Douglas E. SchoenDouglas E. Schoen
Author of Hopelessly Divided
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Medicare Part D Rebates Will Hurt More Than Help

01/19/2015 Published on Forbes.com

It’s no great secret that America needs to get its fiscal house in order.

Now, that’s hardly an unpopular statement these days. And it’s a sentiment we’re hearing from both Republicans and Democrats, as well as the American people who are overwhelmingly in support of Congress balancing the budget and ending this cycle of stop-gap solutions.

However, a newly proposed plan shows that the Obama Administration and some members of Congress seem to think the best way to tackle America’s debt problem is by taxing American pharmaceutical companies instead of doing the real, hard work.

More specifically, the proposal calls for drug manufacturers to pay rebates on a significant portion of the prescription drugs purchased under Medicare Part D plans.

Medicare Part D is an enormously successful program to provide access to prescription drugs to millions of American seniors. Since its introduction 11 years ago, Part D has stood out as a successful Medicare reform that harnesses free market competition to save taxpayers money.

6853652719_bbc9d82cb8_bBut these proposed rebates could jeopardize that.

Instituting Medicaid-style rebates in Medicare Part D isn’t a solution; it’s just Congress passing the buck. The only real way to achieve the savings is to reduce costs. But Medicaid-style rebates merely shift the costs— to employers, to seniors, and to taxpayers in general. And the problems don’t stop there. Forcing drug manufacturers to pay rebates at a time when Medicare populations are expected to rise will put significant strain on the entire system.

The resulting increase in Part D premiums will make it more difficult for seniors to afford their drug plans. Research shows that Medicaid-style price controls could cause the monthly premiums in drug plans to increase as much as 40%.

Read more at Forbes.com

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