Roskam urges attention to challenges facing Medicare’s Part D program

June 4, 2013

6a00d834515c5469e2019102636bc0970c-75wiBy Nancy J. Thorner – 

CHICAGO – Rep. Peter Roskam (IL-06) discussed challenges ahead for Medicare’s popular pharmaceutical subsidy program at an event sponsored by Heartland Institute last week in Chicago.

Roskam, on U.S. House Speaker John Boehner’s leadership team, reviewed the history of Medicare passed in Congress in 1965. The program was officially authorized under Title 18 of the Social Security Act as Health Insurance for the Aged and Disabled. A bad decision made post-WW II to impose wage and price controls has resulted in the fractured relationship between the insured and the insurer.

Additionally, over the years Medicare has been rife with fraud because of inadequate oversight.  Today’s system pursues fraud largely after the fraud occurs. As Roskam stated, there is sophisticated private sector technology that reduces the rate of credit-card fraud in the private sector. By 2008 the American people had decided that health care was too expensive and were equally displeased that people with preexisting conditions were denied healthcare.

Concerning Obamacare, although Americans might not have made up their minds about whether they ascribe to Free Market economy or a Keynesian economic philosophy, they do know they are able to make better choices than the government.  It didn’t take the American people long to figure out that Obamacare is not all that it was deemed to be.

Rep. Roskam believes that the White House will press onward with its implemented of Obamacare, despite internal contradictions which are becoming apparent and a sense of panic.  Even though the Obamacare war is seemingly being lost because of promises made that were under delivered, a sense of pride exists in the White House that doesn’t allow retreat.

Roskam also believes that the House can make the argument against Obamacare.  Many freshmen Republicans were elected in 2010 “not to be somebody but to do something,” being duly elected back home to do something about Obamacare.

As Roskam said:  “People want a remedy, and not avoidance behavior.  No situation gets better the longer you wait.”

A recent report (06/02/13) from The Hill’s Healthcare Blog by Sam Baker indicates that a Court challenge could be effective in tearing down major pieces of Obamacare.  A set of lawsuits accuses the IRS of illegally implementing new subsides to help people buy insurance.  More than 60 lawsuits have been filed challenging the law’s mandate for health plans to cover birth control.

A frequent claim made by Democrats is that Republicans did not have a viable game plan as an Obamacare option. This was a falsehood as Republicans did offer an alternate plan during the Obamacare debate, a plan which received little media coverage.

Roskam believes Medicaid Part D should be a gathering point to serve as an example of something that is successful.  Part D works because it relies on the power of the market, not top-down central planning.  It offers subsidies toward the purchase of private prescription drug plans which then compete for seniors’ business.

Competition not only lowers costs, but also creates more choices for seniors.  It is one of the rare entitlement program that targets the truly needy and costs less than what was originally budgeted — even when that cost doesn’t include an offset for expenses involving surgery and hospitalization avoided by the availability of drugs.

If Medicare Part D is working, what’s the problem?   The President’s plan would lead to rationing and market distortions.  Most importantly, it would undermine the most successful and cost-effective entitlement program the federal government has ever run.  The fact that the Medicare program will be insolvent in ten years gives even more credence to the urgency of reforming Medicare in the mode of the very successful Medicare D program.

If it ain’t broke don’t fix it, Mr. President. It is unfair for Medicare D enrollees to pay more for their coverage just because you want to make up for the loss incurred in the Medicare program.  It is also folly to believe that switching to government price controls will work better than the benefits now enjoyed by Medicare Part D enrollees through competition and a free choice of private insurance companies.

Congressman Roskam and his fellow House members will seek to build on the positive aspects of Medicare Part D, even as the President forges ahead to undermine a healthcare program that runs efficiently and delivers the services and treatments as promised.

Before Roskam spoke, Benjamin Domenech, managing editor of Health Care News and a research fellow at The Heartland Institute, reported about Medicare Part D:

  • Passed in 2003, enrollment in Medicare Part D prescription drug benefit program has grown steadily from 11.6 million in 2005 to 27.6 million in 2012.
  • Part D allows seniors to have access to prescription drugs at an affordable monthly premium.
  • Seniors with Part D prescription coverage enjoy better overall health and need less costly hospitalization.
  • This alone amounted to an overall saving of $13.4 billion on other Medicare services in 2007.
  • Currently the overall cost is $348 billion, about 45% less than the initial10-year predictions.
  • Premium costs now average about 46% less than originally estimated for the period of 2004 to 2013.
  • For the past 3 years senors have had access to prescription drugs for a monthly premium averaging $30.
  • 84% of enrollees say they are satisfied with their coverage; 95% say their plans work well.
  • Part D has been successful, despite the thought in 2003 that an expensive new entitlement program had been created.
  • Because of its success, Part D is considered a good model for overall Medicare reform.

Part of President Barack Obama’s deficit reduction plan (S. 117) allows the federal government to “negotiate”  prescription drug prices with pharmaceutical manufacturers. This is not sensible because government doesn’t negotiate, instead, it sets prices!  In other words, President Obama wants to take the private sector out Medicare Part D and put the government completely in charge.

Part D is unique in that private plans submit competitive bids each year to determine the cost of the benefit.  As such, private companies compete for Medicare Part D enrollees. This action results in holding down drug costs.  Price setting certainly hasn’t worked in Veterans Affairs or at the VA where only 65% of drugs are available to patients.

A summary of S. 117, the Medicare Prescription Drug Price Negotiations Act of the 113th Congress (2013-2014), can be viewed at http://beta.congress.gov/bill/113th-congress/senate-bill/117.  S. 117 was read twice on January 23, 2013, before being referred to the Senate Committee of Finance.  Roll call votes have not yet be taken.

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