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 Medicare Drug Plan
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Recent research indicates pharaceutical companies will gain billions of dollars in taxpayer money under the new Medicare Part D benefit program for prescription drugs. The study was completed by the Center for Economic and Policy Research (CEPR).
The legislation, termed the Medicare Modernization Act, or MMA, was written by Congress to allow private insurers rather than the Medicare administration to provide prescription drug coverage to enrollees in the plan.
State and federal taxpayers will cough up nearly $776 billion throughout the next eight years, according to estimates by CEPR. The report states, "Congress deliberately designed the bill in a way that would ensure that private insurance companies would provide the benefit instead of the Medicare administration or a single designated provider. This design both substantially increased the cost of drugs and administrative costs in addition to making the drug program much more complicated for beneficiaries."
A major issue is the automatic switching from Medicaid to Medicare of more than 6 million seniors and the disabled. MMA prohibits Medicare from negotiating with pharmaceutical companies for lower prices. Medicaid, a state-run program, has a requirement that drug companies guarantee a discount of 15 percent or more for pharmaceuticals sold to the government.
The CEPR study indicates that the government could save up to more than $700 billion over eight years if the Medicare drug plan passed by Congress allowed price negotiation. A separate study by a House committee showed the prices offered by the top Medicare drug plan providers are more than "80 percent higher than the prices negotiated by the federal government, over 60 percent higher than the prices available to consumers in Canada, over 3 percent higher than the prices available on Drugstore.com and almost 3 percent higher than the prices available at Costco."
However, not all is bad news for taxpayers. Many seniors will benefit from the Medicare drug plan, while others are opting out because it will cost them more.
The report maintains that if Medicare could negotiate prices for the 42 million Part D beneficiaries, the government could save anywhere from $370 billion to $785 billion over eight years.
A separate study by the Minority Staff of the U.S. House of Representatives' Committee on Government Reform released in November 2005 stated that the average prices for drugs offered by the top 10 Medicare Part D plans are "over 80 percent higher than the prices negotiated by the federal government, over 60 percent higher than the prices available to consumers in Canada, over 3 percent higher than the prices available on Drugstore.com and almost 3 percent higher than the prices available at Costco."
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Other Links:
Medicare Plan Benefits Industry, Not Seniors
Official Government Medicare Site
Centers for Medicare and Medicaid Services
American Society of Health-System Pharmacists
Kaiser Family Foundation
Humana Medicare Information
Providence Medicare Information |
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