Greeks must now pay for their own Medications because the National Health Care System is Broke

Posted by PITHOCRATES - June 17th, 2012

Week in Review

As businesses wait with fear and trepidation for Obamacare to go into full effect we should consider what this will mean for the country at large.  More government benefits.  More government spending.  And higher taxation to pay for it.  Then we should look around the world for an example of large government spending and generous benefits.  To see if we can get an idea of how well something like a national health care system will work.  Let’s just pick a country at random.  Like this one (see Greek crisis hits hard at the pharmacy by Michael Birnbaum posted 6/13/2012 on The Washington Post).

From road-builders to priests to military suppliers, most walks of life have been affected by the government’s desperate bid to stanch the drain of euros from its coffers. Now health care is on the line, with pharmacists who are owed millions of euros by the government insurance system demanding in recent weeks that their clients pay the full sticker price for medicine. With unemployment at 22 percent and loans almost nonexistent, many people are doing without their drugs…

Under ordinary circumstances, the state health insurance system paid her pharmacist directly. Now pharmacists, fed up by delayed payments that they worry may never come, have told their customers that they need to pay cash and try their own luck at getting reimbursement from their health insurance.

Nothing is free in life.  Not even free health care.  Because government doesn’t make life-saving drugs.  Pharmaceutical companies who specialize in making life-saving drugs make life-saving drugs.  But even for them they are not free.  For they have to pay employees to make these drugs.  And they have to buy the chemicals to make these drugs.  And their chemical suppliers have their own employees to pay.  All of these costs are passed down the purchasing pipeline.  Right to the pharmacists.  Who must buy these drugs before they can sell them.  And when the government stops paying their bills someone has to pay them.  Or these pharmacists will just go out of business.  Because they’re not independently wealthy.  They run a pharmacy for living.  And simply can’t afford to buy drugs and give them away for free.

But pharmacists say they have little choice. Their suppliers, wary of extending credit in euros only to be repaid in weaker drachmas if the country gets booted out of the currency union, are demanding cash before they make shipments. And, though the pharmacies are receiving some reimbursements from the government, they are owed $188 million by the main government health insurance program, said Konstantinos Lourantos, president of the Pharmaceutical Association of Athens.

Doing anything on credit in Greece is risky business.  Because it’s not that certain if anyone will be able to pay their bills.  What makes this worse in Greece is who is paying most of the bills.

In Greece, where much of the private sector was sustained on public-sector spending, many business owners have found themselves to be unwitting creditors of the government, as payments have languished for months while their own credit has dried up, forcing them to scale back their businesses. That has made Greece’s recession, now in its fifth year, even harder to escape.

Everything has a cost.  Nothing is truly free.  Even when government provides it.  And the more the government provides the higher the taxes it takes to fund this government spending.  Relying on government spending, though, is risky.  Because tax revenue goes up and down with the economy.  During a recession there are fewer people working to pay income and payroll taxes.  And fewer people buying things to pay sales and value-added taxes.  Business revenues are down so businesses pay fewer income taxes.  During a deep recession tax revenue can fall far below the level needed to meet all government spending obligations.  Like reimbursing pharmacies.  And what do governments do during budget short-falls?  They borrow.  And Greece has.

Greece has borrowed so much that they are now a very poor credit risk.  They just owe so much money that a lot of lenders have grown doubtful that they will ever get their money back.  Which drives up borrowing costs.  Increasing the amount of interest they pay on their outstanding debt.  And as the recession lingers on tax revenues keep falling.  While the interest on the debt keeps rising.  Leaving less and less of those borrowed funds available to pay their massive government spending obligations.  And this is where Greece is.  They can’t pay their obligations without borrowing.  But they have borrowed so much that when they take on massive amounts of new debt much of it just goes to paying the interest on the old debt.  Which means they have to borrow ever more.  Increasing their interest payments on the debt ever more.  And leaving less and less for that massive government spending.

This is where debt crises come from.  Governments spending too much.  In fact it is safe to say that no government ever had a debt crisis from spending too little.  We can learn a lot from the Greeks.  In fact, we already have.  Most of Western Civilization goes back to Athens.  But we can also learn what NOT to do from the Greeks.  And a good place to start would be to repeal Obamacare.  For it’s this kind of spending that got Greece into trouble in the first place.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , ,