Export Part D Lessons

By April 10, 2013Health Care

President Obama released his proposed budget this morning and within it we see some of the same worn out health care ideas that have been rejected in the past. One in particular would require rebates from pharmaceutical companies for the products sold to Medicare beneficiaries who are also eligible for Medicaid. The President’s budget claims $140 billion in savings would be generated by implementing such an idea, but it puts Part D on the path of other government programs that haven’t served beneficiaries or taxpayers nearly as well.

Before Medicare Part D was enacted, these “dual-eligibles” would have received their drug coverage under Medicaid – a program run by states for low-income individuals. Drug coverage varied from state-to-state and seniors were treated as poor first and seniors second. Part D flipped that around and treats them as seniors first and poor second – while it may not seem like it, that’s an important distinction. It means seniors who happen to be lower-income can participate in the same program their wealthier cohorts participate in and receive the same level of benefits whether they live on the East Coast or in the Mid-West.

Applying a rebate scheme based on reverting back to treating seniors as low-income first is bad policy and something the NAM has opposed in the past and will continue to oppose in the future. Medicare Part D is working well for seniors and taxpayers – we should be looking to export some of the lessons we’ve learned about how the private market can help reduce costs rather than import the command and control mechanisms of an overactive government.

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