medicare part D Archives - Shopfloor

Medicare Part D is Popular and Sound

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Two important reports about Medicare Part D came out this week and reaffirmed once again that the program is a success. Each year, Medicare Today and KRC Research conduct a survey of Medicare Part D beneficiaries every year and this year’s results showed it continues to be extremely popular with 86 percent of seniors saying they are satisfied with the program. The Congressional Budget Office also issued a report titled “Competition and the Cost of Medicare’s Prescription Drug Program.”

The CBO report showed that competition within the Medicare Part D program is an important part of how the program has held down spending and remains successful overall. In fact, the program continues to operate at a cost significantly lower than initial projections – nearly 50 percent below what CBO projected when the program was created. The report also pointed out flaws in proposals to import Medicaid-style rebates for medicines purchased by low-income Part D beneficiaries that have been pushed by President Obama and others. The CBO acknowledged that implementing Medicaid rebates in the Part D program may decrease the cost of some drugs in the short-term, but it is not a permanent solution to lowering costs of prescription drugs and may reduce choices for seniors, reduce incentives for innovation and increase premiums.

As I’ve said before, Medicare Part D should be looked at as a model for reform and the results of these two reports confirm that to be the case. Real competition and real choices lead to real solutions for affordable and accessible healthcare.

Changes to Medicare Parts C and D will Increase Costs for Manufacturers.

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The NAM filed comments today with the Centers for Medicare and Medicaid Services (CMS) on “Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs,” asking for withdrawal of the proposed rule while highlighting serious changes that would alter the programs and ultimately increase costs. Of specific interest is an interpretation of the law that opens the door for government intervention into negotiations of plans – a clear overreach of the legislation that was intended to prevent government interference in these private sector negotiations.

In addition, the rule places mandates on mail order companies, reduces the number of protected classes of drugs provided under Part D, and reduces the ability of plans to negotiate with preferred pharmacies. All of these significant policy changes will increase the costs to Medicare, and in turn, increase the cost to manufacturers who use these programs. These changes are contrary to legislative intent and undermine the stability of successful programs. Instead of tearing down a popular program that is fiscally sound we should be looking to replicate similar solutions elsewhere.

Medicare policy should be based on sound health outcomes combined with robust fiscal management. The current debate looks too much at old politics and not enough a new answers.

Export Part D Lessons

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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.

Part D A Good Model for Medicare Reform

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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.

Medicare Part D – Don’t Fix What Ain’t Broken

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Yesterday NAM President and CEO Jay Timmons participated in a media teleconference centering around Medicare Part D and the fiscal cliff. Medicare Part D, the popular prescription drug aspect of the Medicare program, has been mentioned in talks about the fiscal cliff and as a way to reduce spending. The message of the call, hosted by the Council for Affordable Health Coverage (CAHC), was to avoid ‘fixing what ain’t broke.’

Medicare Part D is wildly popular among seniors and set to come in at 43% under budget. Additionally studies show that if Part D is altered to impose Medicaid-style rebates, it would raise costs for Medicare beneficiaries, increase costs for employers, and ultimately reduce the availability of medication to seniors. On top of that, 200,000 jobs could be lost in the process.

NAM has joined with 400 other organizations to stand up and tell Congress and the Administration that they should keep the focus on reforming the entitlement programs where it’s so badly needed and to leave programs that actually work alone.

Below you can find the remarks given by Mr. Timmons on the call.

Thanks to the CAHC for hosting this call today. I know there are people on the call who will discuss the specific policy implications of altering the Medicare Part D program, so I’d like to use my time to share some thoughts from the broader perspective of the business and manufacturing communities.

It’s really no secret, and the last campaign bears this out, that every candidate was talking about the importance of manufacturing. America is facing a severe challenge, and taxpayers, businesses and families are looking to our leaders in Washington to provide real solutions that won’t cause additional harm to our fragile economy and end up pushing us off the fiscal cliff.

In the case of Medicare Part D, the so-called solution to extend Medicaid-style rebates to the Part D program will only weaken an entire pro-growth industry, result in higher health care costs and lead to the loss of good, high-paying jobs at a time when America’s employers are already facing way too much uncertainty.

