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May 31 2018

Let's Learn the Right Lessons From Medicare's Prescription Drug Program

by Carrie L. Lukas

Glamour magazine's May issue is dedicated to money management, and one topic covered is health care costs.   “How Not to Go Broke at the Doctor's Office,” written by Lauren Brown West-Rosenthal starts by acknowledging how unique the health care market is: 

When you walk into a juice shop, you know exactly how much you'll pay for a green smooth.  That's true for almost everywhere you spend money—except for your doctor's office....Health care is a killer combo for anyone's budget: unpredictable and expensive.

She offers readers good advice, such as “take action in the room,” meaning that patients should actually ask their health care providers about the costs of different tests and treatment options, and to “scrutinize the bill” to make sure that you are paying for treatments you actually received.  This is good, common sense advice.

Patients need to be more proactive in making their health care decisions, but they also need to understand the many factors that make health care so expensive in the first place. 

IWF's Hadley Manning wrote an excellent primer explaining some of the reasons why prescriptions drugs are often expensive, and has also written more broadly about some of the drivers of health care costs, such as the lack of transparency and the fact that there's so often a third party (the government or an insurance provider) paying for medical treatments, which means that neither doctors nor patients have an incentive to take cost into consideration. 

Changing these dynamic is a key to bringing health care costs down. 

One of the few bright lights in terms of health care cost containment has been Medicare Part D, the program that provides seniors with prescription drug benefit coverage.  Plans participating in Medicare Part D truly compete for seniors' business and therefore have an incentive to control costs and provide good value.  As a result, Medicare Part D cost significantly less than forecasters expected—that's almost unheard of when it comes to government programs.   

Unfortunately, previsions in ObamaCare undermined the foundation of Medicare Part D, and more recent moves by Congress have exacerbated those problems.  As the Galen Institute's Grace Marie Turner explains here, Congress has shifted potential costs of prescription drugs away from insurance companies, which means they will have less incentive to try to negotiate better prices for consumers.  Another surprise in Washington, there is bipartisan agreement that this is a problem Congress should fix. In fact, both Democrats and Republicans wrote “Dear Colleague” letters recently urging House leadership to fix this problem.  

Medicare Part D has shown that better health care policies—based on more transparency and true competition—can lead to more affordable medical care, more efficient use of resources and better health outcomes.  Congress should protect, rather than chip away, at the principles that have made this program work and apply the lessons learned from Medicare Part D to the rest of the health care system and really empower patients.  

 

IIndependent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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