Leading policy-makers and scholars explain how market forces, deregulation, and consumer choice can work to improve health care for all Americans.


Favorable Medicare Access
Washington Times, 4-4-06

The Times points out that most of the criticisms of the Medicare drug benefit seem to have been overstated or are in the process of being resolved.

Saturday marked the end of the three-month transition of the Medicare Part D prescription drug coverage to private insurer formularies. Critics clamored that the switch to the new formularies was certain to create access problems and leave patients without the prescription drugs they need, but the facts do not support these dire predictions.

The Center for Medicaid and Medicare Studies analyzes formularies to ensure that the drug lists are not too restrictive, and that each formulary includes at least two drugs in each category, determined by widely accepted classifications. (Two drug options represent the minimum, according to CMS formulary guidelines, and more than two may be required "where additional drugs present unique and important therapeutic advantages in terms of safety and efficiency.") If a necessary drug is not included in an insurer's formulary, patients have been promised a timely ruling on their application for a formulary exception.

That there are simply too many plans for seniors to understand and evaluate their options is another common charge from opponents. Even with the myriad prescription drug plans open to beneficiaries, however, seniors are not overburdened by choice, two recent surveys demonstrate. The surveys, sponsored by America's Health Insurance Plans, show that of seniors who signed up for the Medicare drug benefit, the vast majority (84 percent) had no difficulties enrolling. And finding the right plan is worth the effort of shopping around, two-thirds said. For those who were automatically enrolled, 90 percent had little difficulty receiving their prescription drugs.

Through competition between providers, the Medicare prescription drug coverage seeks a balance between reining in the cost of prescriptions and encouraging pharmaceutical advancement. The benefit has been successful cutting the cost to consumers, with average savings of 57 percent with the lowest-cost plan and up to 42 percent with the median plan. As well as lower out-of-pocket expenses, overall growth in drug spending is expected to be slightly less under Part D.

Critics are also deeply uncomfortable with the precedent that the Medicare drug plan sets: that seniors can choose from a wide range of private plans with a variety of premiums and deductibles, without the traditional price controls that have been imposed in doctors and hospitals who accept Medicare patients. There is, they sense, a real challenge to the government status quo, and they are correct.

Still, if Medicare reform stops with Part D, we can be assured that price controls on pharmaceuticals won't be far behind, as they are already applied to hospital and physicians charges in the rest of the Medicare program. Additional reforms—including means-testing, and privatization of Medicare benefits (perhaps through HSAs, or vouchers)—would help inject more market discipline into the program and place Medicare on a sounder financial trajectory.

Project FDA.
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