Sunday, February 20, 2011

How You Could Cut The Deficit If You Were A Senator

Jamelle Bouie catches Kent Conrad doing the right thing by suggesting that the government should be able to negotiate lower prices with prescription drug makers. This is one of the most straightforward routes towards reducing health care costs in a government-run insurance system -- the government uses the quasi-monopsonistic power as the biggest insurer to bargain down prices. (Corrected thanks to Milind in comments -- a monopsony is like a monopoly, but with one big powerful buyer rather than one big powerful seller.) Passing the public option along with doing this would be an awesome combo, since it would make the public option cheaper and more awesome while increasing the government's clout as more people got their insurance that way.

It's too bad that Kent Conrad is going to be retiring from the Senate and taking this sensible piece of deficit reduction advice with him.


Unknown said...

Just a nitpick: I think you mean "quasi-monopsony." The government is negotiating with sellers of goods (pharmaceutical companies) from a position of being by far the largest buyer of those goods.

Neil Sinhababu said...

Ah, good nitpick, Milind.