Competition and Consumer Choice Keeping Costs Down in Medicare Part D
Grace-Marie Turner, President of the Galen Institute, authors an interesting study examining how private competition in Medicare Part D has led to lower prices and more choices for seniors all while saving money for taxpayers.
In the Medicare Part D program, health plans negotiate rebates directly with prescription drug manufacturers and, by law, the value of these rebates must be passed through to the beneficiaries. Some in Congress want to change this and require those rebates to go to the government rather than the beneficiaries. It’s not too hard to figure out why this will result in higher drug costs.
With 90% of seniors happy with the current program, and the cost savings attributed to competition, the government should be looking for ways to expand this competition to other areas of healthcare.
From the Galen Institute:
Part D Is Still Working
October 3, 2012
Private competition in Medicare Part D has led to lower prices and more choices for seniors, and the program is saving money for taxpayers as well.
That’s not a statement you see often in the health reform debate, where prices continue to climb above the rate of inflation year after year.
But the Medicare drug benefit is breaking new ground. Part D represents the first significant initiative to rein in health spending by restoring personal responsibility and incentives for savings to Medicare beneficiaries. In doing so, it shows that government can leverage free-market forces to cut costs while giving seniors more choices.
The average basic premiums for Medicare prescription drug plans are half what they were expected to be at this point when the program was enacted in 2003 – about $30 a month vs $60 a month from the initial estimates.
Read the full study here (pdf).