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Capitol Comment
by Senator Kay Bailey Hutchison
Medicare Part D Offers Choice and Competition
April 20, 2007
Since it was launched in January 2006, Medicare Part D has exceeded even the most optimistic expectations in providing affordable prescription drugs to America’s seniors. Yet some in Congress have threatened to undermine this program by replacing free market competition with government intervention.
In its first year, over 23 million seniors, including two million Texans, enrolled in the Part D program. These seniors are now enjoying the benefits of prescription drug coverage – many of them for the first time. Monthly premiums are also dropping, from an estimated $37 when the program was created, to $24 in 2006 to an even-lower $22 in 2007. Eighty-eight percent of beneficiaries in Texas have access to coverage with premiums lower than last year.
In addition to the 40 percent reduction in estimated premiums, seniors are now saving $1,200 per year on prescription drug costs, thanks to Part D. According to independent surveys, more than 80 percent of seniors say they are satisfied with the program.
Choice and competition from the Part D program is exactly what has made it so successful, yet a bill recently considered in Congress would have removed this principle. Instead of using the time-tested methods of choice and competition to lower costs, proponents of the legislation wanted to impose a one-size-fits-all government solution. Despite the proven results of the past year and expert opinion, they claimed that government negotiation would lower prescription drug costs. The non-partisan Congressional Budget Office (CBO) analyzed the proposal and concluded the government “would not obtain significant discounts from drug manufacturers.”
Pharmacy Benefit Managers (PBMs) are in fact already negotiating Medicare Part D prices on behalf of the federal government. The top five PBMs are larger in purchasing power than the federal government, and the CBO recognizes that the PBMs have been effective in lowering average monthly premiums.
Proponents of government negotiation often use the Veterans Administration as an example of the benefits of a government-run prescription drug program. But what they do not tell you is that allowing the government to negotiate Part D prices will actually increase prices for veterans. The American Legion wrote that removing the non-interference provision “is not in the best interest of America’s veterans and their families.” And veterans are not the only ones who would be harmed. The CBO concluded that implementing a “best price system” like the one used by the VA and Medicaid would increase drug prices for the VA, Medicaid, and private purchasers.
Preserving Medicare Part D is not just an issue of saving money. It is about who has the fundamental right to make your health care decisions. A primary benefit of competition is that you the consumer – not the government – can choose what drugs you and your family use. As a result, you are not required to pay for a more expensive coverage plan that includes additional drugs that you do not need. These rights are reflected in the current Part D program, and I will continue to oppose efforts to take away those rights.
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