Report: Proposed Medicare Changes Mean Higher Premiums

The administration wants to change Medicare’s drug benefit, but a conservative economist predicts higher premiums

Lipitor(atorvastain calcium) tablets made by Pfizer and distributed by Parke-Davis are seen November 30, 2011 in Washington, DC. Pfizer's patent on the best-selling drug of all-time, the cholesterol-lowering medication Lipitor, expired on November 30, 2011, opening the path to generic competitors for America's most popular medication. Lipitor came on the market in 1997, and has raked in some $100 billion for Pfizer even in a crowded market that includes various other cholesterol-lowering statins, many of which have already gone generic. In the United States, anti-cholesterol drugs account for 255 million prescriptions a year, and about nine million people are taking Lipitor. 
National Journal
Sam Baker
Feb. 6, 2014, midnight

Pro­posed changes to Medi­care’s pre­scrip­tion drug cov­er­age could cause seni­ors to lose their plans or face high­er premi­ums, a con­ser­vat­ive think tank says in a new re­port.

The Amer­ic­an Ac­tion For­um, led by former Con­gres­sion­al Budget Of­fice Dir­ect­or Douglas Holtz-Eakin, cri­ti­cized changes the Medi­care agency wants to make to the ne­go­ti­ations among phar­ma­cies and in­sur­ance com­pan­ies.

“If [the changes are] im­ple­men­ted, the tax­pay­er will face high­er budget costs, mil­lions of seni­ors will lose their pre­ferred plans, be­ne­fits will di­min­ish, and premi­ums will rise,” AAF said in a re­port on the Part D pro­gram.

The fed­er­al Medi­care agency, CMS, pro­posed new rules earli­er this year that would change the way plans es­tab­lish net­works of pre­ferred phar­ma­cies. Plans and phar­ma­cies could no longer reach ex­clus­ive ar­range­ments; any phar­macy would be able to de­cide wheth­er it wants to be part of a plan’s pre­ferred net­work.

AAF says that will mean few­er pre­ferred net­works, dis­rupt­ing cov­er­age and rais­ing prices for seni­ors who rely on nar­row­er phar­macy net­works.

“This is the en­ti­tle­ment that works, why are they break­ing it?” Holtz-Eakin said in an in­ter­view.

A CMS of­fi­cial dis­puted the re­port’s con­clu­sion. There’s lim­ited evid­ence that ex­clus­ive con­tracts ac­tu­ally save money — either for seni­ors or the gov­ern­ment, the of­fi­cial said, and the new pro­pos­al would give seni­ors more ac­cess to any dis­counts by mak­ing them avail­able from more phar­ma­cies.

The of­fi­cial ac­know­ledged that nar­row net­works have the po­ten­tial to save money, but said the pro­posed reg­u­la­tions will re­quire plans and phar­ma­cies to prove that they provide real value.

“The pro­posed policies “¦ will en­sure that Medi­care be­ne­fi­ciar­ies have ac­cess to af­ford­able health and pre­scrip­tion drug plans while mak­ing cer­tain that plans provide value to Medi­care and tax­pay­ers,” a CMS spokes­man said.

A “non-in­ter­fer­ence” clause has kept Medi­care out of the ne­go­ti­ations among phar­ma­cies, drug com­pan­ies and Part D plans, but CMS is now re­in­ter­pret­ing the clause in a way that would al­low the gov­ern­ment to get in­volved in ne­go­ti­ations between plans and phar­ma­cies.

Holtz-Eakin said the change in non-in­ter­fer­ence rep­res­ents a fun­da­ment­al change in the way Part D works.

“It’s a pretty in­vas­ive and mi­cro­man­aging ap­proach,” he said.

Part D is gen­er­ally con­sidered a suc­cess — its premi­ums have stayed nearly flat for years, and its cost to the fed­er­al gov­ern­ment has been lower than ex­pec­ted.

Con­ser­vat­ives see the pro­gram as a mod­el for the over­all health care sys­tem, ar­guing that com­pet­i­tion among private Part D plans is what keeps the pro­gram’s costs in check. Holtz-Eakin said changes to Part D’s net­works could have elec­tion-year con­sequences.

“I find it stun­ning that the ad­min­is­tra­tion would pick an­oth­er health care fight, par­tic­u­larly with seni­ors, in this way in an elec­tion year. This sup­posed to be a polit­ic­ally savvy group, but this is nuts,” Holtz-Eakin said.

{{ BIZOBJ (video: 4716) }}

What We're Following See More »
AT LEAST NOT YET
Paul Ryan Can’t Get Behind Trump
12 hours ago
THE LATEST

Paul Ryan told CNN today he's "not ready" to back Donald Trump at this time. "I'm not there right now," he said. Ryan said Trump needs to unify "all wings of the Republican Party and the conservative movement" and then run a campaign that will allow Americans to "have something that they're proud to support and proud to be a part of. And we've got a ways to go from here to there."

Source:
STAFF PICKS
Trump Roadmapped His Candidacy in 2000
14 hours ago
WHY WE CARE

The Daily Beast has unearthed a piece that Donald Trump wrote for Gear magazine in 2000, which anticipates his 2016 sales pitch quite well. "Perhaps it's time for a dealmaker who can get the leaders of Congress to the table, forge consensus, and strike compromise," he writes. Oddly, he opens by defending his reputation as a womanizer: "The hypocrites argue that a man who loves and appreciates beautiful women (and does so legally and openly) shouldn't become a national leader? Is there something wrong with appreciating beautiful women? Don't we want people in public office who show signs of life?"

Source:
‘NO MORAL OR ETHICAL GROUNDING’
Sen. Murphy: Trump Shouldn’t Get Classified Briefigs
14 hours ago
THE LATEST
JOINS BUSHES, MCCAIN
Romney to Skip Convention
15 hours ago
THE LATEST

An aide to Mitt Romney confirmed to the Washington Post that the 2102 GOP nominee will not attend the Republican convention this year. He joins the two living Republican presidents, George W. Bush and George H.W. Bush, as well as 2008 nominee John McCain in skipping the event. Even among living Republican nominees, that leaves only Bob Dole who could conceivably show up. Dole did say in January that he'd prefer Trump to Ted Cruz, but his age (92) could keep him from attending.

Source:
#NEVERTRUMP
Sen. Sasse Calls for a Third Candidate
18 hours ago
THE LATEST

Sen. Ben Sasse, the most prominent elected official to declare that he's #NeverTrump, wrote an open letter on Facebook to the "majority of Americans who wonder why the nation that put a man on the moon can’t find a healthy leader who can take us forward together." Calling to mind recent conversations at a Fremont, Neb., Walmart, the senator pitted the presumptive general election battle between Donald Trump and Hillary Clinton as such a "terrible choice" that there would be an appetite for another candidate to emerge. In a parenthetical aside to reporters, Sasse ruled himself out. "Such a leader should be able to campaign 24/7 for the next six months," he wrote. "Therefore he/she likely can’t be an engaged parent with little kids." Meanwhile, his colleague Sen. John McCain (R-AZ) admitted in a private recording obtained by Politico that Trump hurts his reelection chances.

Source:
×