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Medicare reform timing

Pres. Bush stated Wednesday that Medicare reform will be addressed after Social Security reform had been completed. According to the NYTimes, Bush’s statements were in response to the recent disclosure that the Medicare prescription drug program cost estimates are now in excess of $700 billion for the program’s first ten years, “with costs reaching $100 billion annually by 2015.”
By way of comparison, the Administration’s initial estimate of program costs for the first eight years was $400 billion, a number that was, according to reports, significantly less than that predicted by the Medicare Actuary. Readers may recall the mini-scandal that erupted when the Actuary disclosed that he had been threatened with dismissal if he went public with the discrepancy (the Actuary’s estimate was $534 over the same period.)
According to California HealthLine,
“lawmakers listed several possible changes to the present Medicare program. The potential measures include capping spending for the benefit; cutting payments for wealthy beneficiaries; allowing the government to negotiate bulk drug prices with pharmaceutical firms; banning Medicare coverage of “lifestyle drugs,” such as Viagra; and legalizing the importation of prescription drugs from Canada and other countries. ”
It is encouraging that our elected officials are becoming more realistic about the costs of this program, and may consider allowing the Federal government to negotiate with drug manufacturers. However, if the Feds are succesful in their efforts, there could be a massive cost-shift to private payers as drug companies seek to recoup lost income.
We’ll be watching this very closely.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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