Part D A Good Model for Medicare Reform

By December 13, 2012Health Care

On Tuesday, the NAM and the Council for Affordable Health Coverage unveiled a letter being sent to the Hill on Medicare Part D, the popular and effective prescription drug program for Medicare beneficiaries. The letter was co-signed by over 400 other organizations and urges Congress to dismiss proposals such as applying rebates to the Part D program. The overall message to Congress is: the program is working more efficiently than anticipated, is under-budget, and highly popular – don’t “fix it.”

Proponents of the Part D rebate scheme tell us it is “unfair” because the financially-stressed Medicaid program has a rebate system for prescription drugs. So “in-fairness and consistency” we should apply it to Part D. The problem with this logic is, there is little logic to it. They are completely different programs and they are structured very differently. Medicaid is a classic command and control government program – services are needed and the government will tell you how much you get paid for that service. In contrast, Part D is the government setting the ground rules for a market to develop and allowing the private sector to compete to provide products and services. It is a model Congress should look to replicate, not undermine.

The shortcoming of previous “reforms” of Medicare in 1997, 2000, 2003 and 2005 is they largely focused on payments for the services as a way to meet a budget number and didn’t address the real problem in the way services are delivered. The dials and levers were adjusted, but we avoided looking at whether the machine itself was in proper working order – or even the right machine for the job anymore. Manufacturers constantly look for ways to make things operate more efficiently. Often that means retooling with modern equipment to deliver a higher quality product more efficiently.

I’ll close with a quote from a report issued by the NAM 15 years ago. “The program needs to be restructured, drawing on successful strategies used by the private sector….This includes giving beneficiaries a greater choice of health plans than now available…” The NAM has been urging lawmakers to address the real issues for decades – perhaps we should start looking at new equipment with modern features. Medicare Part D seems like a good place to start the search for a better way.

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