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EXECUTIVE SUMMARY

To be fair to our friends in the Majority, it was assigned a nearly impossible task – to find credible reasons to criticize a federal program that has a near-90 percent approval rating and has come in a third under budget.

After some early hiccups, Part D, the Medicare prescription-drug benefit, has emerged as perhaps the best rollout of a federal program ever. It is delivering more drugs to more seniors than ever before in American history. It’s satisfaction rate bottoms out at 80 percent and rises incrementally according to how dependent seniors are on its benefits. In other words, those who need it most use it most and like it best.

The Majority did half the job. It found reasons to criticize Part D. It did not find credible reasons. It says administrative costs are too high for Part D because they are higher than for other parts of Medicare where government controls the payouts. Administrative costs are higher, but that’s because the private plans that operate Part D actually attempt to administer the program in a professional way. They set up formularies, design products to meet the individual needs of patients, negotiate price rebates and other discounts and, of course, have to market their products. It’s significantly cheaper – from an administrative standpoint – to simply write checks, as other agencies do.

The Majority criticizes Part D providers for how they handle the rebates they negotiate. Instead of lowering the price of Drug X because they negotiated a rebate for Drug X, providers spread out the savings so all participants benefit from them. It’s hard to argue with the pricing and rebate policies of a program whose private providers will rebate to the government $4 billion this year and still price their products at 40 percent below government projections. As we said, the Majority had a tough task here.

The real target of the Majority was the notion that private firms could deliver this service more effectively and efficiently than government. This attack probably proved least effective. The program works. Seniors love it. The 10-year cost projections to the government have dropped more than 30 percent in less than two years. And, unlike the government formularies for the Veterans Administration, the best and newest drugs are available to America’s seniors.

It was a tough task. All we can say to our friends on the other side is "Nice try."