Senator Bernie Sanders has long been a fierce critic of America’s high prescription drug prices. His latest grievance takes aim at the global dynamics of pharmaceutical pricing, where Americans pay significantly more for medications than citizens of other countries. Sanders argues that the lack of price regulation in the U.S. has created a system in which Americans effectively subsidize cheaper drug prices abroad, as nations with centralized healthcare systems negotiate aggressively to secure discounts.
Yet, for all his passion on this issue, Sanders seems blind to a similar cost-shifting dynamic within the U.S. healthcare system. Medicare and Medicaid, the nation’s largest public healthcare programs, reimburse providers at rates far below the actual cost of care. To offset these shortfalls, healthcare providers charge private insurers higher rates, which are passed on to consumers in the form of inflated premiums and medical costs. Sanders recognizes the injustice of Americans subsidizing global pharmaceutical prices but fails to acknowledge the domestic burden that Medicare and Medicaid’s pricing strategies impose on private payers.
Global Drug Pricing: A Fair Critique
Sanders is not wrong to highlight the inequity in global drug pricing. Countries like Canada, Germany, and the United Kingdom use their centralized healthcare systems to negotiate substantial discounts from pharmaceutical companies, leaving the U.S.—with its market-driven system and fragmented negotiation power—to bear the financial weight. The result is that Americans pay the highest drug prices in the world, with some life-saving medications costing several times more in the U.S. than in other developed countries.
Pharmaceutical companies defend this dynamic by pointing to the high cost of research and development (R&D), much of which is recouped in the U.S. market. They argue that these revenues fund innovation, while the price caps imposed abroad limit their profit margins in other countries. For Sanders, however, this is a clear injustice—an example of corporations exploiting American consumers to sustain a broken system.
The Domestic Parallel: Medicare and Medicaid
What Sanders doesn’t acknowledge is that a similar phenomenon occurs domestically. Medicare and Medicaid, which collectively insure over 100 million Americans, pay hospitals and doctors well below the actual cost of providing care. According to industry estimates, Medicare reimburses about 87% of the cost of services, while Medicaid often pays less than 70%. These shortfalls create a financial burden that providers must recoup by charging private insurers—and their customers—higher rates.
This practice, known as cost-shifting, significantly inflates healthcare costs for privately insured Americans. Hospitals may charge private insurers two to three times the rates they receive from Medicare or Medicaid for the same procedures. The result is that private consumers effectively subsidize the underfunded public programs, much as Sanders claims Americans subsidize global drug costs.
A Blind Spot in Sanders’ Critique
Sanders’ outrage over global drug pricing reflects his commitment to fairness for American consumers, but his reluctance to confront Medicare and Medicaid’s role in domestic cost-shifting reveals a significant blind spot. While he’s quick to label pharmaceutical companies as greedy, he avoids scrutinizing how public programs undercut providers and shift costs to private payers. This selective focus limits his ability to address the full scope of the problem.
Part of the issue may be ideological. Sanders views Medicare and Medicaid as essential safety nets, and any critique of their reimbursement practices risks undermining public trust in these programs. Additionally, acknowledging their role in driving up private healthcare costs could complicate his broader push for expanding public healthcare.
The Cost of Ignoring the Problem
The failure to address Medicare and Medicaid’s impact on healthcare pricing comes at a significant cost. For one, private insurers are not absorbing the financial strain—they’re passing it on to consumers in the form of higher premiums, deductibles, and out-of-pocket expenses. This dynamic contributes to the affordability crisis that plagues millions of American families.
Additionally, the financial pressures caused by under-reimbursement have a ripple effect on the healthcare system. Providers, especially in rural or underserved areas, struggle to remain solvent, leading to hospital closures and reduced access to care. As fewer providers compete for business, healthcare costs for everyone continue to rise.
Will Sanders Connect the Dots?
Despite his strong rhetoric on global pricing, there’s little indication that Sanders will recognize the domestic parallel. His critique stops short of addressing the structural flaws in Medicare and Medicaid, leaving a critical aspect of the cost problem unexamined. For Sanders, the blame lies squarely with pharmaceutical companies and the lack of price regulation in the U.S., rather than the broader system of cost-shifting that affects both private and public payers.
Without a broader understanding of these dynamics, efforts to reform drug pricing or healthcare costs may fall short. While Sanders is right to demand accountability from pharmaceutical companies, a complete solution requires addressing the systemic imbalances caused by Medicare and Medicaid’s reimbursement policies. Until then, American consumers will continue to bear the weight—both globally and domestically.
Conclusion
Bernie Sanders is justified in criticizing the global subsidization of drug prices, but his failure to see the domestic cost-shifting caused by Medicare and Medicaid highlights a critical gap in his analysis. Both issues leave American consumers paying more than their fair share, and until leaders address both problems, meaningful reform will remain elusive. For now, Sanders has identified part of the problem—but whether he’ll ever connect the dots remains doubtful.
Dave Soulia | FYIVT
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