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Americans Should Think Twice About Kamala Harris's Home Care Visions
U.S. Vice President Kamala Harris's new proposal to provide subsidized at-home care for seniors through Medicare has received a warm reception from many academics and advocates for the elderly.
But the likely cost of this new plan — not just to taxpayers but to the health of patients both present and future — makes it unworkable and unwise.
Harris intends to pay for universal home care through, among other things, a fresh round of price controls on prescription drugs.
Such price controls will destroy the incentive for companies and investors to engage in drug research.
In other words, Harris proposes to effectively deprive tomorrow's patients of yet-to-be-invented therapies that could save their lives in order to fund a boondoggle of a new entitlement today.
If enacted, Harris's proposal would represent the biggest expansion of Medicare since 2003. As such, it won't come cheap.
If a recent analysis by the Brookings Institution is any indication, even a "conservative" home care benefit would likely cost $40 billion a year.
The Harris campaign says that money will come from "expanding Medicare drug price negotiations, increasing the discounts drug manufacturers cover for certain brand-name drugs in Medicare, and addressing Medicare fraud."
This is in addition to funds generated through a "crack down on pharmaceutical benefit managers."
Curtailing Medicare fraud and reining in PBMs are worthwhile policy aims. But neither will be sufficient to fund Harris' new home care benefit.
As for her planned prescription drug price "negotiations," it's hard to imagine a more reckless way of boosting federal revenue.
Under the 2022 Inflation Reduction Act, Medicare effectively sets the prices it will pay for an ever-growing list of brand-name medicines.
That process began this year when the federal government announced the first 10 drugs subject to these price controls through the Part D prescription drug benefit starting in 2026.
Another 15 drugs will become eligible for price controls in 2027, 15 more across both Part B and Part D in 2028, and 20 a year across both segments of Medicare in 2029 and thereafter.
Harris wants even more of them.
As part of the case for this new home healthcare entitlement, her campaign has cited a recent proposal from Stanford University researchers calling for price controls on 30 medicines starting in 2026, rather than 10.
The paper also advocates reducing the amount of time new medicines are exempt from price controls, from nine years to five years for small-molecule meds and from 13 years to nine years for biologics.
Those moves would have a devastating impact on drug development. They'd further diminish the incentive for companies and investors to fund drug research.
It takes more than a decade and some $2.6 billion, on average, to bring a drug to market.
Price controls reduce the likelihood that investors will be able to recoup those outlays.
They'll deploy their capital elsewhere.
Indeed, University of Chicago economist Tomas Philipson projects that the IRA's existing price controls will result in 135 fewer new medicines making it to market by 2039.
More draconian price controls would drive that number up even further.
Progress toward new treatments, cures, and vaccines for everything from cancer to heart disease and Alzheimer's could slow to a crawl.
Who knows how many Medicare beneficiaries might have benefited from therapies that are delayed — or never developed — because of Harris's price controls?
Indeed, people may die prematurely because her price controls discouraged investors from funding research into treatments that could've saved their lives.
For these folks, Harris's new homecare entitlement is of no use.
Extracting yet more money from the drug industry to fund home healthcare may be popular with the electorate. But the costs of Harris's proposal to Americans today and tomorrow — in dollars and in treatments foregone — can hardly be understated.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is "False Premise, False Promise: The Disastrous Reality of Medicare for All," (Encounter Books 2020). Follow her on Twitter @sallypipes. Read Sally Pipes' Reports — More Here.
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