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Saving Medicare Part D

why was medicare part d created

Created: June 25, 2013, 12:37 PM

Last Updated: June 25, 2013, 12:45 PM

The Medicare prescription drug benefit, known as Medicare Part D, has been a model of bipartisan compromise on entitlements since it was passed in 2003 and signed into law by George W. Bush.

At the time, politicians in both parties understood that an entitlement program for seniors’ health care that paid for surgery and hospitalization but not drugs was archaic, and that each dollar spent on a new prescription drug saved on hospitalization costs.

Part D has proven that a modernized system – one that funded drugs, focusing on the neediest seniors, and avoiding price controls on prescription drugs – could cost less than the prior system.

Part D was designed to ensure that low-income seniors and those Americans with extremely high prescription drug costs receive coverage, while asking those not in either group to contribute to their own drug costs. It also prohibited direct negotiation of drug prices between the government and drug companies through a non-interference clause.

These free-market provisions have been extremely effective: today, Part D is one of the rare entitlement programs that targets the truly needy and and costs less than what was originally budgeted, and that cost doesn’t even include an offset for expenses involving surgery and hospitalization avoided by the availability of drugs.

Unfortunately, some groups continue to agitate against Part D’s effective approach, as The Hill reports . Instead of allowing market forces to determine drug prices, these groups want to put government in the driver’s seat, raising the real potential for Washington rationing drugs for Medicare patients. This was

exactly the circumstance Part D was created to avoid.

Part D deserves defending: it serves citizens well, and government shouldn’t be allowed to ruin it.

Visit for regular updates on the fight to save the program.

On May 29, 2013, The Heartland Institute hosted an event at the Union League Club in Chicago with Rep. Peter Roskam (R-IL) for a speech on protecting Medicare Part D from forces inside and outside Congress that would destroy it. In front of an audience of about 60 people, Roskam said Medicare Part D works because the power of free markets give seniors better choices and lower prices for their prescription medicine. However, Roskam warned that aspects of Obamacare will undermine the effectiveness of Medicare Part D by replacing market-based price signals with government-mandated price controls. Roskam said he would gather allies in the House to help protect the program from Obamacare.

Roskam was introduced by Heartland Institute Research Fellow Benjamin Domenech, who took 10 minutes to share his views on Medicare Part D. Domenech noted how President Obama wants the federal government to “negotiate” prescription drug prices – despite the fact that free-market competition is keeping drug prices low and increasing choices for seniors. In reality, Domenech added, the government doesn’t want to “negotiate” drug prices, it wants to set prices – a strategy that will cause Part D to be as big a failure as other parts of Medicare.

Watch the video below:

On June 10, 2013, Heartland Institute Research Fellow Benjamin Domenech and Communications Director Jim Lakely discussed Medicare Part D on the Heartland Daily Podcast. Listen to that podcast here .

Category: Insurance

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