How PPACA fixes some of the problems of Part D

February 13, 2011
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One of the most infuriating and hypocritical elements of the GOP’s attack on the Patient Protection and Affordable Care Act (PPACA) is the complaint about its cost. The non-partisan Congressional Budget Office says PPACA will reduce the deficit, not increase it. Even if the projection turns out to be too rosy, there’s no chance PPACA will do anything near the fiscal damage of the Medicare Part D drug benefit, passed under a Republican Administration as a non-means tested gift to old people with absolutely no attempt to offset the expense with new revenue or budget cuts elsewhere.

One of the most infuriating and hypocritical elements of the GOP’s attack on the Patient Protection and Affordable Care Act (PPACA) is the complaint about its cost. The non-partisan Congressional Budget Office says PPACA will reduce the deficit, not increase it. Even if the projection turns out to be too rosy, there’s no chance PPACA will do anything near the fiscal damage of the Medicare Part D drug benefit, passed under a Republican Administration as a non-means tested gift to old people with absolutely no attempt to offset the expense with new revenue or budget cuts elsewhere.

In Some Seniors Are In For Sticker Shock On Drug Premiums, Kaiser Health News reports on the very sound approach PPACA takes to cleaning up some of the excesses of Part D. PPACA reduces the government’s Part D subsidy to Medicare beneficiaries making more than $85,000 or $170,000 for couples. What’s more the income threshold won’t start to adjust for inflation until 2019 meaning more people are likely to fall into the high income category over time. The same rules already apply for Medicare Part B, which pays for physician and outpatient care.

Some advocates for the elderly express concern that healthy people will opt out of Medicare and seek private insurance, leading to higher costs for those still enrolled. Yet that’s unlikely to happen:

[James Capretta, a fellow at the Ethics and Public Policy Center] said the odds are “very low” that wealthier seniors would leave Medicare in droves or that insurers would build new products to cover them. “You take an awful big risk by opting out of Medicare, which is guaranteed issue, community-rated insurance. I don’t think a lot of people would do that.”

Jonathan Blum, deputy CMS administrator and director of the agency’s Center for Medicare, said he’s not aware of any seniors who have left the program because they had to pay more for their Part B coverage, and he added that CMS is “confident that higher-income beneficiaries will stay in the Part D program based upon the history and the fact that the Part D benefit is more generous.”

He also said that while higher-income seniors would be required to pay more for their drug coverage, the benefit is more generous this year, pointing to the 50 percent discount for brand-name prescription drugs once seniors hit the “doughnut hole.”

Remember, Medicare is funded by a payroll tax that affects virtually everyone who works. Many have no health insurance themselves and make a lot less than $85,000. Meanwhile, senior citizens, including plenty who are financially comfortable, have their health care (and pensions) heavily subsidized by the rest of the population. PPACA, meanwhile, is focused on extending coverage to those who lack it, mainly those with moderate to low incomes and those with pre-existing conditions.

I say to the advocates of PPACA repeal: if you want to use cost as a justification for repealing PPACA, let’s repeal Medicare or at least Part D at the same time. At least that way we’d save some serious money and dramatically reduce government’s role in the health care business.

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