Marie Cocco: A Prescription for Congress

Posted on Nov 16, 2006

By Marie Cocco

WASHINGTON—The Medicare prescription drug program is the single totem that best represents the ugly excesses of the now-defeated Republican-controlled Congress.

The plan embodies that overworked but accurate catch phrase “culture of corruption”—a term that implies not only junkets and bribes and other matters that appeal to ambitious prosecutors, but the way in which lawmakers routinely reward private interests and political benefactors with callous disregard for the public good. The drug program is a bottomless trough for private interests. It was created by and for the managed-care and pharmaceutical industries.

So it is remarkable but perhaps predictable that the prescription drug program is an early political flashpoint between President Bush and the incoming Democratic leadership of the Congress.

Democrats pledged, repeatedly and emphatically during the campaign, to eliminate the audacious prohibition in the law that bars the government from negotiating price discounts directly with drug makers. The practice already is in place—indeed, it has been all but perfected—at the Department of Veterans Affairs. Medicaid programs, run by state governors of both parties, demand similar deep discounts and save billions for taxpayers and patients.

Nonetheless, the Bush administration opposes price negotiations and derides them as akin to socialism. “Government-run health care,” declared Health and Human Services Secretary Michael Leavitt.

To which one can only ask, where have you been since 1965?

Medicare, indeed, is government-run health insurance; it has been for more than four decades. Next to Social Security, it is perhaps the best-loved government program of all.

Medicare already sets the price for doctor visits, hospital stays, tests—for any and all covered care. Within the past few days, for example, it announced new price regimens for oxygen and the rental of oxygen equipment, as well as imaging procedures done by hospital outpatient departments.

The prescription drug law isn’t the rule. It’s a jury-rigged aberration. 

For the first time ever, Congress created a Medicare benefit that can be purchased only from private corporations—not through traditional fee-for-service Medicare, where about 85 percent of beneficiaries get their coverage. For the first time ever, Medicare is explicitly banned from using its bulk purchasing power to negotiate the price of a health benefit.

The measure eliminated the discounts that Medicaid had been obtaining for the low-income elderly and for people with disabilities who are covered by both programs. Due to this switch, drug companies have been able to charge more because they are no longer required, as they are under Medicaid, to provide the medication at the lowest available price. Industry analysts have estimated the windfall from switching these Medicaid patients into Medicare for drugs will amount to about $2 billion this year.

If all this weren’t enough, lawmakers also used the drug measure to funnel billions to the managed-care industry, including a special $10-billion fund to encourage more private insurance plans to offer a type of coverage that few Medicare patients seem to want. The Medicare Payment Advisory Commission, an independent panel of experts that Congress set up to advise lawmakers, has said this funding should be repealed. The panel repeatedly has found that managed-care plans cost taxpayers more per patient than traditional fee-for-service Medicare—11 percent more, according to its latest calculation.

This is the wonder of the private market the Bush administration seeks to defend and protect.

In truth, there is far more that’s wrong with the Medicare drug program than just the bizarre ban on price negotiations. It is a convoluted system that forces elderly people who are in traditional Medicare to buy an entirely separate insurance plan for their drugs. It hurts 6.4 million of the sickest and poorest by making them switch out of Medicaid and navigate the maze of private drug plans.

It rips off taxpayers so thoroughly, and so inventively, that lawmakers shouldn’t be rushing to fix the plan. They should be determined to scrap it. They can replace it with something better—that is, a plain and simple drug benefit delivered by plain and simple Medicare.

This would solve the question—raised, legitimately, by the Bush administration and Democrats alike—of how on earth the government would actually go about negotiating with drug companies on behalf of hundreds of private insurance plans. Elderly people would likely flock to a drug benefit administered by traditional fee-for-service Medicare. It’s easier for them. It’s cheaper for us.

And it would be a political winner—something the White House needs now more than ever.

Marie Cocco’s e-mail address is mariecocco@washpost.com.

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