April 4, 2013


The Return of the Mediscare-mongers (Karl Rove, 4/04/13, WSJ)

When attacked, they can say that the GOP's budget framework adopted a proposal from the Medicare reform commission of a Democratic president (Bill Clinton) and introduced by a Democratic senator (John Breaux of Louisiana). More important, that proposal--premium support--has been successfully tested for almost a decade.

The GOP proposal to reform Medicare puts consumers in charge by relying on competition and choice instead of centralized government planning and price controls. It was the organizing principle of the successful Medicare Part D prescription drug benefit passed in 2003.

Here's how premium support works. Seniors who participate in Medicare Part D choose among drug coverage plans offered by competing private insurers. The federal government helps them pay for this coverage. The amount of support is a weighted average of the premiums charged by plans in the part of the country where they live.

If seniors want a more-expensive plan, they pay the difference. If they pick a less-expensive plan, then more of its cost is covered by government's premium support. But requiring seniors to pay at least part of the premium encourages them to shop for value when comparing plans and to use generic drugs where possible.

Medicare Part D has been in operation for eight years, and the results are extraordinary. In 2003, the Congressional Budget Office projected Part D's cost for its first decade would be $552 billion. The actual cost will be around $358 billion, 35% less than forecast and 64% less than the $1 trillion cost that the CBO estimated for the competing Democratic plan, in which the federal government would decide who got what drugs when and at what price.

The average premium for drug coverage is $30 a month, half what the actuaries estimated it would be this year. A 2011 study in the Journal of the American Medical Association found that the prescription benefit helped reduce hospital stays and delay the need for nursing care, saving Medicare $12 billion a year. The Congressional Budget Office also reported last November that seniors "had fewer hospitalizations and used fewer medical services as a result" of participating in Part D.

Posted by at April 4, 2013 12:22 PM

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