The latest news in the financial world is “price controls.” This approach to economics was put forth by the Biden Administration two years ago with the Inflation Reduction Act (IRA), a misnomer for legislation that only added to our inflation problem. The intent of this legislation was to reduce prices on prescription drugs.

It makes good political sense to tell seniors you’re going to lower the price of their prescription drugs. What you won’t tell them, however, is this same move will reduce the development of new medicines.

The Wall Street Journal editorial board tells us Charles River Laboratories, a top research contractor that helps drug makers with clinical trials, warned in its quarterly earnings report that pharmaceutical companies are slashing research and development owing to the IRA’s drug price controls.

“There are profound cuts” at pharmaceutical companies that reflect a “rapid deterioration” of their business, CEO James Foster said. He added: “A lot of these decisions have been taken relatively recently and probably more to come and haven’t been taken yet.” Might drug makers be hedging their investments because Democrats look more likely to hold the White House?

WSJ explains: “The IRA let Medicare “negotiate” prices for 10 to 20 drugs a year and a total of 60 by 2029. Negotiate is a euphemism for extortion: Drug makers that don’t participate or reject the government’s price face a daily excise tax that starts at 186% and climbs to 1,900% of a drug’s daily revenue.”

The law also requires manufacturers to pay the government rebates on medicines sold to Medicare if they raise prices more than the rate of inflation, and puts them on the hook for more of the entitlement’s Part D costs. Democrats used the resulting estimated “savings” of some $160 billion to pay for the green new deal.

WSJ says, “But subsidized solar panels won’t help if you get sick. The inevitable, albeit invisible, result of Democrats’ raid on pharmaceutical companies will be fewer new medicines.”

Roche CEO Thomas Schinecker said last summer that “we have decided that we are not going to do certain trials, or that we are not going to do a merger or acquisition or licensing [deal] because it is becoming financially not viable.” Astra-Zeneca also warned that it might delay launching some cancer medicines because of the IRA.

Some 90% of drug candidates fail in clinical trials, and manufacturers sometimes never recoup their investment on even those that are approved. They use profits from their few commercial successes to finance research and development into new medicines and to compensate investors. The IRA threatens this risk-reward model.

Despite these obvious drawbacks of price controls on the manufacture of prescription drugs, Democratic presidential nominee Kamala Harris has just announced she will pursue price controls on food and groceries as a “solution” to our inflation problem. Just as it has reduced the supply of new medicines when used in the IRA, this use of price controls will inevitably lead to fewer supplies of food and groceries.

Here is what the WSJ editors have to say about that:

“Fixing prices is a recipe for shortages, as controls would discourage grocery suppliers. Voilà, empty store shelves. Price controls have led to shortages everywhere they’ve been tried, from Moscow to Caracas. The last American President to impose wage and price controls was Richard Nixon in the early 1970s. He had to stage a humiliating retreat amid shortages and market dislocations, and prices immediately soared when controls were lifted. If Ms. Harris really believes in this price-fixing, she lacks the most basic understanding of economics. If she is merely floating it to be able to get “price gouging” into a speech, her cynicism is also telling.”

Today’s post is a history lesson for all those paying attention. In 2010 the Democrats passed the Affordable Care Act, better known as ObamaCare, without a single Republican vote. It was implemented in 2014 and people quickly came to realize it was not what it was cracked up to be. Rather than a panacea for rising healthcare costs, it drove them even higher.

President Obama made several promises then including the famous “If you like your healthcare plan you can keep your healthcare plan” which turned out to be lies. He promised ObamaCare would reduce healthcare premiums by $2500 per person per year but in fact they only increased. Less than five years later in 2018 insurance premiums doubled for individuals and rose 140% for families, even while deductibles increased substantially.

Democrats said the solution was to convert ObamaCare into single-payer healthcare; a government guarantee for all medical care they insisted would be “free.” The British have such a system called The National Health Service, which was established by the constitution, and says: “You have the right to receive NHS services free of charge.” But they ignore the fact that the U.K. funds the program by taxing citizens some $160 billion a year, even with its severe limits on access to specialists, drugs and technology.

Dr. Scott Atlas wrote of the problems of such a system in 2018 in The Wall Street Journal. Here is what he said then: “In the past half-century, nationalized programs have consistently failed to provide timely, high-quality medical care compared with the U.S. system. That failure has countless consequences for citizens: pain, suffering and death, permanent disability, and foregone wages.”

“Single-payer programs usually impose long waiting lists and delays unheard of in the U.S. Last year, a record 4.2 million patients were on England’s NHS waiting lists; 362,600 patients waited longer than four months for hospital treatment as of that March, and 95,252 waited longer than six months. By this July, 4,300 people had been on the wait list more than a year—all after receiving their diagnosis and referral—according to NHS England’s “Referral to Treatment” waiting-times data.”

