Most of you probably remember how the Medicare prescription drug benefit, Medicare Part D, was passed in 2004. The Bush Administration rammed the bill through Congress without allowing the Congress critters to see the CBO estimates of what it would cost.
A big reason Medicare Part D added billions of dollars to the federal deficit is that the law that created Part D forbids the government for negotiating for drug prices. Part D works a lot like Medicare Advantage, which is that it pays private insurance companies to offer prescription drug benefits to seniors. The prices of drugs are negotiated between the insurance companies and the pharmaceutical companies.
By 2007, reports were coming out that Medicare Part D was paying 58 percent more, on average, than the Veterans Administration paid for the same drugs. Part D was a huge giveaway to Big Pharma, which was financed through deficit spending, since the Bushies refused to raise taxes to pay for it.
Further, when the law went into effect in January 2006, 6.5 million seniors and disabled people in the Medicaid program were transferred to Medicare Part D for their prescription drug benefits. This group was called “dual eligibles,” since they got most of their health care through Medicaid but prescription drugs through Medicare Part D. The New York Times reported in 2006 that this shifting of programs was a windfall for the pharmaceutical industry:
The pharmaceutical industry is beginning to reap a windfall from a surprisingly lucrative niche market: drugs for poor people.
And analysts expect the benefits to show up in many of the quarterly financial results that drug makers will begin posting this week.
The windfall, which by some estimates could be $2 billion or more this year, is a result of the transfer of millions of low-income people into the new Medicare Part D drug program that went into effect in January. Under that program, as it turns out, the prices paid by insurers, and eventually the taxpayer, for the medications given to those transferred are likely to be higher than what was paid under the federal-state Medicaid programs for the poor.
Under Medicaid, the federal government and state agencies purchase drugs from pharmaceutical companies at the “best price,” meaning the lowest price negotiated by private insurance companies or any other purchaser. These prices are watched closely, and the drug companies sometimes are required to rebate money back to the government if it is discovered somebody else got a better deal.
Needless to say, Medicaid pays a lot less for the same drugs than Medicare Part D pays. This year the CBO estimated that if the “dual eligible” beneficiaries were receiving drug benefits under the Medicaid pricing system, over ten years the federal government would save up to $112 billion dollars (see chart on page 54).
Now, for all the hollering Republicans do about how Medicare is going broke, a sensible person would assume they’d jump at the chance to save $112 billion without cutting benefits. However, “sensible” and “Republican” haven’t lived in the same zip code for some time.
A proposal to make this very change was made in the House recently, and for a time many Republicans supported it. Jonathan Cohn describes how House Majority Leader Eric Cantor led a charge against the bill, however. Note that Big Pharma donated $168,000 to Cantor’s re-election campaign in the last cycle.
Cantor is getting his talking points from the usual sources — think tanks like the Heritage Foundation and the American Enterprise Institute. The Heritage argument is classic think-tank rhetoric — much alarm is expressed, and buzzwords like “price controls” and the superiority of “market based structures” are drizzled throughout.
But taken as a whole, the argument makes no sense. It’s not exactly word salad, but something like ideological bullet list salad. Changing Medicare Part D would cost too much! (Saving $112 billion costs too much?) Seniors would have to pay higher drug prices! (Actually, pharma raised drug prices after Medicare Part D went into effect; see the New York Times article linked above.) Quality of care would suffer! (That only makes sense if you think Lipitor works better if you pay more for it.)
Jonathan Cohn links to more rebuttals of the rightie arguments. See also this 2008 article from Health Affairs, which pretty much demolishes all of the Heritage arguments, including the argument that the “rebate system” stifles innovation.
Cantor gets &168,000! Very impressive.
And how much does a Whoreporatist Democratic Congressman get from the same group? Less, I’m sure, because they’re not House Majority Leader.
Let’s face it, ALL of our representatives are nothing but low-rent whores (with my apologies to real sex workers, who earn their money, and actually provide a service). Some are just higher-rent than others.
Which leads me to this – I have a great idea to cut costs and the deficit!
We fire all of Congress!
House and Senate, with no buy-out or package.
We eliminate their health care – they can still go on COBRA like the rest of us poor schlubs.
And then put the money allocated for their pensions towards the deficit.
Then we just let Lobbyists make the laws.
We could keep a similar system.
The House – will be for low-rent ConLobbymen: Like unions, small business owners, charities, etc.
The Senate – this is the high-rent district, occupied by SenaLobbyors. Oil, gas, Big Pahrma, Big Tobacco, etc.
You see? No more whores! Just pimp’s.
I bet we would never know the difference.
Actually, things may improve because companies can pass the money they used to pay these stupid puppet whores, and pass the savings on to their consumers – US!.
They may actually be more sensative to the people needs, because if they see profits going down, they may stimulate the economy.
Why? Free market principles!
Because, unlike one of our religiously retarded representatives – it ain’t gonna be Jesus telling them to screw the poor. They’re not going to blame some Socialist/Communist/Kenyan plot. They may look at the bottom line and say, “Hey, they can’t ALL be WalMart greeter’s! We’d better get ’em some jobs or else our gizmo sales drop like a leaded lemming off a cliff.”
Let’s start a movement:
“WTF Needs Congress?
Put in the Lobbyists.
Eliminate the Middleman.
Pass the savings on the consumers!!!”
Who’s with me?
It’s more rightie religion, aka “Free Market Magic”, except that it isn’t. It’s using the power of government to create private profit centers. IOW, socialism for the rich.
