Medicare Part D Reform – Part 2

Everyone is interested in the new bill before Congress on Medicare and the ability of the government to negotiate prices.

For those unaware of this issue, a controversial aspect of Medicare Part D was that it left the government without the power to use its significant buying power as a negotiation tactic.  When a purchaser buys large amounts of prescription drugs, it is often a natural perc that the purchaser gets to negotiate discounts.  The Medicare Part D program, which makes the government a large purchaser, does not.  The Veterans Administration does have such authority.

Therefore, Democrats have cited this as a deficiency in the program they wish to address and make the Medicare program have the same level of negotiation power.  Thus, they have introduced the Medicare Prescription Drug Price Negotiation Act of 2007, also called H.R. 4.  As you can see, we are in the beginning of the legislative cycle.  There are 189 co-sponsors of the bill.  It is something the President will surely veto.

So, what is the answer?  The Democrats argument is logical.  But at the same time, polls have shown, as demonstrated in an earlier post, that Americans are highly satisfied with Medicare Part D.  See a past posting on this issue

Still, news reports tell us that the costs of the program have been below projection

Does that mean that the projections were high?  Does it tell us that the ability to negotiate would bring the costs down even further.  No.

This promises to be an on-going hot potato in the coming legislative session.  If you would like to track it, in the lower right hand corner you will find a link to GovTrack.us where you can monitor this legislation as it moves through the maze. 

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