|Selected news articles which highlight important policy issues.||
News: Weekly Archives
News for the week of 11-13-2006
Administration Opposes Democrat’s Plan For Negotiating Medicare Drug Prices
Incoming House Speaker Nancy Pelosi has announced that "in the first 100 hours" of the next Congress, she will push legislation requiring the Secretary of Health and Human Services engage in direct price negotiations for medicines purchased under the Medicare Drug Benefit. The President has already declared this to be a nonstarter. This article from the Times offers a concise summary of the arguments that both sides will likely deploy:
In an interview, Michael O. Leavitt, the secretary of health and human services, said he saw no prospect of compromise on the issue.
Government can, in fact, lower prices, but it will take more than just "negotiations." It will take a single Medicare formulary that government can use to bargain for steep price concessions from companies jockeying for access to the enormous Medicare market. However, creating a single formulary may also invite a backlash from seniors worried about having their drugs excluded.
Would a single Medicare formulary help control overall Medicare costs? It is hard to see how it would. For years, price controls have been in place in Medicare and Medicaid reimbursements for physicians and hospitals, yet both of those programs are fiscally unsustainable.
The problem, after all, isn't so much the price of services per se, but all those pesky sick people; Medicare beneficiaries with multiple chronic conditions account for the vast majority of Medicare spending. Chipping away at prescription drug prices may slow spending at the margins, but it’s not going to fundamentally change the price tag required to treat millions of obese diabetics with high cholesterol.
Our competitors in Europe may spend less per capita on health care than we do thanks to more aggressive health care rationing, but they are facing the same predicament: health care spending is increasing at an unsustainable clip. Arguing about prescription drug prices isn't going to solve any of our real problems, and more government intervention in health care markets might just make them more dysfunctional than they already are. Perhaps it is time to see if a strong dose of capitalism can cure health care.
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