The goal of their ‘Inflation Reduction Act’ is as straightforward as it is cynical: Transfer billions from Medicare Part D to bankroll green energy projects and subsidize premiums for wealthy Obamacare enrollees. It must be stopped.
In their desperate pursuit of a ‘win’ before the mid-term elections, Senators Joe Manchin and Chuck Schumer are endangering one of America’s most popular, affordable health programs – the Medicare Part D drug benefit for seniors. Worse, they are inserting government bureaucrats and politicians into every medicine cabinet in America. As we struggle to hold down drug inflation, the last thing we should do is set up a bonanza for lobbyists and politicians.
Medicare Part D is extremely popular with seniors and the disabled. Before 2006, Medicare didn’t cover drugs. Since Part D’s enactment, science and medicine have experienced a renaissance, with more than 550 new products treating everything from Hepatitis C to cancer.
The average lifespan has increased as new medicines help people live longer, healthier lives.
Part D has played a big role in these advances since it created incentives for innovators to find new treatments for diseases afflicting the elderly and disabled. The result is that 9 out of 10 seniors are satisfied with their Medicare drug coverage, a stratospheric level of support for a government program.
One of Part D’s most attractive features is its affordability. The agency responsible for administering the program – the Centers for Medicare and Medicaid Services (CMS) – just released its premium estimate for 2023. Today, seniors pay, on average, $32.08 per month for a standard benefit plan. Next year, even with inflation raging, premiums are projected to decline to $31.50 with nearly 200 plans offering zero-dollar premiums for low-income enrollees. Where else in health care do you see that?
One reason Part D premiums are decreasing is that the program’s plans contract with the most experienced, aggressive drug discounters in America – national insurers like Cigna, Humana, and CVS Health. The Biden Administration’s own actuary estimates that these companies already negotiate drug discounts of between 20 to 30 percent.
The bill replaces private plan negotiators with government bureaucrats who make decisions based on policy in a political environment. It does so by eliminating the prohibition on government interfering in private sector price negotiations.
I was on the Congressional team that created the Part D program. We included this clause precisely because we didn’t want politicians and lobbyists making these decisions.
We empowered oversight of drug plans through pharmacy and therapeutics committees – physician and pharmacy experts with experience in clinical medicine – to ensure plans covered drugs in all categories to treat disease. And these committees cannot have a financial stake in the coverage or pricing decisions, they must make their determinations based on what is best for the patient.
Politicizing drug coverage and reimbursement, as the Manchin bill seeks to do, will lead to intense lobbying. More lobbying will lead to decisions based on power, not necessarily science or medicine.
This ‘inconvenient truth’ – that world-class, private sector discounters are already delivering substantial drug discounts – is rarely mentioned since it interferes with the government-knows best narrative. It’s doubtful that government bureaucrats with little or no experience in the prescription drug marketplace can save more without reducing the number of drugs seniors can access.
The Congressional Budget Office, University of Chicago, and CMS have all noted that price controls would result in fewer innovative products for seniors and the disabled. CBO has also noted prescription drug manufacturers will likely launch products at higher prices, leading to increased costs for employees, unions, and families.
After the incompetence shown by the government during COVID, it is surprising Democrats want to turn over the drug benefit seniors and the disabled rely upon to government agencies. As we saw with the Centers for Disease Control (CDC) during COVID-19, decisions by government bureaucrats are often driven more by politics than “science.”
Ultimately, this legislation sets the stage for a new federal government takeover of health care, starting with prescription drug benefits. Hospitals and doctors will be next on the price control list as Congress works to enact government-run health care one step at a time.
The best hope for seniors is that one or two Senators will stand up and protect Medicare Part D from becoming a casualty of the Democrats’ midterm election strategy.
Undermining a successful, popular Part D drug benefit to score political points in the guise of “fighting inflation” doesn’t pass the laugh test.
Joel White is the President of the Council for Affordable Health Coverage, a trade association that advocates for market-based reforms that promote more affordable health care for all Americans. He was Staff Director of the House Ways and Means Committee and helped write the Medicare Part D law.
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