News Release

Roots of Medicare Drug Problems

DEAN BAKER
Co-director of the Center for Economic and Policy Research, Baker wrote the just-released report “The Savings from an Efficient Medicare Prescription Drug Benefit.” Baker said today: “The Medicare Modernization Act costs the government and beneficiaries considerably more than is necessary. If Medicare could negotiate directly with drug companies it could save the federal and state governments hundred of billions of dollars and cut insurance premiums. … The potential savings are so large that the current projected budget for the program would be enough to fully finance the benefit with no contribution from the beneficiaries whatsoever.”
“The Savings from an Efficient Medicare Prescription Drug Benefit” (PDF)
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JOHN GEYMAN
Geyman is professor emeritus of family medicine at the University of Washington School of Medicine. He is president of Physicians for a National Health Program and author of the new book Shredding the Social Contract: The Privatization of Medicare.
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DEBORAH S. SOCOLAR
Co-Director of the Health Reform Program at Boston University School of Public Health, Socolar said today: “The Medicare drug benefit is confusing, very thin, full of holes, and far costlier than it has to be. That’s because the drug industry demanded that the benefit be provided through many competing private insurance plans — rather than directly through Medicare — and President Bush and Congress agreed.

“Since many private insurers are now individually negotiating Medicare’s prices with drug companies, they pay much more than the Veterans Administration and governments in other countries do. And high prices mean that the program’s budget won’t stretch very far.

“So Congress designed the drug benefit with a huge coverage gap in the middle. Many of our neediest citizens will fall into this ‘black hole’ and never get out, if they can’t pay for enough drugs themselves to reach the threshold for catastrophic coverage. But if Medicare paid prices comparable to those in other countries, there would be no need for such a hole. High prices also mean drug manufacturers can garner extraordinary profits from this plan, because it will cost them very little to make the additional pills that our seniors need.”
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For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167