I don’t know if I’ll ever see the day in this country when enough people get wise to this kind of thing that happens all the time in so many situations where free market dogma goes unchallenged, and get enough power to put an end to it.
The wars that righties are so fond of are full of this sort of thing, all kinds of sweetheart deals for the well connected. I believe it was Harry Truman who came down hard against the war profiteers – that kind of moral movement is almost completely absent today – we don’t call them profiteers, we call them free market entrepreneurs, the moral stain has been hidden.
When will this country get tired of playing the sap to this right wing nonsense?
How about “chopped salad?” The kind that is layered in a glass bowl and eaten at Passover.
Do see Robert Reich, The Rise of the Wrecking Ball Right
Jennifer,
Nah, not Christian enough – they’ll tell you that salad’s too “Jewy.”
How about “Ambrosia” salad?
The words they’re spouting are like nectar from the Gods (and yeah, yeah, know it was FOR the Gods).
But, if you look at the voters in this country, do you expect them to know Greek Mythology when they think we got our independence from France or Spain, or Liberals?
I found this:
To be very interestingly dishonest.
Part D came under budget for two reasons.
1) Fewer new drugs coming to market.
2) lower participation than expected.
Technically, The author (Nix) can claim not to have lied. Nix didn’t explicitly say that market based structure *caused* cost savings.
But it’s still clearly a lie; try using such a statement on a person in authority who will learn the truth and see how much trouble you get in.
I assume people think “sure it’s a lie, but it’s a lie on *my* side” when they support such garbage. But anyone who lies so glibly is not on anyone’s side but their own.
LongHairedWeirdo: You can find all kinds of news stories and op eds, no doubt re-writes of think tank handouts, claiming that Part D “saves money” because it costs less than originally projected. Seriously. They treat the difference between the projected and actual cost as a “savings.”
I’m rereading my comment, and I want to clarify it – I didn’t mean it in some anti-Semitic way, I was playing off the word, “chewy,” and I’m not sure it came across that way.
“It’s not class warfare, when there’s only one class that matters”
in Wingnut Math = Feed the Rich
But anyone who lies so glibly is not on anyone’s side but their own.
LongHairedWeirdo …Excellent! That’s what I’ve been trying to express about Eric Cantor. And of course there’s that other clown who claimed his lies were ” not intended to be factual”
Maha, one thing you forgot to mention (in an otherwise very excellent post) was that along with the ban on Medicare negotiating lower prices, a ban was also slapped on drug reimportation. You had the ironic situation where drugs made by US companies were being sold at pharmacies in Canada at half the price compared to America. Not surprisingly, US citizens living near the Canadian border who didn’t have health insurance would make excursions to the other side to purchase medications. After the ban went into effect, US Customs zealously started combing through cars with US license plates returning to the USA,seizing sinister illegal drugs such as Lipitor and ampicillan.
I’m sure it all got justified on some sort of weird “Homeland Security” logic. The War on Drugs continues.
Since I live for the perfect word, I had to praise “dribbled.” It conveys the concept beyond accurately.
Isn’t it just totally summative of our paradigm that we have a program spending our tax dollars that is not specifically bound to go for lowest costs except in case of defense or safety emergency, but is instead required to do the opposite? I have a dream that one day a bunch of tired old schoolteachers accustomed to scrounging for paperclips in a dusty supply room will get to straighten out federal spending. I hope Eric Cantor lives in fear of that day. He does not know what “responsibility” means.
Daphne Chyprious ….I don’t want to blow my own horn or anything…but I’d gladly accept some praise for describing Sean Hannity as a butt nuzzler..I’m not sure what the standard for the perfect word is, but I feel that Hannity has been described beyond perfectly.
Try to use medicare part A. I just tried herte recently to use my medicare part A, you know the original one, that I paid into for 45 years. I was told by the hospital, and the doctors office, that I need medicare part B to help pay for the docter and the hospital, they would not accept medicare part A.
jugheadjack — you need to go to the Medicare.gov site to learn what is covered by A and what is covered by B. They don’t cover the same things. Your hospital probably does accept A if it accepts B, but what they want to do to you is covered by B and not A.
Despite the humorous intent, this is probably true. Dan Ariely, behavioral economist and author of Predicitably Irrational, has studied and shown that high-priced placebos, of all things, are more effective than low-priced placebos. (The patients, of course, didn’t know they were receiving placebos, they just knew that the “drug” they were getting was either expensive or inexpensive.)
Medicare Part D is weird – who thought up that donut hole thing? It affects your decisions on what medicines to take. Last year, we couldn’t afford the donut hole cost of an antidepressant drug that worked for me in the past (when I had decent prescription drug coverage prior to becoming eligible for Medicare). (I had to stop taking it because of cardiac side effects that are now under control.) This year, we cashed in a small whole-life insurance policy my in-laws had had forever for my wife to cover the cost of this antidepressant drug for this year, betting that money and our hopes that I get well enough to get gainful employment and decent health care coverage. $300/month for that one drug (plus the costs of other drugs) – and that’s chump change compared to what people with more serious and/or life-threatening conditions have to pay when they fall in the donut hole. If you’re rich enough, you can afford to purchase additional insurance to cover the gap; if not, you’re out of luck. (Thankfully, Obama’s health-care bill is slowly closing the donut hole.)
moonbat – it was following WWI, people were smarter then, that the term “Merchants of Death” was applied to war profiteers.
candide – you get the feeling that the Canadian government is working for the interests of its citizens and the American government is working against the interests of its citizens. Makes for a warm and fuzzy feeling, doesn’t it.