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

Commentary

The Drug Benefit: A Report Card
The New York Times, 6-5-06

The New York Times grades the Medicare Drug Benefit and gives it a (very grudging) C. Still, the Times manage to give some credit where credit is due:

To its credit, the administration seems to have resolved most of the bureaucratic and computer problems that initially left tens of thousands of people unable to obtain essential medicines quickly. Complaints at pharmacies have dropped precipitously, and callers who once found it impossible to get through to congested help lines now typically wait only a few minutes when trying to reach either Medicare or most individual health plans.

Anecdotal reports tell of beneficiaries who are delighted at big savings on their drug bills now that insurance is picking up most of the tab. But polls show a mixed picture. A New York Times/CBS News poll last month, for example, found that 42 percent of those already enrolled said they were spending less on prescription drugs, 19 percent were spending more, and 30 percent were spending the same amount.

Consumers have been given a vast array of choices among dozens of plans, making it possible to choose coverage that provides the right blend of benefits and costs for each individual. The only problem is too much choice—so many options that consumers can't find their way through the maze. That problem should diminish as Medicare presses the health plans to limit their offerings and some weaker plans drop out entirely. On the bright side, competition has helped keep average monthly premiums much lower than originally forecast—only $25 a month, compared with a projected $37 per month. And the projected cost to the government this year has dropped sharply—to $30.5 billion for 2006, down from $38.1 billion...

Most troubling of all, officials estimate that three million of these people are poor enough to qualify for hefty subsidies that would cover the vast majority of their drug bills. This is the most glaring failure in the enrollment drive. It will need to be rectified by a vigorous outreach effort.

At this point, it is not clear how successful the plans have been at negotiating low drug prices with the manufacturers (some consumer and Congressional surveys suggest the savings are meager or nonexistent) or how many people are better off with the program than they were without it. Nor is it clear whether the program has attracted enough healthy beneficiaries to subsidize the chronically ill and thus hold down premiums.

Most important will be the impact Medicare drug coverage has on patients' health. A recent evaluation found that patients whose drug benefits were capped used fewer drugs than patients whose benefits were not capped. They also ended up in the hospital or the emergency room more often and generally had worse clinical outcomes. Analysts will need to monitor the new drug benefit closely to see whether its cost-sharing arrangements have the same negative effects.

It is ironic, to say the least, that the Times concludes its editorial by arguing against capping prescription drug benefits, but also argues for the government to cap its own prescription drug spending through forcing lower prices on manufacturers. Also, there is really no way around the cost-sharing issue. Governments in Canada, the U.K., or anywhere for that matter, "cap" their drug spending through a variety of explicit and implicit rationing schemes–which in turn reduces medical innovation.



Project FDA.
  
home   spotlight   commentary   research   events   news   about   contact   links   archives
Copyright Manhattan Institute for Policy Research
52 Vanderbilt Avenue
New York, NY 10017
(212) 599-7000
mpt@manhattan-institute.org