April 10, 2006
GOAT ROPE OF THE WEEK: PART D
(Photo: Frustrations over the Part D drug plan have led to an epidemic of assaults on toy monkeys nationwide by ordinarily peaceful creatures.)
The last few years have provided some interesting lessons in government and public policy. The inept response to Hurricane Katrina showed what happens when government is controlled by people who don't believe that government can competently do anything. The Part D prescription drug mess shows what happens when you let industry lobbyists write laws.
There are three main aspects to this week's goat rope. The first, Operation Confuse Senior Citizens, the baffling process potential beneficiaries have to go through to apply for this program, is already well known.
The second is the "donut hole," a gap in the plan that provides no coverage for costs between $2,250 and $5,000.
The third, less well known, is the enormous cost of this program to citizens, beneficiaries and taxpayers due to waste, inefficiency, and excessive profits for insurance and drug companies. The problem is not that Part D is a wasteful government program. Rather, it is another case of privatization run rampant or socialism for the rich.
Unlike the traditional Medicare program, Part D is administered through a host of private plans. The law actually forbids the government from using its clout to negotiate fair prices from drug companies. According to the Institute for America's Future, the Congressional Budget Office estimated that the marketing and profits of the insurance industry would add $38 billion to the cost of the program over the first eight years of the program. That's a lot of money, but it's nothing compared to excess drug costs.
"Virtually every other country in the industrialized world imposes some constraint on drug prices, either through formal price controls or government negotiated prices. As a result, people in other countries pay much lower prices than do people in the United States," says a report by the Institute (see link below).
Not taking this obvious step will cost billions of dollars. "If Medicare was allowed to use its bargaining power to negotiate prices on behalf of beneficiaries, it could almost certainly obtain discounts that are at least as large as the highest discounts obtained in other countries, since it would be by far the largest drug purchaser in the world. If Medicare could negotiate the same schedule of prices as Australia (the current lowest cost country), the savings over the first eight years of the drug benefit would be almost $560 billion nationally and $4.7 billion in West Virginia." (see:http://ourfuture.org/issues_and_campaigns/medicare/partd_reports.cfm)
The solution would be to have Part D administered directly by Medicare rather than private plans and to require Medicare to negotiate lower prices from the industry. This would also eliminate vast confusion and save more than enough money to close the gaps in coverage.
GOAT ROPE ADVISORY LEVEL: ELEVATED
by El Cabrero