Friday, July 30, 2010

Getting the Facts Straight on Medicare

In anticipation of Medicare’s 45th anniversary today, the Center for American Progress released a report that attempts to promote Democrats’ closing of the Part D doughnut hole as part of health care “reform.”  The report asserts that “Part D beneficiaries who stay in” the doughnut hole would save an average of 23 percent off their drug spending, while “prescription drug savings will be even greater for the more than half a million” beneficiaries who pass through the doughnut hole.

But the Center for American Progress study misses the point on several fronts.  First, the true savings for beneficiaries in the doughnut hole may in reality be less than they appear; if the richer benefits in the coverage gap just prompt seniors to continue buying more expensive brand-name drugs rather than using less costly generics, they won’t really have “saved” much.  Second, and more importantly, all seniors will be paying higher Part D premiums in order for a select group of beneficiaries to receive richer coverage.  The Congressional Budget Office estimated that “the law would lead to an average increase in premiums for Part D beneficiaries of about 4 percent in 2011, rising to about 9 percent in 2019.”  That means that 27 million seniors will pay higher premiums, but only what the report quantifies as “more than half a million” beneficiaries passing through the doughnut hole will actually receive the full benefit of the discount regime established in the law.  Some would categorize this redistributive scenario as “spreading the wealth around.”

Also in conjunction with the Medicare anniversary, I would direct you to this one-pager previously released regarding the impact of health “reform” on seniors.  Of particular note is the analysis from CBO that the health care law’s changes to Medicare “would not enhance the ability of the government to pay for future Medicare benefits.”