Saturday, February 19, 2005

Administration Admits Medicare Drug Bill Will Cost Triple What Bush Pledged in 2003

The new price tag for Medicare prescription drug benefits is more than triple the amount President Bush suggested when he won passage of the law in 2003.

Beginning with his January 2003 State of the Union address, Bush pledged to keep the total cost of the drug benefit to $400 billion over 10 years. But shortly after Bush signed the program into law in December 2003, the White House revised its projection to $534 billion, a number that Medicare chief Mark McClellan cited as recently as September of last year.

But when the FY 2006 budget was released, McClellan admitted that the cumulative cost of the program between its start year of 2006 and 2015 would be $913 million, and including transition costs incurred in 2004 and 2005, the true total would be about $1.2 trillion.

That led to bipartisan calls for the administration to reopen the debate on Medicare drug costs, and look for way to knock the overall price down. However, McClellan, in a news conference Tuesday, said now was not the time to reopen that debate.


The true cost of the medicare bill has long been in doubt.

Last March, Richard Foster, Medicare's chief actuary for nearly a decade, said Bush administration officials threatened to fire him if he had disclosed his belief in 2003 that the drug package would cost $500 billion to $600 billion.

Foster said that he told the White House five months before the bill was passed that he estimated the cost to be $551 million. But because various conservatives vowed to block any bill over $400 billion, Foster said he was told not to testify before Congress -- in effect to bury the estimates.


Sen. Edward M. Kennedy (D-MA) and Rep. Henry A. Waxman (D-CA) -- two of the Bush administrations' least favorite people in Congress -- wrote Bush on Feb. 15 suggesting that Medicare could save $190 billion over the next decade if the seniors program adopted the price-negotiating model used by the Department of Veterans Affairs. According to The Washington Post, they reached that figure by taking the gross cost of the Medicare drug program ($905 million) and applying a conservative estimate of the VA discount (about 45 percent).

But McLellan, noting that the Medicare prescription drug benefit is slated to go into effect in 10 months, rejected the idea.

Told that McClellan dismissed the calculation, Kennedy told the Post: "It is serious business, and it's time the administration got serious about helping senior citizens get affordable drugs instead of helping drug companies achieve windfall profits."

Meanwhile, a bipartisan bill allowing the importation of Food and Drug Administration-approved medicines from other countries recently picked up the support of Senate Finance Committee Chairman Charles E. Grassley (R-IA), leading co-sponsor Byron L. Dorgan (D-ND) to predict victory if they can get a Senate vote.

"The drug benefit in the Medicare bill has now ballooned to hundreds of billions of dollars more than previously disclosed," Dorgan told the Post. "With that kind of pressure, everybody understands you've got to put downward pressure on prices."

But newly appointed Health and Human Services Secretary Michael Leavitt told the Senate Finance Committee that he opposed a bipartisan proposal for a national commission to study the Medicaid funding problem. Leavitt said competition among pharmaceutical firms and drug plans would bring greater savings.


Of course, in the early going, drug companies have failed to provide savings to seniors.

The drug companies, who got sweetheart deals from the administration to guarantee seniors would be covered, are allowed, in theory, to raise prices as often as once a week.

An AARP study found the annual rate of manufacturers price increases for the 197 brand name prescription drugs most commonly used by older Americans more than tripled the rate of inflation over the 12-month period ending on Sept. 30, 2004.

The study found that manufacturers' prices increased 7.4%, on average, from September 2003 to September 2004. The rate of general inflation during that same 12-month time period was 2.3%.


Anonymous Anonymous said...

Oh my God !!! A government program that costs more than was originally projected. Shocking! I am appalled! Oh, the humanity of this. What is this world coming to ?!

12:39 PM  
Anonymous joe said...

What's amazing, when you read a comment like the one above, is how easily a conservative can overlook the obvious.

The point is that Bush gave one number, and the top Medicare actuary said that he was told not to reveal the real number until after the vote had passed.

Now, in a case of deja vu, the top Medicare official stands by an artificial number, until he has to reveal in the budget what the real number is. And when it's suggested that there are ways to get that real number closer in line with the artificial number, he refuses to listen.

Why? Let's face facts. The Bush administration is in a tough position. It has promised a bushel of goodies to the pharmaceutical industries. And to pay for those goodies, it has to raise the cost of the overall program. And guess who pays for that? The American taxpayer.

Take your pick: Either this shows incredible incompetence by the administration, or it shows that they are a bunch of liars. There really isn't a third option.

9:32 PM  
Anonymous Anonymous said...

It all becomes all too clear that the big greedy pharmaceutical companies are the ones pulling the strings of the Bush Administration. Another cartel is the Federal Drug Administration which is really represented by the interests of, no surprise, the big greedy pharmaceutical companies. My two above claims can be substantiated with mounds of evidences.
In America, the people's health and well-being takes a back seat to the interests of, need I say it again, the big greedy pharmaceutical companies, contrary to bull shit claims of the administration. And it is the executives of these companies raking in most of the profits.
All together now. What controls our health in America: THE BIG GREEDY PHARMACEUTICAL COMPANIES.

7:57 AM  

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