Douglas E. Schoen
Congress just departed for their annual August recess, and to no one’s surprise, Democrats and Republicans could not agree on the 2014 budget. Now, Congress will return this fall for what will undoubtedly be major battles over significant fiscal issues: the approval of a 2014 budget, raising the U.S. debt ceiling, and allowing sequestration to continue for another year.
First, Congress must pass a 2014 budget that will fund the government beyond September 30, the last day of fiscal year 2013, to avoid the shutdown of the federal government. Congress must then negotiate an agreement to raise the U.S. debt ceiling by November, or else the U.S. faces defaulting on its debts. And finally, Congress must determine how to implement the $91 billion in sequestration cuts, or cuts in federal spending, allotted for 2014.
As Democrats and Republicans are struggling to agree on where federal spending can and should be cut, it is critical to differentiate the spending programs that work from the ones that do not.
One program that has been successfully working for ten years is Medicare Part D. Part D is a widely popular, bipartisan program that has been saving Americans money since its inception in 2003, when it was created as part of the Medicare Modernization Act to cover the drug coverage gap that that existed in Medicare’s plan. Under Part D, which is run on a free enterprise model, seniors choose from a wide variety of privately run drug plans that negotiate individually with drug makers.
Part D is the most cost-effective and successful entitlement program the federal government runs. The Part D prescription drug benefit has subsidized costs of prescriptions drugs for millions of seniors and Americans with disabilities. In fact, it was recently announced that more than 6.6 million people with Medicare have saved more than $7 billion on prescription drugs as a result of Part D – or about $1,000 per Medicare recipient.
This news marks just the latest indication of the program’s ongoing success, and was followed by a USA Today article, which revealed that Medicare Part D premiums will remain stable, and the deductible will fall from $325 to $310 in the upcoming year.
And not only is Medicare Part D saving Americans money, the program has consistently come in under budget. Costs are now 45 percent below the program’s initial 10-year projection – the program will cost $340 billion less than original estimates. Even more impressive, Medicare Part D is helping to save costs in other ways: the Congressional Budget Office found every one percent increase in prescriptions filled has led to a .20 percent decrease in Medicare spending.
The program’s success is reflected in the ratings beneficiaries have given it. Ninety-four percent of Medicare recipients say they are satisfied with their drug coverage, and 95 percent are confident that their level of coverage meets their needs.
Thus, it is clear that Democrats and Republicans should make sure this program stays out of the fray of upcoming budget negotiations, and enable this cost effective and continuously thriving bipartisan program to successfully continue.
Yet the Obama administration wants to change Medicare Part D by imposing mandatory government rebates on drug companies that participate in the program. Framed as a cost saver, these new rebates could have significantly damaging effects on the program.
The proposed rebates could ultimately contribute to higher premiums and copays and increased drug prices for private sector consumers, thus resulting in reduced access to critical medications. Because rebates would mean less funding for biopharmaceutical research, this policy could delay potential scientific and medical developments that could realistically change and save lives by making drugs more effective and safer to use. Mandatory government rebates to Medicare Part D would also translate into fewer jobs in the biopharmaceutical sector.
Recently, 45 House Democrats signed a letter urging legislators to reject any proposals from the administration that would impose new government rebates on Part D, citing each of the aforementioned potentially negative impacts as cause. This is a good step.
At time when Congress is struggling to balancing budget, it is imperative for Democrats and Republicans to preserve a cost effective, well-liked program that saves Americans money like Medicare Part D. Rather than implementing destructive changes, Democrats and Republicans must preserve what works, and increase support for an already established and flourishing program.
Put simply, both Democrats and Republicans have an opportunity to drive bipartisan cooperation and reduce health care spending through a proven government program.
Douglas Schoen is a political strategist and author of Hopelessly Divided: The New Crisis in American Politics and What it Means for 2012 and Beyond.