Taking a Break from Politics

Taking a break from politics for a moment, earlier this week, the Ways and Means Committee (Republican side) put out a statement regarding the startling success of the Medicare reform/prescription drug legislation passed by the Republican Congress and signed by the president in 2003.

“According to the CMS actuaries, the cost of the Medicare drug benefit (known as Part D) will be $117 billion lower over the next 10 years, compared to the estimate that was prepared just last summer. This is the third year in a row where Part D cost projections have decreased. Compared to its initial estimate in 2003, the next ten year cost of the Medicare drug benefit is nearly $250 billion (almost 40%) lower than originally estimated. The success of Part D stands in stark contrast to the dramatic increases in overall healthcare spending during the same time period.”

Why has the system worked so well in keeping down costs while providing senior citizens the help with prescription drugs that they need? Competition and the free market.

I have had the argument with countless friends who hate the fact that Republicans passed expanded Medicare with a prescription drug benefit. This is more big government, they say. This is a perfect example of how Republicans lost their way, they fume. We should simply get rid of the Medicare program entirely, they argue.

Well, guess what? We aren’t going to get rid of Medicare. And as long as we’ve got this program, we might as well make it work by introducing free-market concepts like competition.

Ideological conservatives have a simple view of government: We need to get rid of it. I sympathize with that view. I think most government is oppressive, wasteful and counterproductive.

But sometimes, the national interest requires government action. Medicare is an example of that national interest, because senior citizens, especially those who are retired, need access to healthcare and prescription drugs. Making Medicare work efficiently is part of that national interest.

Where ideological conservatives want us to get rid of Medicare entirely, Democrats want socialized medicine, with the government dictating prices, and with all citizens getting the same basic benefit. The problem with socialism is that it limits innovation, hurts quality and curtails freedom.

The Republicans threaded the needle when they passed into law this remarkable reform bill. It provided seniors the help they needed and allowed for both innovation and improved healthcare quality, without a government takeover of the system. And it cost less than we thought, because it encourages competition.

Of course, most Republicans are slightly embarrassed to talk about one of their biggest accomplishments for fear of alienating the base. But they shouldn’t be embarrassed. This law has been a huge success. And if Republicans want to get back in charge, they shouldn’t run from the good things they did when they were in the majority.

Because private Medicare drug plans are forced to compete, and beneficiaries have the right to choose among these competing plans, Part D plans have been able to slow the rate of drug cost increases, lower plan spending and increase the rebates they receive from drug manufacturers.

Despite Rep. Rahm Emanuel’s (D-Ill.) claim that Part D is a “Republican legislative failure,” it is time to realize that Congress got this one right.

Today, nearly 90 percent of Medicare beneficiaries (39.5 million) have prescription drug coverage, including 1.5 million enrollees who signed up within the last two months.

Enrollees are now saving roughly $1,200 annually off of their prescription drug costs.

The average Part D premium in 2008 is roughly $25. Democratic amendments in 2003 sought set monthly premiums at $35. Had these amendments passed, seniors would be paying $120 more each year for their drug coverage.

Independent surveys consistently show that more than 85 percent of seniors are happy with their new drug coverage.

How is it that, unlike virtually every other sector of the healthcare industry, costs are falling? Because competition is working. In competing for seniors’ business, plans have an incentive to negotiate deep discounts and keep monthly premiums low. Compare this model with the outdated traditional government-run Medicare program, where monthly premiums are reaching unaffordable levels and the program is going bankrupt in just 12 years.