The same was true in Canada. In 2018, the median wait time between seeing a general practitioner and following up with a specialist was 10.2 weeks, while the wait between seeing a doctor and beginning treatment was about five months. According to the Fraser Institute study, the average Canadian waited three months to see an ophthalmologist, four months for an orthopedist, and five months for a neurosurgeon.

This issue came up in the mid-term elections of 2018 and was promoted by socialist Vermont Senator Bernie Sanders in a slick campaign called “Medicare for All.” Then Senator Kamala Harris jumped on the bandwagon, endorsing Sanders’ socialized medicine plan. It is doubtful you’ll hear her say the same thing now, but her record is clear.

The Wall Street Journal editorial board wants you to remember this important history since Democrats are trying to re-write history. Here’s what the editors say: “Harris campaign aides are whispering that she no longer supports single-payer healthcare, but travel back to Ms. Harris’s Senate tenure. She co-sponsored a bill from Vermont Sen. Bernie Sanders that would set up a single-payer system in the U.S. in four years. That would toss 150 million Americans who receive health insurance at work into a new government plan, inevitably financed by ferocious tax increases across every income level.

At a Democratic debate in 2019, a moderator put this question to the primary contenders: ‘Many people watching at home have health insurance through their employer. Who here would abolish their private health insurance in favor of a government-run plan?’ Ms. Harris raised her hand.”

The WSJ editors say the Harris plan from 2019 could cost $44 trillion over a decade, according to a forthcoming analysis from health economist Stephen Parente and Theo Merkel at the American Action Forum. That includes some $1.8 trillion to cover some 11 million illegal immigrants. America can’t afford this and doesn’t want this even if it could.

In Part I of this series, we learned that home nursing visits are being used by private insurers to bilk the taxpayers for billions in additional Medicare funding. In Part II we will see who is abusing the system the most and how they do it.

The Wall Street Journal reported on an investigation into the home nursing industry and found home nurses were adding billions to the cost of Medicare. To find out how insurers use home visits to add diagnoses, the Journal interviewed nurses, patients, home-visit managers and industry executives and reviewed hundreds of pages of internal documents from home-visit companies. They described a system that used nurses, software and audits to generate diagnoses.

“They do the job with a purpose, and it pays off for the Medicare Advantage plans,” said Francois de Brantes, a former executive at Signify Health, a company that does home visits for insurers. “Identifying the diagnoses, that’s the job.” Insurers, including UnitedHealth and CVS Health, owner of both Signify and Aetna, said the house calls help patients by, among other things, catching diseases early and making sure people are taking their medicine properly. The insurers said they relay home-visit findings to primary-care doctors.

Nurses who made visits said they felt they were helping some patients with advice about medications, performing needed tests and sometimes reporting health emergencies. For UnitedHealth, the parent company of the largest Medicare insurer, each home visit was worth about $2,735 in extra Medicare payments during the three years covered by the data, the Journal analysis found. That’s nearly three times the average for all other Medicare Advantage insurers.

UnitedHealth’s chief physician, Dr. Wyatt Decker, attributed the disparity to what he said was UnitedHealth’s sicker patient population and its nurse practitioners being so effective at their jobs. (No surprise there!) Sixty percent of UnitedHealth home visits generated at least one new revenue-producing diagnosis of a condition no doctor was treating, the analysis showed. Home visits by Humana, the No. 2 Medicare insurer, did so 39% of the time.

Step one is getting Medicare Advantage recipients to agree to a visit, especially patients whom insurers deem most likely to have undiagnosed conditions that would garner extra payments. Two former managers who oversaw home visits for Humana, and a third who worked for both Humana and Signify, said insurers used an internal scoring system to identify prospects. Under the Medicare Advantage system, diagnoses have to be documented every year to trigger the extra payments, so people who had an earlier home visit that produced extra payments were particularly valued, the managers said. Insurers also considered other factors, including how likely patients were to agree to a visit, some home-visit executives said.

The Medicare Payment Advisory Commission, a nonpartisan agency that advises Congress, has recommended that diagnoses from home visits shouldn’t count toward extra payments to Medicare insurers. The inspector general that oversees the Medicare agency has said it should reconsider the use of such diagnoses. A spokeswoman for the Centers for Medicare and Medicaid Services, said the agency recently ramped up audits to verify diagnoses. The agency also is eliminating some diagnoses from those that qualify for extra payments, including peripheral artery disease.

This is the kind of investigative journalism we need more of and my hat’s off to the Journal for this in-depth look at the home nursing industry. We cannot afford this kind of wasteful spending if our Medicare system is to survive.