By Chris Manning
In December, the Iowa Business Council’s quarterly survey of Iowa business leaders pointedly noted that “questions persist about the economy and the federal government’s debt and budget issues.”
If anything, that’s an understatement. Medicare’s long-term finances alone face a shocking $38 trillion shortfall. If we don’t fix Medicare, it will drown our economy in debt. But there are right ways and wrong ways to reform Medicare.
A proposal in Congress to overhaul Medicare’s prescription drug benefit, Part D, is on the wrong track. Iowa’s economy and job market depend on Part D.
More than 30 million Americans get prescription drugs through Part D, and over half a million Iowa seniors are eligible. A recent poll in USA Today showed “90 percent of seniors are satisfied with the program” and “53 percent would be more likely to cut back or stop taking medicine altogether” without coverage provided by Part D. The premiums are affordable, averaging just $30 a month.
The nonpartisan Congressional Budget Office (CBO) reports that the 10-year cost of Medicare Part D will come in 41 percent lower than initial projections. And the Journal of the American Medical Association concluded that Part D saves $12 billion a year, because increased access to prescription drugs prevents hospitalization and keeps seniors out of nursing homes.
Part D works because it’s market-driven. Private insurers offer a wide variety of prescription drug plans, competing for their share of the large Medicare market.
Now Congress wants to undermine Part D’s structure with a rebate program for seniors who qualify for both Medicare and Medicaid. Drug manufacturers would have to refund a portion of the sales price for these beneficiaries.
Medicaid finances prescriptions for lower-income beneficiaries by a similar rebate schedule, and it doesn’t work. The CBO says the rebate simply raises drug prices for other consumers and restricts seniors’ access.
It’s also bad for business. The biopharmaceutical industry supports 23,000 jobs in Iowa. In 2011, these companies and their Iowa vendors and suppliers combined for a whopping $5 billion of the Iowa economy’s output and added millions to the tax base.
We’d almost certainly see major job losses in Iowa if the Part D rebate goes through. Also, producing new treatments depends on the ability of companies to turn a profit, and siphoning their revenues would slow development of the next lifesaving medicines.
Fix Medicare, but leave Part D alone.
Chris Manning is Vice President of Business Development for Bluestone Project Management and Engineering, a Johnston firm that does health care and other project management. Comments: email@example.com