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Selected news articles which highlight important policy issues.

News: Weekly Archives

News for the week of 11-26-2006

Success of Drug Plan Challenges Democrats
Washington Post, 11-26-06

Editor's Notes:

The Washington Post reports that while Democrats made government negotiation of drug prices in the Medicare drug benefit a central plank of their campaign agenda, actually delivering on that campaign promise may prove to be harder than expected given the current popularity and success of the program.

House Democrats have vowed to act quickly after taking power in January to lift a ban on Medicare negotiations with drugmakers, which they hope will save as much as $190 billion over a decade. But House leaders have yet to settle on a strategy and acknowledge that negotiation is, in any case, unlikely to generate sufficient savings to fill the "doughnut hole," the much–criticized gap in coverage that forces millions of seniors to pay 100 percent of drug costs for a few weeks or months each year.

Polls indicate that more than 80 percent of enrollees are satisfied, even though nearly half chose plans with no coverage in the doughnut hole, a gap that opens when a senior's drug costs reach $2,250 and closes when out–of–pocket expenses reach $3,600. By the latest estimates, 3 million to 4 million seniors will hit the doughnut hole this year and pay full price for drugs while also paying drug-plan premiums.

The cost of the program has been lower than expected, about $26 billion in 2006, according to the nonpartisan Congressional Budget Office. The cost was projected to rise to $45 billion next year, but Medicare has received new bids indicating that its average per–person subsidy could drop by 15 percent in 2007, to $79.90 a month.

We could also add that even though Medicare price controls are in effect for physicians and hospitals, it has not helped make the program any more fiscally sustainable. Perhaps rather than looking at the success of the market–driven Medicare drug benefit as a problem, Democrats should start thinking of it as a model for the rest of Medicare.

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