Biopharmaceutical research and manufacturers truly represent one of the most vibrant and dynamic sectors of American manufacturing. All told, they are directly responsible for employing more than 650,000 Americans. The industry also has an extremely high multiplier effect, with studies showing each biopharmaceutical job supports nearly five additional jobs outside of the industry. This is an area of our economy we need to encourage, not punish in order to fix a program that’s not broken and that has helped millions of American senior citizens live longer, healthier lives. As an example, one study estimates that the effect of imposing a rebate onto Medicare Part D, similar to recent proposals, could result in 200,000 jobs lost.

Medicare Part D is an amazing example of a federal government program that is actually working, providing a valuable service that keeps costs down for the taxpayers and for Medicare beneficiaries. The policymakers should hold up the program as an example of how government can do a better job and not use it as a bargaining chip.

Part D already provides significant discounts through competition in the marketplace, and those savings are passed directly on to consumers in the form of low premiums and drug costs. Shifting costs onto employers, Medicaid and beneficiaries will only serve to take money out of the productive private sector at a time when we can least afford it. For this reason, the National Association of Manufacturers today joins with nearly 400 business, patient, provider and veteran organizations in urging Congress not to move forward with a proposal that would damage this very successful program.

There’s no doubt our government needs to make some difficult choices in the weeks and months ahead in order to get us back on the right track.  But putting even more Americans out of work and burdening a program that is actually working shouldn’t be a part of any solution to the fiscal cliff.


If It Ain’t Broke, Don’t Fix It

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Congress will return after the elections for a lame-duck session and there will be big issues on the agenda. They will have about five weeks to come to some agreement on how to avoid the “fiscal abyss” we face on January 1, 2013.  The NAM has opposed sequestration because of the serious implications it has for our national defense and other important functions of the federal government. What has received little attention is the effect the sequestration will have on some other important programs – programs that are popular, successful, and under-budget. The Medicare Part D program is, perhaps, the best example of such a program.

Medicare Part D was enacted in 2003 and fully implemented in 2006 so we have about seven years experience from which to draw conclusions about the success or failure of the program from a beneficiary’s eyes as well as the government’s checkbook.  According to figures from the Congressional Budget Office (CBO), the program is coming in 43 percent – or $435 billion – below initial projections, making it the rare government program that has delivered as expected while costing billions less than forecasted.  In fact Part D saved about $1,200 in one year in lowering hospital, skilled nursing facility and other medical costs for each senior previously lacking comprehensive prescription drug coverage.  Coupled with other research showing that nearly 11 million seniors gained comprehensive prescription drug coverage, this represents annual savings of over $13 billion.  In addition a satisfaction survey released today by Medicare Today found that more than 90% of beneficiaries are satisfied with the program and three of four seniors said the program works very well.

Medicare Part D is a successful partnership comprised of the federal government, private providers, employers and beneficiaries. Yet, Medicare Part D is subject to reductions under the sequestration plan unless Congress comes up with an alternative during the five weeks between the elections and the holidays. Clearly, a distinction can and should be made between those programs that are working effectively and those which are not. Medicare Part D is working. Congress and the President should recognize that and look for ways to replicate its success instead of looking to change and limit its effectiveness.

Medicare Part D is Working – Leave it Alone

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Medicare Part D, the prescription drug program for America’s seniors, is a unique success story in how a government program can work effectively by harnessing the efficiencies and strengths of our private sector. Reformative in its approach, the program relies on the private sector to negotiate prices, set premiums and compete for customers on a level playing field.

Unfortunately, there are some in Congress who are pushing proposals that will undermine this popular program. With a 90 percent satisfaction rate among beneficiaries and a programmatic budget 40 percent below cost estimates, where is the wisdom in tinkering with it?

The “Super Committee” is tasked with finding $1.2 trillion in savings and one of the ideas is to impose new “rebates” on the manufacturers of the medicines low-income seniors use in the program. The justification requires a short history lesson.

Under the old system, some beneficiaries received their medicines through Medicaid because they were considered low-income first and seniors second. Under Medicaid, companies have to provide a rebate to the program for the volume of medicines used by its beneficiaries. Under the new Part D program, we treat seniors as seniors first and low-income second. The rebates previously siphoned off to the government have actually gone into discounts to the Part D plans making the program stronger and less expensive for beneficiaries. This is one of the many reasons the program is successful and highly popular among beneficiaries. Read More