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View Diary: Boehner, Cantor and McConnell raised debt ceiling by $800 billion to pay for health care costs (12 comments)

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  •  The first ten years of Part D, the Medicare Drug (3+ / 0-)
    Recommended by:
    Jon Perr, coffeetalk, whaddaya

    Plan, will cost about $380 billion, lower than the $395 billion budget thus becoming the first federal health program of any kind that actually cost less in its first ten years than its initial CBO budget or forecast.

    "let's talk about that"

    by VClib on Wed Sep 11, 2013 at 12:24:40 PM PDT

    •  Part D Costs Have Been Lower Than Forecast... (0+ / 0-)

      ...primarily because of lower enrollment and the rise of generic drugs.

      Ezra Klein explained it here:

      It’s true that Part D’s costs have come in beneath expectations. The question is, “why?” Brooks suggests that that’s due to the structure of the program, which “uses a competition model.” But then, why is national drug spending 35 percent (pdf) below expectations? There was no major reform of the non-Medicare market for pharmaceuticals, after all.

      The answer, basically, is that pharmaceutical spending is down because pharmaceutical innovation is down. Medicare’s trustees, whom you might expect to trumpet their success controlling costs in Part D, are very straightforward about this: “The reduced estimates reflect a higher market penetration of generic drugs and a decline in the number of new drug products that are expected to reach the market during this period.” In other words, old drugs are slipping out of patent and new ones aren’t being invented as quickly as we’d expected, or hoped. That’s not the program’s fault. But no one should cheer cost control that comes from a slowdown in innovation.

      There’s another reason Part D has been cheaper than projected: Seniors aren’t signing up. The Congressional Budget Office estimated that 93 percent of Medicare enrollees would participate. Instead, 77 percent did. That’s obviously led to lower costs than expected, but not because the program is working better than expected.

      •  It doesn't take away from the fact that it came in (0+ / 0-)

        under budget, the first ever for a federal health care program. We should be so lucky with other programs.

        I had the chance, a few years ago, to have a cup of coffee with Tom Scully, the author of Part D. The entire reason for the "donut hole" was to encourage seniors to do two things, switch to generics, and really pay attention to managing their annual drug costs. So any saving due to those reasons were part of the program design.

        "let's talk about that"

        by VClib on Wed Sep 11, 2013 at 01:53:46 PM PDT

        [ Parent ]

        •  It Also Doesn't Take Away from the Fact... (0+ / 0-)

          ...that at no point has Medicare Part D been funded.  Unlike the Affordable Care Act, which due to its mix of new revenue sources and cost savings reduces the national debt, the cost of Medicare Part D just got added to the national credit card.

          As for Tom Scully, here's an update from 2009:

          As the New York Times reported later in 2004, the GAO ultimately concluded that the Bush administration "illegally withheld data from Congress on the cost of the new Medicare law" and that Scully "should repay seven months of his salary to the government." While Scully was later fined for other ethics violations, he was never held accountable for his role in the Medicare fraud. Today, Thomas Scully "now works for a law firm and a private investment firm, has registered as a lobbyist for Abbott Laboratories, Aventis Pharmaceuticals, Caremark Rx and other health care companies."
          •  Scully is one of the most knowledgable people (0+ / 0-)

            about health care public policy and US healthcare economics I have ever met. He was working as the head of CMS at about a 75% cut in his private sector compensation. I have no knowledge of the "illegally held information". Scully was on record testifying to Congress that the ten year cost would be less than $400 billion, which was correct. Remember at the time we were running a budget surplus, which is why Part D didn't have a revenue source. Had we not been in surplus there would not have been a Part D and seniors would likely be paying 100% out of pocket for their prescription drug costs.

            "let's talk about that"

            by VClib on Wed Sep 11, 2013 at 02:38:09 PM PDT

            [ Parent ]

            •  Some Additional Follow Up Points (0+ / 0-)

              1. The U.S. budget was not in surplus in 2003, 2004 or after.   The deficits topped $400 billion in both of those years. (OMB)

              2. Medicare Part D could have cost the government much less.  Rather than add the benefit to the existing government-run Medicare program, Part D forces recipients to buy a plan through private insurers.  Worse still, the law bars the government from negotiating drug prices directly (as the VA does) with the pharmaceutical firms.  Those two factors explain why almost all Democrats voted against it.

              3. Thomas Scully, while no doubt knowledgeable, also has a checkered past of ethical woes.  His threat to fire Medicare actuary Richard Foster if he told Congress he truth about the Medicare Part D budget forecast was not only found to be illegal (leading to a fine of seven months of pay).  As it turns out, Scully also had to pay back $10,000 in expenses he wrongly charged to the government. The New York Times and Washington Post tell the tales:

              ”Inquiry Proposes Penalties for Hiding Medicare Data."

              ”Former Bush Adviser Agrees to Pay for Trips.”

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