From the pages of the Des Moines Register (and hello Senator Grassley):
Changes to Part D won't save Medicare
By: Peter Pitts
With a debt-ceiling showdown just around the corner, Republican lawmakers are insisting upon more government spending cuts in exchange for raising the country’s borrowing limit.
President Obama says the debt ceiling shouldn’t be used as a negotiating tool. But it’s inevitable that additional cuts will be seriously considered. And, unfortunately, lawmakers are likely to take aim at Medicare Part D, the highly successful prescription drug benefit.
This approach is misguided. Cuts to Medicare Part D would have devastating consequences for seniors and taxpayers.
Created in 2006, Medicare Part D has helped ensure that America’s seniors have access to prescription drugs. Today, nearly 47 million Americans are eligible for Part D.
The program was built to rely on market mechanisms. Under Part D, seniors choose from a wide variety of drug coverage plans — in fact, there are now over 1,000 different plans available across the country. With so many insurers competing for seniors’ business, they have a strong incentive to keep costs low and benefits generous.
This fierce competition has kept expenses down for both seniors and the government. Overall, Part D has cost $435 billion, or 43 percent less than original estimates predicted — practically unheard of for a government program.
Part D monthly premiums will again average just $30 in 2013, according to officials at the U.S. Department of Health and Human Services. That number has held basically steady for four years, and premiums are up only 2.5 percent since 2006.
Part D rates are even more impressive when compared to what is happening in the regular health insurance market. The typical premium for an employer-sponsored family health plan rose 4 percent from 2011 to 2012 and increased 9 percent the year before, according to the Kaiser Family Foundation.
Seniors, moreover, are pleased with their Part D coverage. A new poll sponsored by Medicare Today found that 90 percent of enrollees are satisfied — up 12 points from 78 percent in 2006.
Still, many Democrats are willing to compromise this highly successful program. Their proposal would require drug companies to pay a so-called “rebate” to the government for every medication sold to a Medicare Part D participant who also qualifies for Medicaid, the government health program for the poor. There are about six million of these dual-eligible seniors.
The Obama administration believes that its plan to overhaul Medicare spending will save nearly $600 billion, with 42 percent of those savings coming from the Part D drug rebates.
But this scheme won’t work the way the president intends. It will drive up health care costs for a large portion of Medicare beneficiaries.
Just look at what is already happening in our Medicaid program. Drug companies are required by law to sell their wares to Medicaid at below-market prices, and consequently they have been forced to raise prices elsewhere. In other words, the proposed Part D rebate program would effectively levy a new tax on every senior who is not eligible for Medicaid.
Indeed, two independent studies have estimated that the rebate plan will raise premiums for traditional Medicare enrollees by 20 to 50 percent.
Higher premiums are a big concern for most Part D beneficiaries. According to the Medicare Today poll, 84 percent of enrollees were worried that a Part D restructuring would increase their out-of-pocket drug costs, while 53 percent were afraid it would cause them to cut back or stop taking their medicines altogether.
Our government health programs are still in serious need of comprehensive reform. Unfortunately, the president continues to attack the very part of the system that is most financially sound. Changes to Medicare Part D will raise only minimal revenue — at the expense of seniors.
