Monday, February 27, 2006
Dissing part D
Another day--another very negative news story about the new Medicare "Part D" prescription drug benefit, this time from the Washington Post, where Ceci Connolly explains that even the very poor Americans targeted by the program are avoiding it like a cobra in a pill bottle. This finding is entirely in character with the benefit's terrible history. Even back when it was new and shiny, and basically involved handing out prescription discount cards without premiums or other costs to beneficiaries, seniors didn't like or trust the new program. The incredibly botched roll-out of the full Part D ball of twine has entrenched the perception of the program as a classic bureaucratic boondoggle, to the point that people who really need the benefit don't much want it. It takes a special breed of public officials to design and deliver a new entitlement program that nobody likes. Really, really special.
Sunday, February 26, 2006
Current health care system: "just plain stupid"
Six years ago Adam Gopnik and Malcolm Gladwell debated healthcare in the pages of the Washington Monthly. Gopnik was for universal healthcare and Gladwell was agin it. But wait! Gladwell has blinked! He now says Gopnik was right:
Why have I changed my mind? Some of my reasons are in the piece on moral hazard I wrote for the New Yorker last summer. The bigger reason is simply that I woke up one day and realized what much smarter people than me (Adam Gopnik) realized a long time ago, which is that the idea of employer-based health care is just plain stupid — and only our familiarity with it and sheer inertia prevent us from rising up in rebellion.
I always try to think of a suitable analogy and fail. The closest I can come is to imagine if we had employer-based subways in New York. You could ride the subway if you had a job. But if you lost your job, you would either have to walk or pay a prohibitively expensive subway surcharge. Of course, if you lost your job you would need the subway more than ever, because you couldn't afford taxis and you would need to travel around looking for work. Right? In any case, what logical connection is there between employment and transporation? If you can answer that question, you can solve the riddle of the U.S. health care system. And maybe I'll change my mind back.
Gladwell wrote this because, for some reason, his old debate with Gopnik has suddenly gotten renewed attention in the blogosphere (20 cites in the past week) and, he says, "I shudder when I read what I said back then." By the way, did you know that Malcolm Gladwell now has a blog? Well he does.
Why have I changed my mind? Some of my reasons are in the piece on moral hazard I wrote for the New Yorker last summer. The bigger reason is simply that I woke up one day and realized what much smarter people than me (Adam Gopnik) realized a long time ago, which is that the idea of employer-based health care is just plain stupid — and only our familiarity with it and sheer inertia prevent us from rising up in rebellion.
I always try to think of a suitable analogy and fail. The closest I can come is to imagine if we had employer-based subways in New York. You could ride the subway if you had a job. But if you lost your job, you would either have to walk or pay a prohibitively expensive subway surcharge. Of course, if you lost your job you would need the subway more than ever, because you couldn't afford taxis and you would need to travel around looking for work. Right? In any case, what logical connection is there between employment and transporation? If you can answer that question, you can solve the riddle of the U.S. health care system. And maybe I'll change my mind back.
Gladwell wrote this because, for some reason, his old debate with Gopnik has suddenly gotten renewed attention in the blogosphere (20 cites in the past week) and, he says, "I shudder when I read what I said back then." By the way, did you know that Malcolm Gladwell now has a blog? Well he does.
Friday, February 03, 2006
Sigh. Yet another Medicare lie
Good news, campers! The Department of Health and Human Services says the Medicare prescription plan is coming in under budget! Not so fast....
When the program was being developed, before we had any actual experience with the cost of drug coverage, it was estimated that the Part D benefit would cost about $700 billion in its first ten years. But as plans compete for seniors’ business, they are driving the costs of prescriptions down. According to our latest estimates, the costs of the Medicare prescription drug benefit are significantly less than expected.
The federal government now projects the cost to be about 20 percent less per person in 2006. Over the next five years, payments are now projected to be more than 10 percent lower than first estimated. That is a significant savings for taxpayers.
Well. That is good news, isn't it? Competition is certainly a wonderful thing.
And yet....something is niggling at me. You see, back when the program was being developed, HHS actually estimated it would cost $400 billion, not $700 billion. As we later learned, this was just a flat out lie, designed to fool Congress into voting for it. Shortly after the bill passed, HHS admitted that its chief actuary had actually estimated a cost of $500-600 billion but had been forbidden from revealing this to anyone. Then, last year, they upped the estimate again to $720 billion. So assuming that the 10% "savings" applies to the entire 10-year budgeting period, it means HHS is now estimating a cost of $650 billion, which is actually far higher than either of the estimates from two years ago.
It's also worth noting that HHS has come up with this alleged 10% savings after a grand total of one month of experience with the program. In fact, it comes from a document called "The Secretary's One Month Progress Report on the Medicare Prescription Drug Benefit." So take this news with a great big shaker of salt.
When the program was being developed, before we had any actual experience with the cost of drug coverage, it was estimated that the Part D benefit would cost about $700 billion in its first ten years. But as plans compete for seniors’ business, they are driving the costs of prescriptions down. According to our latest estimates, the costs of the Medicare prescription drug benefit are significantly less than expected.
The federal government now projects the cost to be about 20 percent less per person in 2006. Over the next five years, payments are now projected to be more than 10 percent lower than first estimated. That is a significant savings for taxpayers.
