Medicare Part D is goose that laid golden eggs
Sunday, August 21, 2011
At a young age, every child learns the Aesop fable of the cottager who kills the goose that lays golden eggs. He kills the goose in search of even more riches inside, finds nothing and loses the gold in the process. Unfortunately, the federal government is considering doing something similar with the Medicare prescription drug benefit, known as Part D. Despite its initial challenges, seniors now highly value the program. However, for some in Congress, a successful and popular program is not enough, they want more — proposing to dramatically change the system, putting the program at risk.
As former Region 10 director of Health and Human Services, I can attest to the need that Medicare Part D addresses in the lives and budgets of seniors, as well as the powerful benefit that it offers.
The program offers a wide range of choices to seniors about the type of prescription drug coverage they want. In Washington, seniors have dozens of choices of plans, forcing insurance companies to compete. The results have been significant. While health care costs are going up overall, the Center for Medicare Services announced recently that the average premium for a prescription drug plan would actually be going down next year.
Indeed, costs for Medicare Part D have consistently been lower than projected year after year. What other private or government health insurance can claim that?
Perhaps even more important is that Part D is achieving success in keeping seniors healthy.
The Journal of the American Medical Association recently published a study showing that the Medicare prescription drug benefit kept seniors healthy and out of the hospital, yielding a savings of about $1,200 per person — a savings of $12 billion per year to the federal government.
I can attest to these successes. Despite initial concerns that the large number of choices would be confusing and that the program wouldn’t work, I saw seniors find plans that worked for them and saved money. Polls consistently show that more than 90 percent of seniors with Part D are happy with the program.
‘Rebates’ really taxes
Despite all of this good news, Congress is now looking to squeeze more tax dollars out of seniors with Medicare prescription coverage, putting these successes at risk.
Congress is now looking to increase taxes on prescription medicines in the Part D program — proponents prefer to call them “rebates.” Whatever the name, this requirement that pharmaceutical and biotech researchers give money back to the government is a significant change in the way the program works, adding billions in costs to the program — costs that will ultimately find their way to the very seniors that the program is trying to help.
Estimates show those billions would push premiums higher. How much higher? According to a study by former director of the Congressional Budget Office Douglas Holtz-Eakin, these additional costs would drive up premiums for seniors with prescription drug coverage by 20-40 percent.
Higher costs would make it more difficult for seniors to receive the medicines they need. It might risk the savings the JAMA study found, sending more seniors to emergency rooms and hospitals because they can no longer afford adequate coverage.
For the past five years, the Medicare prescription drug benefit has provided us with golden eggs that have improved the health of seniors and cut health care costs. Changing the system by increasing taxes, raising premiums and making medicines more costly to access risks those benefits. Congress has a tough and important responsibility to get the nation’s budget under control, but we need to tell them, don’t kill the golden goose — keep Medicare Part D working for seniors.
James Whitfield of Kirkland, is former director of U.S. Health and Human Services for the Pacific Northwest region.