Medicare Part D shows market-based solutions work
Good editorial in the AJC this morning on Medicare Part D, the prescription drug plan created during the Bush administration. It’s an approach to government spending I’d like to see more of:
Consider Medicare Part D. This prescription drug benefit for seniors has a huge price tag, but by allowing the market to set prices, Part D has actually reduced costs and improved services for seniors.Under Part D, seniors select a prescription drug plan offered by a private insurer. The federal government subsidizes these plans, and insurers compete to offer seniors the best deal. Competition among insurers drives down costs to enrollees and provides them with multiple choices so that they can pick a plan that suits their medical needs and budget.
Medicare Part D stands out as a rare success among the scores of bloated, inefficient government programs we encounter on a daily basis. It has managed to deliver great service to its beneficiaries — at a fraction of the projected cost to taxpayers.
The Congressional Budget Office put the original 10-year price tag of the program at a whopping $634 billion. Premiums for a standard plan were projected to be $44 by 2009.
CBO recently revised its 10-year estimate of Part D’s cost down to $395 billion. And today, standard plan premiums are $28 — 37 percent less than anticipated.
When businesses compete, it tends to bring prices down. Perhaps we should keep this in mind while discussing plans to nationalize our health care system and have one payer — the federal government.
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