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Special coverage: Medicare

Rx: dose of reality

Democrats who think they've found a simple fix for the nation's costly, convoluted Medicare prescription plan need to be careful. They are entering a pharmaceutical quagmire full of restrictive formularies, big-ticket coverage gaps and institutional resistance.

The fight is a worthy one, and the precipitous veto threat by President Bush only underscores the stakes. But Democrats won't win with campaign rhetoric. The bill set to move through the U.S. House today provides little more than an edict that the secretary of health and human services "shall negotiate" lower drug prices, as though the government itself is the one buying. Unfortunately, drugs are bought and dispensed under the 2003 Medicare law by a maze of some 1,875 private drug plans.

The Democratic plan is, at best, incomplete. The current law does, absurdly, outlaw any negotiation of drug prices, which has the principal effect of fattening pharmaceutical bank accounts. But the kind of savings the Department of Veterans Affairs has been able to negotiate for its prescription drugs is not merely the result of its collective bargaining power. The VA, which filled some 120-million prescriptions last year, also restricts the kinds of medicines that are available to patients.

As James R. Lang, former president of Anthem Prescription Management, told the New York Times: "For this proposal to work, the government would have to take over price negotiations. It would have to take over formularies. You cannot do one without the other. There's no leverage."

Democrats are not being honest about the trade-offs, and the possible need for some restrictive formularies to help reduce costs. They are also offering a misleading pledge to eliminate the so-called "doughnut hole." To save money, Republicans created a peculiar gap in coverage that nabbed as many as 4-million seniors last year. Under the coverage gap, Medicare recipients pay 100 percent of drug costs each year after the total has reached $2,400 until they pay an additional $3,850 out of pocket.

During the midterm elections, House Speaker Nancy Pelosi was among the prominent Democrats promising that the savings from lower drug prices would be plowed back into the program. "We will use that money to fill the doughnut hole," she said at one campaign stop, "so that seniors will have affordability, they will have reliability, and will not be caught in this trap of the doughnut hole."

The Congressional Budget Office has projected, however, that eliminating the coverage gap would cost roughly $450-billion over 10 years. Few, if any, Democrats are now claiming those new costs can be offset purely by savings from price negotiation. An estimate of drug price reductions prepared by Rep. Henry A. Waxman, D-Calif., pegged the 10-year savings at roughly $96-billion.

The point here isn't that Democrats should walk away from this fight. The current Medicare prescription plan is indeed incomplete, needlessly complex and indefensibly profitable to the pharmaceutical industry. But the plan is also in effect and generally well-received by many seniors. Problems of this magnitude won't be fixed just by ordering a Bush administration bureaucrat to negotiate.

House Democrats may think they can the heal the Medicare drug plan in one easy congressional dose, but their Senate counterparts are wise to take more time. Seniors have had enough empty political promises already. They deserve affordable coverage.

[Last modified January 12, 2007, 06:55:08]