When President Clinton proposed prescription drug coverage under Medicare in mid-1999, the health care industry moved to combat the proposal, which it considered amounted to price controls on the industry (Stone, 1999, p. 2082). From an economic perspective, the increased lobbying effort will likely lead to an increase in the cost of doing business for drug companies, and consumers are likely to see an increase in prices as a result. Prescription drugs have a relatively inelastic demand schedule (even generic drugs can vary significantly from their ethical counterparts), and some conditions can only be treated effectively with a single product. Lacking widespread substitute goods, suppliers in this industry are able to pass along any increased costs (such as might be associated with lobbying to protect the industry's interests) to consumers. The price increases will most likely be felt in the form of increased premiums or in decreased availability of particular drugs since insurance companies will be the direct

Federal policies toward health care financing in the years since 1965 can be

health sector, most buyers were unorganized individual patients who were

with an incentive to hold down costs. Hospitals whose charges did not deviate

administration's concerns about a boycott of the program were reflected in the

Since the prevailing view from the 1940s through the mid-1960s was that

1987]. The federal government's first efforts to limit its financial exposure

1982; Hackey 1997]. Although demand for health care declined during the Great