off the charts
BEYOND THE NUMBERS
BEYOND THE NUMBERS
Debunking the Myth of Private Insurers and Medicare Part D
Columnist Robert Samuelson says the Congressional Budget Office may be wrong in estimating that the House-passed plan to convert Medicare into a voucher to buy private insurance would raise total health costs per beneficiary by upwards of 40 percent. Samuelson, however, may be drawing the wrong conclusion from Medicare’s experience with its “Part D” drug benefit. Samuelson notes that the Part D drug benefit — which private insurers provide — has cost much less than CBO originally expected. House Budget Committee Chairman Paul Ryan, who authored the House-passed plan, cites the lower Part D spending as justification for his new proposal and attributes the lower-than-anticipated costs to efficiencies produced by competition among private insurers. But as our recent analysis explains, the reliance on private plans had little or nothing to do with Part D’s lower-than-expected costs. The primary factors were:
- Prescription drug spending throughout the entire U.S. health care system fell sharply just as Part D got up and running. That’s because fewer new blockbuster drugs came to market, some major drugs went off-patent, and patients relied more on generic drugs. In fact, overall U.S. prescription drug spending was about 35 percent lower in 2010 than CBO had projected back in 2003, when Congress created Part D. The Medicare trustees have explained that this system-wide slowdown was a key factor in reducing Medicare drug spending below original projections.
- Part D enrollment was significantly lower than expected. In 2010, only about 77 percent of Part B beneficiaries were enrolled in Part D or received Medicare-subsidized drug coverage through their employer, well below CBO’s original 93 percent estimate. That means roughly 6.5 million fewer people were enrolled than CBO had estimated in 2003.
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