John McCain has proposed revamping Medicare’s payment system to reward doctors who produce better health outcomes. But for the most part, the candidates’ prescriptions for Medicare nibble around the edges of the drug benefit instead of addressing the system’s long-term sustainability.
John McCain’s proposal
McCain, who voted against the drug benefit in 2003, would accelerate the introduction of generic drugs and allow the re-importation of U.S.-made drugs that are sold more cheaply in other countries. Before Part D, savings-conscious seniors bought drugs in Canada and Mexico. Today, re-importation means very little, since Part D has taken some of the sting out of high prescription costs.
The faster introduction of generics will hardly help Randle. He takes mostly brand name drugs; when they are too expensive, the free medicine he gets while in the donut hole continues to tie him to drug companies’ more expensive brands—which, of course, means higher mark-ups and market share.
Barack Obama’s proposal
Obama would promote the use of generic drugs. OK, maybe Randle can go to Wal-Mart and cheaply fill some of his prescriptions with generics. Doctors would have to agree the generics would work well for him. Plus, he would need some consumer education to make the switch, and must be willing to give up the free drugs while he is in the donut hole. It would be a cost/benefit calculation. Obama would allow the federal government to negotiate prices of pharmaceuticals used by Medicare recipients. When Congress established the drug benefit, lawmakers banned the government from negotiating cheaper prices, as it does in the VA system. So far, Congress has failed to overturn the ban. If the new Congress can do that, the price of drugs for Randle might drop, and he wouldn’t reach the donut hole as fast. But it’s unclear whether price negotiation will affect the system’s long-term fiscal health.
Since we don’t know where the candidates stand on fixing the overall finances of Medicare, it’s hard to say which candidate would help or hurt Randle the most. Cutting benefits to shore up the system would certainly pinch, since he would have to finance more care from his own slim income. Increasing premiums and copayments for certain Medicare services would also hurt him. One solution on the table is making wealthier beneficiaries pay more for their benefits, either through higher premiums or higher coinsurance, a move that some say leads to the further privatization of Medicare. Even if Congress defines “wealthy” as incomes around $50,000, which a few experts think could happen, Randle’s very low income keeps him safe for now.
Permitting Medicare to negotiate Part D prices would do the most to help seniors like Randle. Primarily since Medicare is the "big pool" and would most effectively negotiate "big savings" -- larger than even the Veterans Affairs can leverage for its clients. A lower overall base price for each medication means that the doughnut hole is that much farther away for Randle and seniors like him. A conservative strategy would be to insert a "true" Medicare Part D plan as a nationwide choice, using its clout, and let all those other private Part D insurers race to beat or match the Fed's prices --- like how the $4 generic concept sprang forth at every chaim pharmacy. It's still capitalism: Money is still being made, just not the obscene amounts. And that would save Medicare and taxpayers billions.
Posted by Lisa on Fri 26 Sep 2008 at 02:19 PM