Medicare Part D.ppt

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					Medicare Part D:
Free to Choose or No
  Choice At All ???
    Most Governmental Spending is
    Accounted for by 2 Great Social
           Insurance Plans

   Medicaid targets the poor and covered
    37.5 million people in 2004

   Medicare covers citizens over the age of
    65 and in 2004 covered 39.7 million
In Both Systems Health Insurance
          is Socialized:
   But the medical care is provided by the
    private sector
   Medicaid is a state-federal matching
    program with states providing 40% of
   Medicaid is financially unstable and
    subject to the whims of elected officials
   Medicare is a purely federal program with
    a strong political constituency
     Medicare is a Single-payer
   Medicare has lower administrative costs
    because it does not spend large sums
    fighting adverse selection
   Medicare does not screen applicants or
    differentiate coverage among individuals
   Medicare spends less than 2% of its
    resources on administration
   Private insurers spend more than 13% on
     Many Seniors Face Problems
     Paying for Prescription Drugs
   Congress passed the Medicare
    Modernization Act in 2003
   The bill ensures that private insurance
    companies provide the benefit instead of
    the Medicare administration
   This design increases the cost of drugs as
    well as the administrative costs
Major Problems with the Medicare
          Drug Benefit
   It prohibits direct negotiation between
    Medicare and the pharmaceutical industry
   The relative advantages and
    disadvantages of various plans are difficult
    to recognize
   Insurers can change their benefits after a
    plan has been selected and a drug may be
    dropped from the “covered list”
   The drug program is too complicated
    The Pharmaceutical Industry
   Prices for drugs are typically more than
    2000 percent above their cost of
   Evidence shows that there has been a
    multi-billion dollar windfall to drug
    manufacturers as a result of the transfer
    of drug coverage from Medicaid to Part D
Pharmaceutical Industry Continued
   Main goal of the pharmaceutical lobby is
    to ensure there is no governmental
    interference with their ability to charge
    high prices
   The pharmaceutical industry is a tight,
    global oligopoly with significant pricing
    power in the United States
         The Marketing of Drugs
   More money is spent marketing products
    to doctors than in developing the drugs
    sold by the drug companies
   From 1996 to 2001 the pharmaceutical
    sales force in America doubled =90,000
   Drug reps give gifts to doctors for writing
    scripts- doctors also market drugs to other
     More Medicines From Abroad
   Canadian pharmacies purchase brand-
    name drugs at low wholesale prices
    negotiated with the purchasing power of
    the Canadian government
   Federal regulators have cracked down on
    drugs ordered from abroad, especially
    those from Canada
   The seizures appear to have coincided
    with the launch of Medicare’s drug-
    discount program
     What Do We Know So Far?
   Kaiser Family Foundation reported in 2004
    that 25% of eligible seniors could pay less
    buying drugs on their own than through
    the new Medicare program
   Government is well-suited to pool risk and
    provide insurance (see Social Security and
   Writing private insurers into the drug
    program equation adds expense and
The Unraveling of Employer-
  based Health Insurance
   The rise in Medicaid coverage
    results from the growing number of
    people who have lost their
    employer-provided health insurance
   Without Medicaid, the uninsured
    population would have increased
    even more than it has
   State and federal governments are
    increasingly paying the tab for
    health care that used to be provided
    by employers
      The Plan: After the $250
      Deductible a Retiree Finds
   The insurer covers 75% of the next $2000
    in drug costs
   Then assistance vanishes through the
    “doughnut hole”
   Total expenditures must exceed $5,100
    and then insurers cover 95% of additional
    drug costs
        The Paradox of Choice
   Given too many options the rational
    person is more likely to be paralyzed than
    to pick wisely
   Beneficiaries tend to focus on premiums or
    out-of-pocket costs: not the array of
    factors that actually determine which plan
    is best
   Beneficiaries who haven’t signed up by
    May face enrollment penalties
Is This a Ploy to Get Everyone into
         Medicare HMO’s?
   Seniors may feel that compared to the
    labyrinth of premiums and cost-sharing,
    arrangements of stand alone PDP’s,
    Medicare HMOs are easier

   Without the requisite sign ups, PDP’s will
    lose bargaining leverage with drug
    manufacturers and plans will collapse
    Medicare not Social Security is on
         an Unsustainable Path
   Health costs are growing so much faster
    than the rest of the economy
   The Bush administration is pushing to
    make tax cuts permanent thus forcing cuts
    in Medicare based on the growing gap
    between revenues and outlays
   We can ration care, reign in spending or
    raise revenues
       The Bush Administration
            Encourages the
    Wrong Kind of Insurance Policies
   Insurance companies pay only for things like
    $30,000 amputation fees for patients with
    diabetes- but not the $150 visit to the podiatrist
   Payments are made to respond to symptoms,
    when they should be encouraged to promote
   It’s not a question of whether medicine has
    become a business, as what kind of business it
    has become??
       Free Market Ideologies are
      Inappropriate for Health Care
   Higher spending on those with good
    insurance occurs by consigning more
    people to poor insurance or none at all
   Most health costs are incurred by a small
    proportion of the population whose
    expenses greatly exceed limits on out-of-
    pocket costs
   US system relies on private rather than
    public health insurance which raises costs
What about a National Health Care
   Health care should be a fundamental right
    and a public rather than a private good
   The US is unique in not sponsoring
    government-controlled Universal Health
   There are appalling inefficiencies in our
    system with approximately 30% of
    American health care spending wasted
      Selected Sources
   New York Times, Health Care Confidential by Paul Krugman. January 27, 2006
   New York Times, Pharmacists Say Drug Plan Threatens Their Livelihood by
    Robert Pear, March 13, 2006
   Washington Times. Junk Medicaid by Alex Gerber. January 29, 2006.
    New York Review of Books, The Health Care Crisis and What to Do About It
    by Paul Krugman, Robin Wells. Volume 53, Number 5 · March 23, 2006 .
   New York Times, For Some Who Solve Puzzle, New Medicare Drug Plan
    Pays Off by Robert Pear, March 26, 2006
   Center for Medicare Advocacy, Prescription Drugs Cost More Under
    Medicare Part D Than Under Medicaid, February 16, 2006.
   The Century Foundation. Launching the Medicare Drug Benefit: The Good,
    the Bad, and the Ugly. October 28, 2005
   The Century Foundation. Medicare Part D: Watch Those Numbers. January
    26, 2006.
   New York Times, More Medicines from Abroad Seized by Lisa Girion.
    February 11, 2006.
   The Atlantic, The Drug Pushers by Carl Elliot. April 2006.

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