Skip to main content

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 volume discounts in 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 volume discounts 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 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.

4:19 PM PT: Oh my! This made Community Spotlight? I wasn't expecting that. Thank you.

If mcjoan's most recent front page piece comes to pass, that will be very good news indeed.

5:52 PM PT: Whoa! I never thought this would be my first diary to make the rec list! Thank you all so much!

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.

Originally posted to billyleeblack16 on Mon Jan 07, 2013 at 01:28 PM PST.

Also republished by Community Spotlight.

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

Thumb, Ed in Montana, Sylv, dwellscho, RF, Chi, Upper West, itsbenj, Stevie, MadRuth, Liberal Thinking, importer, zed, Emerson, MouseThatRoared, Shockwave, cotterperson, liz, genethefiend, Res Ipsa Loquitor, jdld, eeff, HootieMcBoob, kdub, Do Something, exNYinTX, jancw, expat germany, hubcap, Heart of the Rockies, concernedamerican, howd, wonkydonkey, magnetics, annrose, themank, mkfarkus, roses, Dhavo, jalbert, mollyd, oceanview, sidnora, aitchdee, Texknight, kharma, marko, 2laneIA, wordene, Lawrence, Boppy, fuzzy10009, potatohead, HeyMikey, flatford39, DSC on the Plateau, chantedor, Sembtex, Kitsap River, ScienceMom, Mosquito Pilot, jcrit, rolet, babaloo, gnutpnut, rapala, Skennet Boch, maybeeso in michigan, historys mysteries, radarlady, 3goldens, NoMoreLies, Hoomai29, DianeNYS, greycat, el dorado gal, caul, chimene, irate, offred, Simplify, EJP in Maine, reflectionsv37, ratzo, fixxit, bleeding blue, Sun Tzu, where4art, Ozzie, Rusty in PA, bunsk, Rogneid, nymosyn, kathny, Jim R, splashoil, Jim P, RJDixon74135, golem, Mr Bojangles, BlueInARedState, tobendaro, trentinca, seefleur, technomage, kck, Lefty Coaster, blueoasis, MJ via Chicago, global citizen, gooderservice, NearlyNormal, Spock36, Up to here, hlsmlane, onionjim, AmBushed, IL clb, Helpless, profh, Brunette, sea note, Aaa T Tudeattack, DBunn, ammasdarling, FoundingFatherDAR, asilomar, Cronesense, Habitat Vic, Cat Whisperer, Loudoun County Dem, SpecialKinFlag, Deadicated Marxist, ksp, AdamSelene, leema, Dartagnan, ColoTim, Positronicus, puakev, LillithMc, some other george, veinbulge2000, noofsh, deepeco, bnasley, mbh1023, gchaucer2, OIL GUY, Chico David RN, leonard145b, Brahman Colorado, janatallow, Unlabled, South Park Democrat, vet, TomP, jwinIL14, MKinTN, aztecraingod, condorcet, Roger Fox, HappyinNM, Sixty Something, Ponder Stibbons, NewDealer, elwior, FG, Buckeye Nut Schell, lineatus, KJG52, inHI, Calamity Jean, RandomNonviolence, temptxan, petulans, sewaneepat, gas28man, DixieDishrag, Al Fondy, HarpboyAK, sagansong, fayea, Fiddlegirl, prettygirlxoxoxo, Rhysling, J M F, greengemini, lostinamerica, skywrnchsr509, Zotz, shopkeeper, JesseCW, dRefractor, geebeebee, marzook, TheOpinionGuy, Shelley99, histOries Marko, sfarkash, Lacy LaPlante, Leftcandid, RickinStLouis, CalGal47, Comanchegyrl, commonmass, brooklyns finest, nsfbr, CS11, Crabby Abbey, Progressive Pen, CrissieP, cordgrass, gulfgal98, pixxer, nirbama, SunsetMagnolia, science nerd, soaglow, Actbriniel, translatorpro, Onomastic, janemas, redlum jak, TAH from SLC, kerflooey, allenjo, sostos, swale44, deeproots, nezzclay, lawyernerd, trumpeter, mrsgoo, Haf2Read, marleycat, zukesgirl64, Ricochet67, thomask, KVoimakas, ScionSlaw, Grandma Susie, MRA NY, createpeace, jgnyc, peregrine kate, whaddaya, Daulphin, sound of progress, poliwrangler, VTCC73, blue aardvark, Willa Rogers, AllFleshFromGrass, dradams, Regina in a Sears Kit House, SouthernLiberalinMD, Davui, absdoggy, fenway49, gofigure, anodnhajo, sow hat, Williston Barrett, stills999, Citizenpower, David54, barkingcat, Joieau, rukidingme, tucanaz, BusyinCA, MartyM, aznavy, lunachickie, james321, arizonablue, splintersawry, FrY10cK, databob, Robynhood too, Lily O Lady, Chaddiwicker, Geriw, countwebb, Late Again, weck, alice kleeman, ggfkate, bluechip0309, ziniko, ChristineM, oslyn7, skepticalcitizen, hwy70scientist, RUNDOWN, Paradigm Change, central oregon progressive, teacherjon

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site