Walgreens and Delaware – A Cautionary Tale of ObamaCare

August 13, 2009 by Cato  
Filed under Delaware, Delaware Politics, Fiscal Policy, Healthcare, National

Walgreen’s has reached a settlement with the state of Delaware, and dropped out of a lawsuit against the First State, regarding Medicaid reimbursement rates.  Walgreens will continue to fill Medicaid prescriptions.

This situation should caution us as Congress prepares to debate ObamaCare.  As more Americans become part of a so-called “public option”, how can providers such as physicians and pharmacies provide services when they are being reimbursed below their own costs?

This is the problem with any enterprise operated by the government.  They don’t have to turn a profit.  They don’t think that anyone else needs to generate a profit.  It’s as if they believe tax dollars simply come out of thin air.

Proponents of ObamaCare will argue that this is precisely why we need “reform”.  Cost have to be controlled.  Asking providers to deliver services below their cost certainly is one way of doing that.  Unfortunately, it isn’t a very successful way.  I am reminded of the wage and price controls instituted by the Nixon administration when I was a child.  Was inflation curtailed?  Were costs controlled?  Of course not.  Shortages became common place.  Can anyone spell RATIONING?

What will be the answer?  Government operated pharmacies.  Doctors working out of government owned offices, if not being outright employees of the government.  Proponents will argue that this is simply more “misinformation”.  I would argue that these are the most likely end results of the current proposals.