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Smashing success?


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EN ESPAÑOL

Letter to the Editor
DOC News

To the Editor,

In your issue of April 2007, Neil Versel describes Medicare Part D as a “smashing success”. A report by the Center for Economic and Policy Research (CEPR) indicates otherwise.

Mr. Versel’s contention is based on the Congressional Budget Office (CBO)’s report which states that the net cost of the benefit to the federal government, estimated to be $32.1 billion in 2006, had fallen to 31 billion by the end of that year. Yet the CEPR found that the rate of growth in drug spending had already dropped from 15.4 in 2000, to 8% in 2005, a year before the benefit began, and that the rate of growth observed in 2006 merely continued that of prior years. It also noted that the initial estimate was based on the expectation that a certain number of patients would enroll, yet this expectation was not met — actual enrollment was 10% lower — and that on a first approximation, 10 percent decline in enrollment would lead to 10 percent reduction in costs. While this reduction clearly constitutes a saving for the federal government, it is hardly one that benefits patients.

An alternative explanation for the slower growth in drug spending, suggests the CEPR, is that the pharmaceutical industry has not developed qualitatively new drugs during this period and that the number of enrollees did not meet initial expectations. It also notes that the correct standard to compare the alleged savings of Medicare Part D is not a prior non-existent benefit, but an administratively efficient one, such as the Veteran’s Administration’s, which uses the purchasing power of a publicly-financed, single-payer system to save in administrative costs and to bargain for prices on behalf of its beneficiaries, who are not faced with the daunting task of choosing among a myriad plans but are entitled to comprehensive benefits, including prescription drugs.

As economist Paul Krugman noted, the power of a single payer pool allows the VA to get better deals even for drugs not-included in the formulary which enrollees can get once their doctors make a special request on their behalf. It also accounts for the VA’s substantially lower administrative costs when compared to the current Medicare drug benefit in the hands of the private insurance sector. As most readers are aware, this bargaining power was denied to Medicare by law, on the grounds that it would make the competition for better prices for drugs “unfair”.

In an undergraduate seminar in health policy at the University of California in Santa Cruz, I assigned my students the task of finding the best Medicare part D drug plan for an imaginary patient, an elderly grandparent with a range of medical conditions, including, yet not limited to, diabetes. To complete this assignment, students had to navigate 800 numbers and the Medicare website. All fifteen of them concluded that the “choices” they had found were daunting, and likely to scare off but the very brave, strong, and computer savvy. And all of them finally “chose” a plan only because choosing was required by the assignment. Whether what they had found was the best bang for their grandparent’s health care dollars, while meeting their medical needs, assuming these needs did not change in the future (some students read the small print!), none of them could tell.

If we consider the alternative interpretation of the CEPR’s report and the stress experienced by my non-representative sample of undergraduates in the quest to help an imaginary grandparent, neither can we.

Claudia Chaufan, MD (University of Buenos Aires), PhD