Health Care Reform - Round 1

In the area of the Obama Administration's effort to reform health care, the only change made to date is an agreement with the pharmaceutical manufacturers who will pay up to half of the drug charges for Medicare Part D recipients who are in the donut hole. In Medicare Part D, the government pays for the 1st $2,700 in prescription drug expenditures each year, the recipient then pays 100% of costs until the recipient has spent $4,300 after which Medicare pays for the rest of the expenditures. The recipient's annual expenditures between $2,700 and $4,300 is referred to as the donut hole and the pharamaceutical industry has agreed to pay for half of the prescription cost for brand name drugs only (not generics) for income eligible recipients purchased by the Medicare recipient while in the donut hole.

First, I find it unfortunate that the 1st agreement extends benefits for seniors (I'm a senior myself) who are the best served group in terms of medical care in the US and who have benefited to such a large extent from health care reform over the last few years such as the addition of Medicare Part D prescription drug coverage.

Second, I question what the Obama Administration has given the drug manufacturers in return for this change. I am concerned that the Obama administration has agreed to continue the current policy of not allowing Medicare to negotiate drug prices.

There is a group of people who are "dual eligible beneficiaries" in that they qualify for both Medicaid (health care for the poor) and Medicare (health care for seniors and the disabled). Prescription drug coverage for these dual eligibles was paid by Medicaid until 2006 after which the costs were paid by Medicare. For the top 100 drugs, Medicare paid $3.7 billion more than what Medicaid would have paid. Medicare Part D drug costs are about 30% higher than what is paid by Medicaid. For all drugs, if Medicare Part D paid the same price as Medicaid for all drug purchases, the total savings to the taxpayer over the next ten years could be as much as $156 billion.

Perhaps I'm too cynical but I'd bet that negotiated drug prices by Medicare has been taken off the table so I'll give round 1 to the health care providers.

Along these same lines, I'd also question why Medicare even pays for brand name drugs when there is a chemically identical generic. As an example, the statin drug for high cholesterol Zocor costs about $150 per month while the chemically identical generic Simvastatin costs about $6.00 per month. Medicare pays for Zocor while my Blue Cross plan only covers Simvastatin.