The cover of The Atlantic magazine featured a story “The Secret Shame of the Middle Class.” The sub-head was more detailed, “Nearly half of Americans would have trouble finding $400 in a crisis. I’m one of them.”
The key finding comes from the “Report on the Economic Well-Being of US Households in 2015” issued by the Board of Governors of the Federal Reserve System. Simply, “Forty-six percent of adults say they either could not cover an emergency expense costing $400, or would cover it by selling something or borrowing money.” Expressed in those terms, the percentage of people with inadequate emergency savings is frightening. We have a cultural image of borrowing money. Time was, borrowing money brought to mind George Bailey asking Henry F. Potter for a loan. The image of the bank loan officer has been engraved alongside the Sheriff of Nottingham. Even the family loan, parent asking adult child for money or adult child asking parent, has an image of personal shame.
This type of loan has been replaced with revolting credit, Instead of a formal loan application, we simply reach for the credit card, pre-approved, so that we hardly notice that our debt is growing. Bloomberg Business reports that the total credit card debt in the United States comes to over $935 billion, with the average American between the ages of 18 and 65 owing $4,717, at an interest rate of over 18%. – and yet it’s not clear if using a credit card is even thought of as taking a bank loan.
The significance of this is magnified when taken alongside the reports of the price increase for Epi-Pen, an epinephrine injection meant for emergency use. The drug itself is inexpensive, and not that long ago there were several similar products designed for self-administration, but they were discontinued by their manufacturers, leaving Mylan Pharmaceuticals with an effective monopoly. Emergency epinephrine can be life-saving for people with severe allergies, but also for people with some types of cancers and infections. In 2007, when Mylan got the rights to Epi-Pen, the wholesale price of a two-pen set was under $100. This May the price went up to $608.61. Usually, people at risk try to have several sets of the injectors so that they’re always available and they have to replace them every year whether they’ve been used or not.
Mylan’s initial response was to claim that for people with the proper insurance, Mylan was offering $100 coupons – which would cover the out-of-pocket costs. Unfortunately, too many peopole have no insurance, or insurance with a high co-pay. Basic Medicare doesn’t cover drug costs, and while Medicaid usually does, too many states refused to expand Medicaid as part of the Affordable Care Act. The Federal Reserve Report noted “Twenty-two percent of respondents experienced a major unexpected medical expense that they had to pay out of pocket in the prior year, and 46 percent of those who say they had a major medical expense report that they currently owe debt from that expense.” .
Heather Bresch. The Chief Executive of Mylan, has said that the price increase was neccesary for the company to cover the cost of increasing awareness of the risks of severe allergic reactions, and for improving the quality of the product. The claims have a hollow ring, and Ms. Bresch seems too similar to Martin Shkreli and J. Michael Pearson, both of whom effectively pioneered the practice of getting exclusive rights to older, generic drugs, and raising the prices to unaffordable levels. While Ms. Bresch has said that the Mylan price increases weren’t even in “the same hemisphere” as those of Mr. Shkreli who raised the price of pyrimethamine (Daraprim) from $13.50 to $750 a tablet overnight, they were more than most families could afford. Either way, life-saving drugs were being held hostage and the role of government is to benefit everybody, not just the well off.
The issue of general lack of savings should begin with accepting the fact that trickle down economics is a fraud, and taxes should be raised for the wealthy and cut for people with lower incomes. The weakness in our economy is due to lack of demand, the fact that people who don’t have money to spend cut back on spending. Corporations are sitting on high cash balances waiting to find out what the next big thing will be, but they won’t admit that financial inequality is bad for business. Redistribute wealth equitably and the increased demand will create jobs and opportunity. By comparison, this part is easy.
The price of drugs is a lot more complex, but Secretary Clinton has proposed a series of changes to current laws and practices that should, overall, lower drug costs. One of the first steps could be a loosening of import regulations for generic drugs. If there’s no domestic competition, open the doors to competitors subject to fair pricing. There’s a lot more to be done, but Secretary Clinton has an extensive plan that should work. All it will take is a Democratic Congress.
Sam Uretsky is a writer and pharmacist living on Long Island, N.Y. Email sdu01@outlook.com.
From The Progressive Populist, October 1, 2016
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