am
Your article reminds me of why I stopped subscribing to the Wall Street Journal, after being a faithful reader from my college days onward. When Robert Bartley passed away, I noticed a big step away from free market thinking, and duller op-eds. Sigh.
David Henderson
May 17 2022 at 3:12pm
In my view, the good on the op/ed page and in the Journal’s editorials vastly outweighs the bad.
Walter Boggs
May 17 2022 at 3:51pm
I agree, and I wish I could just subscribe to those sections. I’d be fine if they included some ads, too! After I retired and inflation hit, I couldn’t justify the cost of a WSJ subscription any longer.
Comments are closed.