Wilson's Weblog

My wife and I are 59 years of age and currently do not qualify for Medicare coverage. I have, however, read much about the current law providing Medicare Part D coverage and wished to express my thoughts on that program and its current flaws..

Much has been written about the problems that the program faced when it was introduced in January of this year. Most of those problems were the result of poor execution and do not relate to the fundamental flaws in the legislation itself. Those flaws, as I see it, are the following:

1. The law provided that providers can determine which drugs their programs cover and which they do not. Senior citizens must then pick and choose which program to sign up for based on whether the drugs they are currently using are covered by the plan they choose.

Problems: This provision makes choosing a program a confusing nightmare as the senior citizen is not able to compare programs on an “apples-to-apples” basis. When a person decides to purchase a car, all of the cars on the market have turn signals, brakes, and even heaters and air-conditioners these days. When a person is choosing a Medicare Part D plan, the choice may be which parts of the car will be best to have or not have. Not only does this make for a confusing array of choices for a senior citizen, this provision of the law presupposes that the drugs a person are currently taking will be constant over time. As a person’s condition changes and new drugs are introduced to the marketplace, that person’s prescriptions can and do change, thus making the previous choice of a program obsolete in a relatively short period of time. This supposition is inherently ridiculous and illogical. Another problem is that it allows a provider to cherry-pick the drugs that it will cover, allowing providers to cut various deals with the drug companies to focus on the specific products it has chosen to provide. I suspect that this is one of the reasons for the high cost of Medicare Part D for the taxpayer while the actual benefits provided to our senior citizens are less than what they should be.

Solution: The law should be rewritten to require providers to cover all FDA approved commonly prescribed medicine. Senior citizens would then be comfortable that any plan they choose would provide the drug benefits they need now and in the future. Shopping for the programs would be less confusing as the programs offered all would provide drugs that are included on the same required list. Lastly, true competition could exist and costs could come down as companies would be required to compete on a level playing field.

2. The law included a component that prevented the government from negotiating directly with any of the drug companies.

Problem: The problem with this approach is obvious in that Medicare Part D is destined to become one of the biggest customers of prescription drugs on the face of this earth. The entire program is paid for by taxpayers. To not allow the government to participate in negotiations on price is a serious departure from marketplace supply and demand theory because it excludes the largest customer from participating on the demand side. The lack of this ability to negotiate is a primary reason for the huge cost of this program.

Solution: Allow the government to participate in pricing negotiations with the drug companies. This will quickly bring down the cost of the entire program. Each provider would then incur the same low cost as any other provider and they will compete based on their efficiency in administering their programs versus their ability to cut deals on specific drugs with the drug companies.

In summary, I would suggest that the current year of 2006 be used as a test year for the current program and that back-up legislation be introduced soon so that a totally restructured program that fixes the current law’s flaws can be implemented on January 1 of 2007 if the current Medicare Part D is deemed a failure. Based on how the current law is structured, that outcome is inevitable.