The Medicare drug benefit doesn’t need federal fixing

In the 11-plus years since the Medicare Part D prescription drug benefit was implemented, at least two facts have remained inarguable.  One is that the program has worked extremely well in making medications affordable and accessible for millions of Medicare beneficiaries, and the other is that there was, is, and will continue to be a political push to make people believe Part D is somehow lacking because the federal government doesn’t have a sufficiently heavy hand in it.

We’re seeing that latter case being made pretty persistently these days, that there is a compelling need for the feds to become engaged in setting prices for pharmaceuticals within the Part D program. The argument is that, without the largest purchaser of drugs involved in the pricing process, vital prescription coverage will be unaffordable for a large population of senior citizens and beneficiaries with disabilities.

The biggest problem with this argument, as emotionally potent as it may be, is that the facts don’t back it up.

{mosads}The Centers for Medicare and Medicaid Services just released the data on Part D beneficiary premiums for 2018 and, far from seeing prices go up, the base monthly premium is actually going down from this year’s $34.70 to $33.50. And to look at this in a broader perspective, from 2012 to 2018 that base monthly premium will have increased barely more than two dollars.  

That’s because the system, as it was structured when Congress created the prescription drug benefit, continues to work.  

Health plans and pharmaceutical benefit management firms, each of whom have the clientele size to exercise significant buying power, are negotiating with drug manufacturers to keep prices reasonable and are encouraging the use of generics, and the plans also are competing against each other for enrollee loyalty. The Congressional Budget Office has analyzed this issue and came to the conclusion that federal government involvement in Medicare drug pricing would not bring about leverage any more powerful than what private payers are already exercising. The only unique weapon the executive branch could use — maintaining strictly limited drug formularies like the Veterans Administration does – would not be in the best interests of beneficiaries.

If anyone wonders why the idea of a more intrusive government in Medicare drug pricing hasn’t gained traction, it’s largely because there is no clamor for it from the people who are currently utilizing the program.

Our Medicare Today coalition commissioned a survey this summer by Morning Consult to ascertain how senior citizens viewed their Part D prescription drug coverage.  The results did not leave much room for doubt.  Eighty-seven percent said they are satisfied with their coverage, and 84 percent said the plan they have offers a good value.  Importantly from a policy standpoint, seniors overwhelmingly like the current private sector choice-and-competition framework for Medicare Part D with 83 percent saying they believe it is important to have a selection of plans from which to compare.

I suspect we’re going to continue to hear a lot of talk about the need for Washington to take control over Medicare drug pricing.  I’m also optimistic, though, that lawmakers will pay attention to their constituents back home and never let that rhetoric turn into actual policy. Today, we have a Part D prescription drug benefit that is affordable, popular, and helping to preserve and strengthen the health of millions of older and disabled Americans.  Instead of using the old cliché about not fixing what isn’t broken, I would suggest instead that Congress shouldn’t even consider breaking a program that has become indispensable.

Mary R. Grealy is president of the Healthcare Leadership Council, a coalition of chief executives from all disciplines within American healthcare, and chair of the Medicare Today coalition.

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