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May 07, 2006
The Prescription Drug Plan: 20% Lower Cost
Many conservatives moan and groan about the cost of the prescription drug benefit Republicans passed and President Bush signed into law. I don't like much government spending, but I always viewed this bill as an investment that could actually lower costs in the future; providing people medication now would prevent more expensive hospitalization later.
The Democrats have made headway with bashing the program, but only because they wanted to spend more and because they wanted to use the program to socialize the pharmaceutical and health insurance industry (a pit stop on the way to HillaryCare).
The Wall Street Journal reports some welcoming news:
Medicare's prescription-drug benefit will cost the government about 20% less during the next decade than was projected a year ago, but largely for reasons outside the government's control.
Most of the reduction will result from lower-than-expected growth in the nation's per capita drug spending, Medicare's actuaries said in their latest projections, which came as part of the annual release of data on the financial health of Medicare and Social Security from the trustees of the programs.
The actuaries said fewer people than expected are signing up for the new coverage. Since last year, Medicare actuaries have lowered estimates for enrollment by May 15 -- this year's deadline for signing up -- from about 37 million to 31.4 million, a move that fueled calls in Congress to give people more time to sign up.
The latest cost projection for the drug benefit is "substantially lower" than projected last year, the trustees report said. Last year, Medicare's actuaries estimated the benefit would cost a total of $997 billion over 10 years, not including savings to Medicaid. Now that estimate is $788 billion. Another reason for the reduction: The private insurers selling the new, government-subsidized coverage achieved discounts on medications sooner than the actuaries had expected. That offset a 4% increase in what the government thought it would spend on Medicare beneficiaries with costly drug bills.
"The outlook for Medicare [drug coverage] is much better," said Mark McClellan, administrator of the federal agency that runs the program. He credited the competition for customers between private insurers that resulted in lower than expected premiums for drug coverage this year. On enrollment, he and Health and Human Services Secretary Michael Leavitt said they are hitting their own goals to have 28 to 30 million Medicare beneficiaries getting drug coverage.
Three things to notice:
1. Politicians like to talk about imaginary figures. Nancy Pelosi said something like Clinton (who had nothing to do but sign the budget the Republican Congress handed him) had a 3 trillion dollar surplus and now we have an 8 trillion dollar deficit which is totally ridiculous. There was only one year during the Clinton administration that there was ACTUALLY A SURPLUS where the federal government took in more money than it spent in a year (but we still had a 6 trillion dollar deficit). She pretends a 10 year budget projection was like money in the bank so she can act like Bush spent 11 trillion dollars. How stupid.
Bush was stupid in this regard by projecting costs of the war on terror which have ballooned out of that unrealistic projection. These costs must be viewed in terms of economic costs (9/11 cost about 1 trillion, how much will we spend to prevent another perhaps worse event?) But Democrats are going to run like the drug benefit has already cost us a trillion dollars--when in fact it only costs 30 billion a year (which could easily be paid for wth some fiscal restraint).
2. The market works. When you allow consumers to have choices and allow insurance companies to compete, prices will come down. The Democrats wanted a federal agency to deal directly (control) private pharmaceutical companies and negotiate prices otherwise they would gouge the consumers. But lo, the insurance companies negotiated with the pharma companies and brought prices down for their customers. When is Walmart going to start making drugs???
3. You passed the program--run on it. Conservatives will moan at the price, but we are upset about different things right now (immigration, earmark spending, judges, and the war). There is no need to avoid the subject in places like Florida and in liberal states with Republican candidates.
Posted by Aaron at May 7, 2006 05:45 PM
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Comments
The plan costs less than expected thus far only because of the bad press coverage you deride, which has convinced many people it sucks.
Ironical
Posted by: paul at May 8, 2006 09:57 AM