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Sickness & struggle, part 7: Medicare changes

Corporate giveaway in the name of reform

Published Oct 29, 2009 8:50 PM

On Dec. 8, 2003, former President George W. Bush signed into law the misnamed Medicare Prescription Drug Improvement and Modernization Act of 2003. The Act, better known as Medicare Part D, was touted as a landmark reform to provide seniors and the disabled with a prescription drug benefit, more choices and better benefits under Medicare.

The evidence demonstrates that, in reality, this legislation has been a corporate giveaway to the same insurance and pharmaceutical companies that make billions of dollars by denying care to those who cannot afford it and overcharging those lucky enough to have health insurance.

Medicare Part D represents government collusion with industry to redistribute huge amounts of taxpayer money to the health corporations. President Bush and congressional leaders of both parties, in typical right-wing fashion, adopted the language of populism and reform to carry out this redistribution of wealth away from poor and working-class taxpayers.

Taxpayer fleecing revealed

The U.S. House Committee on Oversight and Government Reform examined confidential information on drug prices to compare the costs of drugs purchased under Medicare Part D with those purchased through Medicaid, a federal-state program that provides health care to 60 million individuals living in the U.S. The findings were published in a July 2008 report titled “Medicare Part D: Drug Pricing and Manufacturer Windfalls.” (oversight.house.gov)

The report findings provide a scathing indictment of this so-called reform. Medicare Part D pays an average 30 percent more for prescription drugs than does Medicaid. Administrative expenses and profits of private insurers account for nearly 10 percent of Part D costs, nearly six times that of traditional Medicare.

This produced in excess of $3.7 billion that went straight to the drug manufacturers in the first two years of the program. Johnson & Johnson received the largest windfall, making $615 million off the program in 2006 and 2007. More than $500 million of that additional revenue came from the sales of just one drug—the anti-psychotic Risperdal. Bristol-Myers Squib received a boost of $400 million, including over $200 million in additional revenue from sales of Plavix, a heart-attack and stroke medication.

The report arrives at its estimate of $3.7 billion by examining the 100 drugs most used by beneficiaries. If the discrepancy is the same for other drugs as it is for the top 100, the windfall could actually be billions of dollars more for the pharmaceutical companies.

Much of this money is obtained as the result of a dual-eligibility provision which transferred the drug coverage of elderly and disabled individuals who qualify for both Medicare and Medicaid away from the more cost-effective Medicaid to the Medicare Part D program.

The dual-eligibility scam portends even greater profits for the rapacious drug companies. Dual-eligible beneficiaries are expected to consume $432 billion worth of prescription drugs in the first 10 years following the report’s publication. If Medicare Part D negotiated the same prices that Medicaid receives, the cost of these drugs would fall by an estimated $86 billion.

None of these figures address the larger imperative of removing the private pharmaceutical firms from the equation altogether, but they do illustrate the real intent of Medicare Part D—to pad the already flush coffers of the big drug companies with public funds.

Donut hole fails sick, elderly

One of the biggest failures of Medicare Part D is the gap in coverage popularly known as the donut hole. This refers to the gap that exists between the initial coverage limit and the eligibility threshold for catastrophic coverage. During this period enrollees are responsible for paying all prescription costs out-of-pocket with no assistance from Medicare.

According to the Kaiser Family Foundation, 71 percent of plans offered no assistance with gap coverage in 2008. Last year the coverage gap totaled $3,216 for plans offering the standard Medicare Part D benefit. The gap is projected to grow to more than $6,000 by 2016. (kff.org)

The donut hole is criminal by any reasonable moral standard, especially in light of the vast revenues the drug companies have managed to squeeze from the Medicare program. The pharmaceutical industry has essentially arranged to secure for itself billions of dollars in extra monies each year through a system that leaves those most vulnerable—the sickest of the elderly and disabled—stuck with paying thousands of dollars out-of-pocket during their time of greatest need.

The three most profitable drug companies made more than $28 billion in combined profits in 2008. Profits like these made the pharmaceutical industry the third most profitable U.S. industry in the midst of a severe recession, according to Fortune magazine. (cnnmoney.com, May 4)

Medicare Part D reveals what the ruling class and their capitalist politicians in Congress really mean by “reform.” The only wealth redistribution they are interested in is that which comes with corporate welfare. Health care reform, as it was implemented with Medicare Part D, means bolstering the coffers of the most profitable industries in the country.

Next: The impact of technology on health delivery and access.