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Tue Jan 8, 2013, 09:56 AM

Entitlement Reform Everyone Can Support

Mon Jan 07, 2013 at 01:28 PM PST
Entitlement Reform Everyone Can Support
by billyleeblack16

Come the end of February we will inevitably be facing another hostage crisis with the debt ceiling and demands for austerity. Austerity as we have seen it implemented in Europe has been a disaster for them. Just ask the Greek, Spanish, Portuguese, Irish and British public. The reason why it has failed is because the things that were cut were the exact things that stimulate economic growth and impoverish their middle classes.

However, I think we do need to make one big fundamental change to Medicare which will be the biggest driver of our long-term debt. I would like to reintroduce an idea that can cut hundreds of billions of dollars from Medicare spending without touching the benefits that seniors receive. It is a free-market idea that has been proven to work in both the public and private sectors. It should be a central part of any demands that Obama has concerning the sequester cliff. If conservatives truly believe in the free market and cutting out waste in government, this should be something every Republican should support.

What I'm talking about reforming is Medicare Part D. Passed into law in 2003 and fully implemented in 2006, it was designed as a way for Medicare to cover prescription drugs. In reality, it turned out not to be a very good deal for taxpayers for one very important reason, Medicare can't legally negotiate drug prices.

This more than anything else is why Medicare Part D was a huge giveaway to the private healthcare industry. Medicare can't legally use their enormous pool of enrollees as a way to bargain for better prices on prescription drugs. This is something that happens all the time in the private sector. For example, using their leverage as America's largest retailer and employer, Wal Mart is able to offer one of the cheapest perscription drug plans in the country. There is absolutely no reason why Medicare shouldn't be able to do the same thing and save hundreds of billions of dollars in the process.

One may say, "That's something that can only work in the private sector." Wrong. In fact, the government's other single payer healthcare plan does exactly that and gets the same drugs at significantly cheaper prices. Unlike Medicare, the Department of Veterans Affairs is allowed to directly negotiate prescription drug prices for veterans. The result? In some instances the VA can get cheaper prices on brand-name drugs than Medicare can get for the equivalent generics. For example:

Although generic versions of (frequently prescribed to the elderly) drugs are now available, plans offered by three of the five (exemplar Medicare Part D) insurers currently exclude some or all of these drugs from their formularies.…Further, prices for the generic versions are not substantially lower than their brand-name equivalents. The lowest price for simvastatin (generic Zocor) 20 mg is 706 percent more expensive than the VA price for brand-name Zocor. The lowest price for sertraline HCl (generic Zoloft) is 47 percent more expensive than the VA price for brand-name Zoloft.


Here's an apples to apples comparison on specific drugs from that same study:



This is an absolutely unacceptable waste of taxpayer money. There are far fewer veterans receiving VA benefits than seniors getting Medicare benefits. With a much larger pool of beneficiaries, Medicare should be able to negotiate a much lower price for drugs than the VA can. Unfortunately, that's not the case.

So what does all this mean in budgetary terms? Economist Dean Baker estimated that Medicare could have saved between $332 billion to $563 billion between 2006 and 2013. Keep in mind this is government waste that a Republican Congress and a Republican president enacted into law. If all Congress did was replace the sequester next month with this change to Medicare, we would slash the debt by about a little more than a trillion dollars (factoring in the tax increases just passed) and we would extend the long-term solvency of Medicare without cutting anyone's benefits. I don't know about you but that is 'entitlement reform' I can get behind.

Whether or not a member of Congress supports this idea should be the true test of whether they are serious about wanting to extend the solvency of Medicare as we know it. Will enough of Congress grow the balls/ovaries to stand up to PhRMA and AHIP and tell them that they are a huge factor behind the deficit. Will enough Republicans notice that the VA is doing something far more efficiently than Medicare is and be willing to apply that best practice to Medicare? Any proposal about reforming Medicare that does not include this very basic reform should not be taken seriously. We can cut costs in Medicare without screwing over present and future seniors and overhauling Part D is how you do it...

SNIP

...7:02 PM PT: From the comments (h/t Boundegar):

The Humana-WalMart plan isn't news. I was selling it last year, and it sold like hotcakes. But very few people understand how it works.

Medicare is forbidden by law to negotiate volume discounts - but WalMart isn't. Looking at the drugs on the list in the OP, WalMart is able to buy drugs in bulk at prices well below the VA price. Then they fill prescriptions and are reimbursed at the Part D price. Profit margins can be over 500%.

The good news is our seniors aren't getting robbed. The bad news is, the taxpayer is. When a prescription gets filled, the patient pays a (usually) very small copay. Humana bills Medicare at full retail price, and splits the profit with Walmart.

We would call this insurance fraud, except that the law is written to require these obscene profits.


http://www.dailykos.com/story/2013/01/07/1175748/-Entitlement-Reform-Everyone-Can-Support

11 replies, 1424 views

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Arrow 11 replies Author Time Post
Reply Entitlement Reform Everyone Can Support (Original post)
FourScore Jan 2013 OP
zander77 Jan 2013 #1
FourScore Jan 2013 #2
grantcart Jan 2013 #6
el_bryanto Jan 2013 #3
Angry Dragon Jan 2013 #5
Last Stand Jan 2013 #4
grantcart Jan 2013 #7
alberg Jan 2013 #8
Roland99 Jan 2013 #9
leftstreet Jan 2013 #10
Roland99 Jan 2013 #11

Response to FourScore (Original post)

Tue Jan 8, 2013, 10:16 AM

1. bullshit info

Negotiating drug costs is good ESPECIALLY FOR GOVMNT
What about that people are screwed and pharma protected, pharma can drop you ,,but you got to eat shit if pharma changes rules ??? dont you give a shit that peeps are treated like SHIT??

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Response to zander77 (Reply #1)

Tue Jan 8, 2013, 10:24 AM

2. Oh, ye of 2 posts...

WTF are you talking about?

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Response to FourScore (Reply #2)

Tue Jan 8, 2013, 12:10 PM

6. they were all against it until I explained it to them

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Response to zander77 (Reply #1)

Tue Jan 8, 2013, 10:25 AM

3. It's Beat Poetry I tells ya!

It don't have to make sense.

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Response to zander77 (Reply #1)

Tue Jan 8, 2013, 10:39 AM

5. I think you need to reread the post

the Poster is for the people

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Response to FourScore (Original post)

Tue Jan 8, 2013, 10:30 AM

4. Reform Bush's reforms.

Administrative costs and drug prices have soared. The numbers are in plain sight.

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Response to FourScore (Original post)

Tue Jan 8, 2013, 12:12 PM

7. Exactly right


I assume that there are other instances of waste and even fraud that benefit companies but do not benefit the clients, but this is the biggest item of all.

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Response to FourScore (Original post)

Tue Jan 8, 2013, 12:21 PM

8. The President, Senators and Representatives should be talking about this continually to the press.

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Response to FourScore (Original post)

Tue Jan 8, 2013, 12:21 PM

9. *Benefit* reform, they mean??

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Response to FourScore (Original post)

Tue Jan 8, 2013, 12:31 PM

10. DURec but it's 'benefit' reform, not 'entitlement' reform

I know that's not your title, but the author's

DURec

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Response to FourScore (Original post)

Wed Jan 9, 2013, 01:21 PM

11. I honestly can't believe this isn't even mentioned as an afterthought anywhere in the M$M

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