The Medicare Part D program could save up to $800 million in the first 10
years if basic changes were enacted by Congress, according to a nationwide
campaign whose goal is to overhaul the program.
The Americans United Coalition launched a campaign in March to get the
prescription drug program modified.
Coalition members said changes are needed to provide huge savings to a
benefit that threatens to balloon quickly in cost. A report by the Institute
for America's Future concluded that Medicare Part D may provide very limited
benefits to millions of beneficiaries because their prescription drug costs
will remain unchanged or increase. They blamed the program's design for
transferring costs from drug companies to the government.
Their cost projections are based on a Congressional Budget Office (CBO)
estimate that marketing costs and insurance industry profits would add $38
billion to Part D's cost in the first eight years of the program.
The report also identified $4.8 billion in "wasted administrative
costs" under Part D. The biggest source of waste in Part D is"
excess payments" for the medications beyond what Medicare would
pay if Medicare Part D allowed for negotiated prices.
The report also used a comparison of drug prices paid by the Australian
government for its version of a federal prescription subsidy to identify an
extra $50 billion to $140 billion the U.S. government will pay for drugs
annually through 2015. The total savings from a program that could negotiate
the same schedule of prices as Australia, which is currently the country with
the lowest drug costs, over the first eight years of the drug benefit would be
almost $560 billion.
"We're paying an awful lot for the Bush administration's decision to
go with the plan as they have designed it," said Dean Baker, Ph.D., the
report's author. "We have saddled the government with a large liability
that will haunt us for years to come."
The advocates for reforming the program said price negotiation would follow
the practice of much of the industrialized world, which regularly imposes
constraints on drug prices. This allows people in other countries to pay much
lower prices than those in the United States.
Another CBO study assessed drug prices in several wealthy countries and
found consumers in those countries paid on average between 35 percent and 55
percent less than consumers in the United States. Discounts obtained by the
Department of Veterans Affairs, which does negotiate drug prices, were even
The effort to modify Part D, which includes local lobbying in 22 states and
the District of Columbia, will focus on prohibiting the removal of drugs from
the preapproved list when participants switch between plans and a requirement
for drug-price negotiation.
The reform advocates said the program's main failing is that it prohibits
Medicare from negotiating with drug companies for lower prices.
Flaws in the program will also result in denied coverage to millions of
seniors who will still pay monthly premiums this fall, said Roger Hickey,
co-founder of the Institute for America's Future.
Allowing seniors to choose their drug plan directly from
Medicare—instead of from a private insurance company—would give
seniors a better drug plan, with lower costs and less confusion.
Diane Archer, the founder of the Medicare Rights Center, the largest
independent source of health care information and assistance for Medicare
recipients, said thousands have called its hotline because of difficulties
accessing benefits and paying for their medications.
"The plan is something seniors are struggling with every day,"
She and others urged the Bush administration to delay the May 15 deadline
for seniors to sign up for a drug plan without being charged a penalty.
However, in a mid-March speech, Bush said he would not support a delay.
Centers for Medicare and Medicaid Services Administrator Mark McClellan,
M.D., Ph.D., acknowledged in recent comments during an APA-sponsored event on
Capitol Hill that "the transition has not been without problems."
However, he said, the program has provided millions of beneficiaries who have
mental illness with more comprehensive coverage. It also provides uniform
benefits across the United States in place of Medicaid drug benefits that
varied from state to state.
Guy Molyneux, a pollster, said public opinion data show that just one-third
of voters have a favorable view of the drug program so far. Forty-three
percent have an unfavorable view.
Congressional candidates may benefit from promises of major changes in Part
D in order to reduce confusion and make drugs affordable, he said.
Democrats have made the controversial drug benefit a campaign issue. Rep.
Henry. Waxman (D-Calif.) said the Republican-authored program is geared toward
special interests, and its implementation was fumbled. Republicans accused
critics of Part D of trying to scare seniors into not signing up for the
"Medicare part D is working. Seniors are signing up for a drug
benefit through Medicare for the very first time," said Rep. Shelley
Moore Capito (R-W.Va.), who cited studies that seniors could save as much as
$1,100 annually through the program.
Supporters of the program said the best measure of its success is the
extent of its use by the public. In late March the Department of Health and
Human Services announced that 7.2 million beneficiaries had signed up for the
drug plan. Overall, about 27 million seniors are enrolled in drug coverage
under Medicare, which includes 6.4 million low-income seniors who qualified
for both Medicaid and Medicare and were automatically enrolled in Part D