Well. That is good news, isn't it? Competition is certainly a wonderful thing.
And yet....something is niggling at me. You see, back when the program was being developed, HHS actually estimated it would cost $400 billion, not $700 billion. As we later learned, this was just a flat out lie, designed to fool Congress into voting for it. Shortly after the bill passed, HHS admitted that its chief actuary had actually estimated a cost of $500-600 billion but had been forbidden from revealing this to anyone. Then, last year, they upped the estimate again to $720 billion. So assuming that the 10% "savings" applies to the entire 10-year budgeting period, it means HHS is now estimating a cost of $650 billion, which is actually far higher than either of the estimates from two years ago.
It's also worth noting that HHS has come up with this alleged 10% savings after a grand total of one month of experience with the program. In fact, it comes from a document called "The Secretary's One Month Progress Report on the Medicare Prescription Drug Benefit." So take this news with a great big shaker of salt.
Still more $$ for the drug makers
Speaking of Medicare prescription drugs, here's a little tidbit that somehow didn't make its way into the administration's progress report:
The new Medicare drug benefit will give drug companies up to $2 billion in extra profits this year because they're no longer required to pay rebates on drugs bought by the government for the elderly poor.....The boost in profits comes from a shift in the drug coverage of 6.4 million poor and elderly people from Medicaid to the new Medicare drug benefit. Unlike Medicaid, which requires drug companies to charge their lowest or "best price" for medications, the Medicare program relies on competition among private drug plans to keep prices low. By eliminating the need to discount drugs for the government, the industry can now pocket the savings.
"The net effect over 10 years is probably closer to $40 billion in extra profit," said Stephen Schondelmeyer, a pharmaceutical economics professor at the University of Minnesota.
This is no surprise, of course. After all, you don't think the pharmaceutical industry would have supported the bill if they really thought "competition" would drive down prices, do you?
The new Medicare drug benefit will give drug companies up to $2 billion in extra profits this year because they're no longer required to pay rebates on drugs bought by the government for the elderly poor.....The boost in profits comes from a shift in the drug coverage of 6.4 million poor and elderly people from Medicaid to the new Medicare drug benefit. Unlike Medicaid, which requires drug companies to charge their lowest or "best price" for medications, the Medicare program relies on competition among private drug plans to keep prices low. By eliminating the need to discount drugs for the government, the industry can now pocket the savings.
"The net effect over 10 years is probably closer to $40 billion in extra profit," said Stephen Schondelmeyer, a pharmaceutical economics professor at the University of Minnesota.
This is no surprise, of course. After all, you don't think the pharmaceutical industry would have supported the bill if they really thought "competition" would drive down prices, do you?
Thursday, February 02, 2006
Priorities out of order
A day after he got the GOP congress to cut Medicaid, student loans, child support enforcement, welfare and other programs for the needy by $39 billion over the coming years, Bush tells Congress that he needs another $70 billion for Afghanistan and Iraq for just next year. If we're going to finance a war of choice (Iraq) on the backs of the needy here at home, maybe we should spend the rest of the year demanding that the $70 billion be paid for by eliminating corporate welfare and tax subsidies and breaks. Update: He's actually going to ask for $120 billion. Even worse. Almost twice as bad.
You can call the outhouse a palace, but it still smells the same
Well, sponsors of the latest version of TABOR have decided that TABOR carries too many negative connotations, so they're changing its name. Now it's the TP amendment, or the Taxpayer's Protection Amendment.
We know that Wisconsin Manufacturers & Commerce employed its considerable marketing skills on behalf of TABOR supporters to rename TABOR, but couldn't they have come up with a better acronym than TP?
When one concerned citizen called Sen. Ron Brown (R-Eau Claire) to oppose TABOR, he was told TABOR was dead and legislators were now working on the Taxpayer Protection Amendment, which he was told was different. Really?
Instead of being TABORized, we're now merely going to beTP'd. It turns out that states across the country are fleeing from the acronym TABOR, if not the concept.
In Arizona, Republicans still like the idea of a TABOR-like creature, they just don't like the negative connotations that TABOR has aroused, among thinking citizens everywhere, not just in Colorado. State Sen. Dean Martin of Phoenix: "This really is a different animal," Martin, who prefers that the measure he's helping sponsor be known as the Budget Stabilization Act, told the Arizona Republic.
Of course, that acronym is BS...
We know that Wisconsin Manufacturers & Commerce employed its considerable marketing skills on behalf of TABOR supporters to rename TABOR, but couldn't they have come up with a better acronym than TP?
When one concerned citizen called Sen. Ron Brown (R-Eau Claire) to oppose TABOR, he was told TABOR was dead and legislators were now working on the Taxpayer Protection Amendment, which he was told was different. Really?
Instead of being TABORized, we're now merely going to beTP'd. It turns out that states across the country are fleeing from the acronym TABOR, if not the concept.
In Arizona, Republicans still like the idea of a TABOR-like creature, they just don't like the negative connotations that TABOR has aroused, among thinking citizens everywhere, not just in Colorado. State Sen. Dean Martin of Phoenix: "This really is a different animal," Martin, who prefers that the measure he's helping sponsor be known as the Budget Stabilization Act, told the Arizona Republic.
Of course, that acronym is BS...
