However, in the health care context, calling this "libertarian" is a little disingenuous. To see why, you have to understand what Megan appears to be afraid of: rationing of Medicare. The government already sets "market" drug prices because Medicare is basically Pharma's biggest customer, and because private insurers base their rates on those paid by Medicare. So the mechanism for getting to "less innovation" is the government eventually refusing to pay any price for all drugs (including experimental ones) into perpetuity--a policy that seems to be implied by all this talk of "bending the cost curve," the Administration's insistence that this won't translate into less care notwithstanding. But how is it possibly libertarian to want the government to go bankrupt paying for any and all treatment for a rapidly growing aged population? The problem is that in the health care context, because of Medicare, there is no real market for drugs. So the libertarian solution would appear to be reducing the role that Medicare plays in drug pricing.
The fact that this option isn't on the table could justify Megan's opposition to health care reform; however, rationed care under Medicare doesn't appear to be on the table either. The economic hydraulics will probably force rationing at some point, but in the meantime, it's not clear to me what any of this has to do with expanding coverage to the uninsured through an "insurance exchange" or public option or what have you. The only thing I can think of is that a public option *could* give the government even more power than it already has in setting prices and eating into Pharma profits. Which, I have to agree, may be a problem.
Again, the solution to the innovation conundrum would appear to be facilitating a robust and functioning private market for drugs. The way things work now, the US government (through Medicare) is subsidizing innovation for the rest of the world. That's unsustainable in the long run. How one goes about creating this market, I don't know. But it doesn't seem to be a question anyone is asking.
