Arnold Kling  

Carnival of the Capitalists

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Kinsley on Social Security... Phelps on the Dollar...

On the blogroll to the left, you will find "Jay Solo: Carnival of the Capitalists," which is a collection of posts that comes out every Monday. This week's edition is unusually good. Don't miss it.

One of the links I followed from COTC was Mike Pechar's report on a change in German drug reiumbursement policy.


On January 1, 2004, German health care reform stipulated that non-prescription drugs would no longer be covered by Germany's health system. Now those individuals buying non-prescription medicine have to pay out-of-pocket.

Well, guess what? Non-prescription drug sales have collapsed. According to Jurgen Petersen, OTC drug expert at IMS Health, OTC sales slumped by 13% this year and 80% of the drug producers have seen a decrease in sales.


Pechar notes that this could be an indication of what might happen if third party payments were eliminated for other medical expenses.

For Discussion. Are there other "natural experiments" that demonstrate that consumer choice can make a difference in health care spending?


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COMMENTS (2 to date)
John Palmer writes:

How much substitution was there from OTC drugs to prescription drugs?

The reason I ask is that in Ontario (Canada), the gubmnt recently decided it won't pay for optometrists or physical therapists. One effect has been an increase in the demand for the services ophthmologists and doctors whose services are covered. The effect has been increased demand for services that are already being rationed because the quantity demanded exceeds the quantity supplied at the current (zero) price. Of course since the supply of physicians' services has not increased, the provincial gubmnt thinks they've saved money with the plan, but overall, the costs have gone up due to increased waiting times and other rationing schemes.

Zack Lynch writes:

Price elasticity in pleasureceuticals would surely be an interesting focus for a dissertation on the global political economy of price regulation in non-life saving markets.

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