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Thursday, October 14, 2004

The Flu Question
Here's the answer to the flu question from last night's debate. (From Michelle Malkin's comments last week and again this morning.) The problem is a perfect example of incentives (see Thomas Sowell's book, Basic Economics). The CDC buys the vaccine in bulk. They're a huge buyer and can therefore bargain for a low price. The price is so low it's not worth the drug companies' trouble. Many companies quit producing it. The supply goes down.

My solution: Introduce market forces. Take the purchasing away from the government and move it closer to the consumer - insurance companies, hospitals, or health clinics. They would begin competing for supply and the price would go up. Vaccine producers would reenter the market and supply would increase. The problem for the consumer, of course, would be increased prices - but who said the vaccines have to be free anyway? And isn't a more expensive vaccine better than no vaccine at all? The government could subsidize the cost for the poor and the rest would pay their share.

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